Redecard Prospectus

OFFERING MEMORANDUM STRICTLY CONFIDENTIAL
150,827,527 Common Shares
(Including Common Shares in the Form of Global Depositary Shares)

REDECARD S.A.
R$27.00 per Common Share
US$28.57 per Global Depositary Share
We are offering a total of 15,555,555 common shares, and certain selling shareholders are offering a total of 135,271,972 common
shares, including common shares in the form of Global Depositary Shares, or GDSs. Each GDS represents two common shares and
will be evidenced by a Global Depositary Receipt, or GDR. We and the selling shareholders are offering the common shares and the
GDSs to (1) the public in Brazil only in the form of common shares, (2) certain qualified institutional buyers, or QIBs (as defined in
Rule 144A under the U.S. Securities Act of 1933, as amended, or the Securities Act) in the United States and (3) institutional and other
investors outside the United States and Brazil that are not U.S. persons (as defined in Regulation S under the Securities Act).
We have applied to register this offering with the Brazilian Securities Commission (Comissão de Valores Mobiliários), or CVM.
Currently, no public market exists for our common shares or GDSs. We have applied to list our common shares on the Novo Mercado
segment of the São Paulo Stock Exchange (Bolsa de Valores de São Paulo), or the BOVESPA, under the symbol "RDCD3."
The selling shareholders have granted to Banco Itaú BBA S.A. an option, exercisable upon consultation with the other bookrunners,
for a period of up to 30 days from the first business day following the date of publication in Brazil of the announcement of
commencement of this offering to purchase up to an 21,124,128 additional common shares including common shares in the form of
GDSs, to cover over-allotments, if any.
Investing in the common shares and the GDSs involves risks. See "Risk Factors" beginning on page 12.
The common shares and the GDSs have not been and will not be registered under the Securities Act or under any U.S. state securities laws.
The common shares and the GDSs may not be offered or sold within the United States or to U.S. persons, except to qualified institutional
buyers and to certain non-U.S. persons outside the United States and Brazil in reliance on Regulation S. By purchasing our common shares or
GDSs in the United States, you will be deemed to have represented to us that you are a qualified institutional buyer. Prospective purchasers
that are qualified institutional buyers are hereby notified that we and the selling shareholders may be relying on the exemption from the
provisions of Section 5 of the Securities Act provided by Rule 144A. See "Transfer Restrictions" on page 131 for a description of restrictions
on transfers of our common shares and GDSs.
Neither the U.S. Securities and Exchange Commission, or the SEC, any state securities commission, the CVM, the BOVESPA nor
any other regulatory authority has approved or disapproved of these securities nor have any of the foregoing authorities passed upon
or endorsed the merits of this offering or the accuracy or adequacy of this offering memorandum (or the prospectus in Portuguese
used in connection with the offering of our common shares in Brazil, or the Brazilian offering). Any representation to the contrary
is a criminal offense.
Offering Price: R$27.00 per common share and US$28.57 per GDS
Investors residing outside Brazil, including qualified institutional buyers in the United States and institutional and other
investors outside the United States and Brazil, may purchase our common shares if they comply with the registration
requirements of CVM Instruction No. 325, dated January 27, 2000, and Resolution No. 2,689, dated January 26, 2000, of
the Brazilian National Monetary Council (Conselho Monetário Nacional), or CMN. For a description on how to comply
with these registration requirements, see "Market Information—Investment in Our Common Shares by Non-residents of
Brazil" on page 22.
Payment for our common shares will be required to be made in reais, through the facility of the Brazilian Custody and Clearing
Company (Companhia Brasileira de Liquidação e Custódia), or CBLC, and we and the selling shareholders expect to deliver our
common shares through the facility of the CBLC on or about July 17, 2007. We expect to deliver the GDSs against payment in
U.S. dollars through the book-entry facilities of The Depository Trust Company, or DTC, on or about July 17, 2007.
Joint Bookrunners
Citi Itaú BBA Unibanco

July 11, 2007
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TABLE OF CONTENTS
Page Page
Presentation of Financial and Other Information iv Our Management ................................................78

Forward-looking Statements ................................ x Principal and Selling Shareholders .....................84
Summary .............................................................. 1 Related Party Transactions .................................86
The Offering ......................................................... 6 Description of Our Share Capital .......................88
Summary Financial and Operating Information ... 9 Description of Global Depositary Shares .........102
Risk Factors........................................................ 12 Taxation of Our Common Shares
Use of Proceeds .................................................. 19 and Global Depositary Shares .......................118
Market Information ............................................ 20 Certain ERISA Considerations .........................126
Dividends and Dividend Policy.......................... 24 Plan of Distribution ..........................................128
Exchange Rates .................................................. 27 Transfer Restrictions.........................................131
Capitalization...................................................... 28 Notice to Canadian Residents...........................136
Dilution............................................................... 29 Legal Matters....................................................137
Selected Financial Information........................... 31 Independent Accountants .................................137
Management's Discussion and Analysis of Enforcement of Judgments
Financial Condition and Results of Operations...34 and Service of Process ..................................138
Industry Overview .............................................. 53 Index to Financial Statements........................... F-1
Our Business....................................................... 57
You should rely only on the information contained in this offering memorandum. Neither we, the
selling shareholders, the Brazilian underwriters nor the international underwriters appointed by the
Brazilian underwriters to facilitate the placement of common shares outside of Brazil, have authorized
anyone to provide you with information that is different or additional from that contained in this
offering memorandum. If anyone provides you with different or additional information, you should not
rely on it. You should assume that the information in this offering memorandum is accurate only as of
the date on the front cover of this offering memorandum, regardless of time of delivery of this offering
memorandum or any sale of our common shares or GDSs. Our business, financial condition, results of
operations and prospects may change after the date on the front cover of this offering memorandum.
Neither we, the selling shareholders, the Brazilian underwriters nor the international underwriters are
making an offer to sell the common shares or GDSs in any jurisdiction where the offer or sale is not
permitted.
In this offering memorandum, references to "Redecard," "Company," "we," "us" and "our" refer to
Redecard S.A., except where the context requires otherwise. References to "common shares" and "GDSs" refer
to the common shares and GDSs, respectively, of Redecard S.A., except where the context requires otherwise.
When used in this offering memorandum, the term "selling shareholders" refers to Banco Citibank S.A., or
Citibank, Banco Itaucard S.A., or Itaucard, which is controlled by Banco Itaú Holding Financeira S.A., or Itaú
Holding, and Unibanco Participações Societárias S.A., or UPS. References to "controlling shareholders" of
Redecard are to (1) Citibank, (2) Itaucard, (3) UPS, (4) Unibanco - União de Bancos Brasileiros S.A., or
Unibanco, and (5) Dibens Leasing S.A. - Arrendamento Mercantil, or Dibens, which is an entity controlled by
Unibanco. References to "shareholders" are to our controlling shareholders and MasterCard International Inc.,
or MasterCard International, unless the context requires otherwise.
The term "Brazil" refers to the Federative Republic of Brazil. The phrase "Brazilian government" refers to
the federal government of the Federative Republic of Brazil, and the term "Central Bank" refers to the Banco
Central do Brasil, or the Central Bank of Brazil.
All references in this offering memorandum to "real," "reais" or "R$" are to the legal currency of Brazil
and all references to "U.S. dollar," "U.S. dollars" or "US$" are to the legal currency of the United States.
i Final_Redecard_e5
This offering memorandum is highly confidential, and we have prepared it for use solely in connection with
the proposed offering of our common shares and GDSs outside Brazil. This offering memorandum is personal
to the offeree to whom it has been delivered by the international underwriters and does not constitute an offer to
any other person or to the public in general to subscribe for or otherwise to acquire our common shares or GDSs.
Distribution of this offering memorandum to any person other than the offeree is unauthorized, and any
disclosure of any of its contents without our prior written consent is prohibited. Each offeree, by accepting
delivery of this offering memorandum, agrees to the foregoing and agrees to make no photocopies of this
offering memorandum, in whole or in part.
We and the selling shareholders are relying on an exemption from registration under the Securities Act for
offers and sales of securities that do not involve a public offering. Our common shares and GDSs offered
through this offering memorandum are subject to restrictions on transferability and resale, and may not be
transferred or resold in the United States except as permitted under the Securities Act and applicable U.S. state
securities laws pursuant to registration or exemption from them. By purchasing these securities, you will be
deemed to have made the acknowledgements, representations and warranties and agreements described under
the heading "Transfer Restrictions" in this offering memorandum. You should be aware that you may be
required to bear the financial risks of this investment for an indefinite period of time. In making an investment
decision, you must rely on your own examination of our business and the terms of this offering, including the
merits and risks involved.
You must comply with all applicable laws and regulations in force in any jurisdiction in which you
purchase, offer or sell our common shares or GDSs or possess or distribute this offering memorandum and must
obtain any consent, approval or permission required for your purchase, offer or sale of our common shares or
GDSs under the laws and regulations in force in any jurisdiction to which you are subject or in which you make
these purchases, offers or sales, and neither we, the selling shareholders nor the international underwriters will
have any responsibility therefor.
We, the selling shareholders and the international underwriters reserve the right to reject any offer to purchase,
in whole or in part, and for any reason, our common shares or GDSs offered hereby. We, the selling shareholders and
the international underwriters also reserve the right to sell or place less than all of our common shares and GDSs
offered hereby.
Unless otherwise indicated, all information contained in this offering memorandum assumes no exercise by
Banco Itaú BBA S.A. of its option to place up to an additional 21,124,128 common shares, including common
shares in the form of GDSs.
The offering of our common shares is being made in Brazil by a prospectus in Portuguese that has been
filed with the CVM and that has the same date as this offering memorandum but has a different format and
contains certain information generally not included in this offering memorandum. This offering is made in the
United States and elsewhere outside Brazil solely on the basis of the information contained in this offering
memorandum. Investors should take this into account when making investment decisions.
This communication is directed only at persons who (1) are outside the United Kingdom, or (2) are
investment professionals falling within Article 19(5) of the Financial Services and Markets Act of 2000
(Financial Promotion) Order 2005, or the Order or (3) are persons falling within Article 49(2)(a) to (d), or high
net worth companies, incorporated associations etc. of the Order, all such persons together are being referred to
as relevant persons. This communication must not be acted on or relied on by persons who are not relevant
persons. Any investment or investment activity to which this communication relates is available only to relevant
persons and will be engaged in only with relevant persons.
We and the selling shareholders are not, and the Brazilian underwriters and the international underwriters
are not, making any representation to any purchaser of our common shares or GDSs regarding the legality of an
investment in our common shares or GDSs by the purchaser under any legal investment or similar laws or
regulations. You should not consider any information in this offering memorandum to be legal, business or tax
advice. You should consult your own attorney, business advisor and tax advisor for legal, business and tax
advice regarding an investment in our common shares or GDSs.
ii Final_Redecard_e5
NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A

LICENSE HAS BEEN FILED UNDER RSA 421-B OF THE NEW HAMPSHIRE REVISED
STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS
EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW
HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY
DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING.
NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS
AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF
STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATION OF, OR
RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION.
IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER,
CUSTOMER, OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS
OF THIS PARAGRAPH.
iii Final_Redecard_e5
PRESENTATION OF FINANCIAL AND OTHER INFORMATION
Our financial statements are prepared in accordance with accounting practices adopted in Brazil that are
referred to in this offering memorandum as Brazilian GAAP, which consist of the accounting principles set
forth under:
• Brazilian Corporate Law (Law No. 6,404, dated December 15, 1976, as amended);
• Accounting standards issued by the Brazilian Institute of Independent Accountants (Instituto dos
Auditores Independentes do Brasil), or IBRACON;
• Accounting standards issued by the Brazilian Federal Accounting Council (Conselho Federal de
Contabilidade); and
• Rules and regulations issued by the CVM.
Brazilian GAAP differs in certain significant respects from accounting principles generally accepted in the
United States, or U.S. GAAP, and from International Financial Reporting Standards, or IFRS. There are
significant differences between U.S. GAAP and IFRS and Brazilian GAAP. Accordingly, the financial
statements contained in this offering memorandum differ from those that would be prepared based upon U.S.
GAAP or IFRS. We have made no attempt to identify or quantify the impact of those differences. No
reconciliation to U.S. GAAP or IFRS of any of the financial statements presented in this offering memorandum
has been prepared for the purpose of this offering memorandum or for any other purpose. There can be no
assurance that reconciliations would not identify material quantitative differences as well as disclosure and
presentation differences between our financial statements as prepared in accordance with Brazilian GAAP and
any financial statements as prepared under U.S. GAAP or IFRS.
Our accounting records are denominated in reais. The following financial information is included in this
offering memorandum:
• Our financial statements as of and for the years ended December 31, 2004, 2005 and 2006, and as of
and for the three-month periods ended March 31, 2006 and 2007, including balance sheets, statements
of income, statements of changes in shareholders' equity, statements of changes in financial position,
and explanatory notes, prepared in accordance with Brazilian GAAP.
Solely for the convenience of the reader, certain real amounts in this offering memorandum as of and for
the year ended December 31, 2006 and as of and for the three months ended March 31, 2007 have been
translated into U.S. dollars at the commercial selling rate at closing for purchase of U.S. dollars, as reported by
the Central Bank, as of March 31, 2007 of R$2.0504 to US$1.00, respectively. The U.S. dollar equivalent
information should not be construed to imply that the real amount represents, or could have been or could be
converted into, U.S. dollars at this rate or at any other rate.
Redecard Consortium
History
Late in the 1970's Citibank, Itaucard and Unibanco formed Credicard S.A., or Credicard, a credit card
management company. It was a successful initiative from the very beginning, which set successive records both
as a card issuer and in terms of the number of affiliated merchants. In 1983, in a joint venture with Visa
International, Credicard began to issue Visa branded cards. In 1987, Credicard terminated its agreement with
Visa International and a joint venture was formed with MasterCard International.
In 1990, Credicard managed a credit card portfolio encompassing 60 financial institutions located in Brazil.
Credicard did not undertake the risks of granting credit to cardholders, it had a share of the results from
operations related to the credit card portfolio then carried out jointly with these financial institutions, as it was
still the exclusive issuer of MasterCard branded cards.
iv Final_Redecard_e5
This exclusivity terminated in 1996, mainly as a result of changes in the financial market, including the
merger of former Banco Nacional by Unibanco. As a result of this merger, one financial conglomerate
concentrated operations as a card issuer for Visa branded cards (Banco Nacional) and for MasterCard branded
cards (Unibanco, who had exclusivity through Credicard to issue MasterCard branded credit cards).
At the time, thus, MasterCard and Visa card issuers operated both in granting credit to cardholders and in
the affiliation of merchants to accept either these credit card brands as a means of payment for goods and
services, as well as other local and international card brands.
Redecard S.A was founded on September 2, 1996 as a result of the spin-off of the merchant acquiring and
payment processing departments of Credicard. The shareholders of Redecard were the same shareholders of
Credicard. After its formation, MasterCard International also became a shareholder of Redecard. Redecard's
focus has been on relationships with merchants and development and maintenance of specific systems and
processes to serve issuers of MasterCard and Diners Club credit cards in Brazil, in addition to Redeshop and
Maestro branded debit card issuers.
On November 1, 1996, the shareholders of Redecard decided that the most effective vehicle to implement
their joint venture was a consortium and, as a result, the Redecard Consortium was created with the purpose of
managing the base of credit cards already issued by Credicard, as well as Credicard's merchant acquiring and
payment processing network and systems that were already in place and had been transferred to Redecard.
The Redecard Consortium was organized in accordance with Articles 278 and 279 of Brazilian Corporate
Law. Under these provisions, the Redecard Consortium was not considered as a partnership or a corporation.
The consortium's contractually stated business purpose was that of a "joint venture for provision of services
related to the use of Redecard system in connection with cards issued by the associated issuers: (1) management
of affiliated merchants network; (2) capture, transmission, processing and settlement of transactions resulting
from the use of credit and debit cards; and (3) development of other related or connected businesses."
Initially, Credicard and Redecard were members of the Redecard Consortium. Later, in April 1997,
pursuant to a first amendment to the Redecard Consortium formation contract, Credicard assigned to our
controlling shareholders part of its rights in the income distribution of the Redecard Consortium according to its
share in the consortium's revenues. Subsequently, in December 1997, pursuant to a second amendment to the
Redecard Consortium formation contract, Itaucard had the same rights as Credicard in the income distribution
of the Redecard Consortium as a result of the assignment of another portion of Credicard's share in the
consortium's revenues, which corresponded to the credit card base issued by Itaucard. Then, in January 2006,
pursuant to a third amendment to the Redecard Consortium formation contract, Credicard withdrew from the
Redecard Consortium and assigned to the shareholders of Redecard its remaining rights to income distribution
of the Redecard Consortium. Lastly, pursuant to a fourth amendment to the Redecard Consortium formation
contract, dated March 31, 2007, the Redecard Consortium was terminated.
Results of Operations
Our statements of income as of and for the years ended December 31, 2004, 2005 and 2006, as well as our
statements of income as of and for the three-month periods ended March 31, 2006 and 2007, relate only to the
results of our share in the Redecard Consortium.
To facilitate the analysis of our financial statements, we have in the past prepared an explanatory note to
our financial statements "Result from Redecard Consortium Participation" that showed the revenues, expenses
and the operating income of the Redecard Consortium as a whole, and not only the results attributed to
Redecard S.A.
v Final_Redecard_e5
Therefore, we believe that the statement of income that would best reflect the results of operations is the
one contained in the explanatory note to our financial statements "Result from Redecard Consortium
Participation" for the years ended December 31, 2004, 2005 and 2006, and for the three-month periods ended
March 31, 2006 and 2007, because this note shows full statements of income related to the activities that we
currently carry out.
Three-month period
Year ended December 31, ended March 31,
2004 2005 2006 2006 2006 2007 2007
(in millions (in millions
of U.S. of U.S.
(in millions of reais) dollars) (in millions of reais) dollars)
Net Revenue
Operating revenue ..................... 1,005.6 1,315.0 1,600.4 780.6 361.5 418.2 203.9
Service tax(1) ............................ (39.8) (50.7) (58.8) (28.7) (13.5) (15.3) (7.5)
PIS(2) ........................................ (13.4) (9.3) (12.3) (6.0) (3.2) (2.7) (1.3)
COFINS(3)................................ (58.3) (61.2) (68.6) (33.5) (17.0) (16.7) (8.1)
Financial revenue ...................... 409.0 541.1 562.0 274.1 148.5 208.0 101.5
Financial expenses .................... (145.7) (217.3) (213.3) (104.0) (55.0) (45.7) (22.3)
1,157.4 1,517.6 1,809.4 882.5 421.3 545.8 266.2
Cost of services rendered .......... (173.7) (214.3) (295.3) (144.0) (70.8) (62.7) (30.6)
Gross profit.............................. 983.7 1,303.3 1,514.1 738.5 350.5 483.1 235.6
Operating expenses
Administrative expenses ........... (237.7) (283.2) (242.7) (118.4) (73.9) (58.0) (28.3)
Depreciation and amortization .. (75.0) (153.6) (134.2) (65.5) (34.6) (28.3) (13.8)
Other operating expenses .......... (191.5) (211.6) (199.9) (97.5) (52.9) (51.5) (25.1)
(504.2) (648.4) (576.8) (281.4) (161.5) (137.8) (67.2)
Operating income.................... 479.5 654.9 937.3 457.1 189.0 345.3 168.4
Distribution of income
Redecard S.A. ........................ 226.4 285.8 442.8 216.0 83.6 149.1 72.7
Other consortium members ....... 253.1 369.1 494.5 241.1 105.4 196.2 95.7
Total ......................................... 479.5 654.9 937.3 457.1 189.0 345.3 168.4
(1) Tax on Services (Imposto sobre Serviços), or ISS tax.

(2) Contribution to the Social Integration Program (Programa de Integração Social), or PIS.
(3) Contribution for the Financing of Social Security (Contribuição para Financiamento da Seguridade Social), or COFINS.
For the purpose of presenting financial information of the statements of income for the years ended
December 31, 2004, 2005 and 2006 in the table above, the total amounts in the line item "other operating
expenses" of R$365.2 million, R$426.0 million and R$495.2 million, respectively, were segregated between the
line items "cost of services rendered" and "other operating expenses, so that the presentation of the statements of
income for the years ended December 31, 2004, 2005 and 2006 conform to the presentation of the statements of
income for the three months ended March 31, 2006 and 2007."
Line items below operating income could not be presented in the above note because the operating income
of the Redecard Consortium was distributed directly to its members. From April 1, 2007, after the termination
of the Redecard Consortium on March 31, 2007, we will present our statements of income until the line item
"net income," which will include certain taxes which were not applicable to the Redecard Consortium.
vi Final_Redecard_e5
For this reason, based on assumptions that our management believes to be reasonable, we calculated our
pro forma net income, which presents the estimated net income that we would probably have realized had the
revenues and expenses, in the respective periods, been fully allocated to us. Below we present a reconciliation
between the operating income stated in the explanatory note "Result from Redecard Consortium Participation"
and the pro forma net income used in this offering memorandum:
Year ended Three-month period
December 31, ended March 31,
2004 2005 2006 2006 2006 2007 2007
of U.S. of U.S.
Redecard Consortium
operating income ....................... 479.5 654.9 937.3 457.1 189.0 345.3 168.4
Adjusted PIS/COFINS taxes(1)....... (19.2) (24.5) (31.0) (15.1) (5.6) (11.3) (5.5)
Pro forma income before income
and social contribution taxes ....... 460.3 630.4 906.3 442.0 183.4 334.0 162.9
Social contribution tax(2)................ (41.3) (58.0) (80.6) (39.3) (15.1) (30.0) (14.6)
Income tax(2) .................................. (116.5) (160.7) (223.8) (109.1) (44.5) (87.0) (42.4)
Redecard pro forma net income ... 302.5 411.7 601.9 293.6 123.8 217.0 105.9
(1) We apply the PIS and COFINS rates based on the non-cumulative method. On this calculation basis, we apply the PIS
and COFINS rates of 1.6% and 7.6%, respectively. For more information, see "Management's Discussion and Analysis
of Financial Condition and Results of Operations—Our Main Sources of Revenue and Expenses⎯Description of the
Main Line Items in Our Results of Operations—Net Revenue—PIS and COFINS."
(2) For the calculation of social contribution and income taxes, we used the effective rates ascertained in accordance with our
accounting and tax book records. For this reason, the proportion of these taxes is variable in each of the periods. The effective
social contribution tax rates vary between 8.2% and 9.2%, while the effective income tax rates vary between 24.3% and 26.0%.
Unless expressly stated otherwise, all statement of income information in this offering memorandum is
based on: (1) the financial information in the explanatory note "Result from Redecard Consortium
Participation," and (2) the reconciliation of the pro forma net income mentioned in this offering memorandum.
Beginning on April 1, 2007, our statements of income should consist substantially of the same line
items as those presented in the explanatory note "Result from Redecard Consortium Participation," and
results after this date will be substantially different from our results, after the distribution of the results
in the Redecard Consortium, for the years ended December 31, 2004, 2005 and 2006 and for the
three-month periods ended March 31, 2006 and 2007.
Adjusted EBITDA Reconciliation
Our Adjusted EBITDA consists of our operating income plus depreciation and amortization and adjusted by net
financial results, which, however, includes financial income related to prepayment of receivables to merchants, which
we consider as part of our operating activities and thus we add it back to our Adjusted EBITDA . By advancing
payments to merchants, we anticipate the payment that we would have to make on the due date related to the credit card
transactions. Adjusted EBITDA is not a measure of financial performance under Brazilian GAAP, and should not be
considered individually, as either an alternative to net income as a performance indicator or operating cash flow or a
measure of liquidity. Adjusted EBITDA does not have standardized meanings and our definition of Adjusted EBITDA
may not compare to Adjusted EBITDA as used by other companies.
We believe that the Adjusted EBITDA reconciliation that would best reflect our activities is that based on
the results of operations for the years ended December 31, 2004, 2005 and 2006 and for the three-month periods
ended March 31, 2006 and 2007 as set forth in the explanatory note "Result from Redecard Consortium
Participation," as explained in "—Redecard Consortium."
vii Final_Redecard_e5
The table below sets forth the Adjusted EBITDA calculation for the periods indicated:

2004 2005 2006 2006 2006 2007 2007
of U.S. of U.S.
Operating income .............................. 479.5 654.9 937.3 457.1 189.0 345.3 168.4
(+) Depreciation and amortization(1) .. 75.0 153.6 134.2 65.5 34.6 28.3 13.8
(-) Total financial revenue .................. (409.0) (541.1) (562.0) (274.1) (148.5) (208.0) (101.4)
(+) Total financial expenses ................ 145.7 217.3 213.3 104.0 55.0 45.7 22.3
(+) Net financial income related to
prepayment of receivables.............. 266.7 323.7 365.0 178.0 94.3 105.8 51.6
Adjusted EBITDA ............................. 557.9 808.4 1,087.9 530.5 224.5 317.0 154.7
(1) The variation in depreciation and amortization expenses occurred in 2004 and 2005 was due to the reduction in the
depreciation period of the point-of-sale, or POS, electronic capture equipment, on the basis of a technical report issued
by a specialized institute. The depreciated value of the equipment was adjusted to the new useful life of the equipment in
2005. For more information, see "Management's Discussion and Analysis of Financial Condition and Results of
Operations—Critical Accounting Policies—Depreciation and Amortization."
Other Information
References in this offering memorandum to "merchant" refer to any organization that accepts credit or
debit cards for the payment of goods and services. References to "card issuers" are to financial institutions that
issue credit and debit cards to approved applicants and are identifiable by their trade name typically imprinted
on the issued card. References to "cardholders" are to an approved applicant for a credit and debit card from a
card issuer, and who may also be an entity, for which a card issuer wishes to extend a line of credit, such as a
consumer or a corporation. The cardholder may use the card at any merchant location that meets the
qualification standards of the relevant "card association," such as Diners Club. In this offering memorandum,
we use the term "brand" to address the name of card associations that is imprinted on the issued card. Card
associations consist of members, generally financial institutions, who establish uniform regulations that govern
much of the industry. For further information, see "Summary—Overview⎯Characteristics of the Merchant
Acquiring and Payment Processing Industry in Brazil."
References to "merchant discount rate" are to the fee we charge to merchants for our services of capturing,
processing, transmission and settlement of transactions performed with credit or debit cards. The merchant
discount rate is charged on the value of the transaction. References to "commercial discount rate" are to the fee
we charge to merchants for the prepayment of receivables resulting from credit card transactions. References to
"interchange fee" are to the fee we charge to merchants and that we pass on to the card issuer as part of its
remuneration for approving transactions carried out with the cards issued by the card issuer. References to
"chargeback" are to cancellation of transactions carried out with credit or debit cards caused by the
non-acceptance by the cardholder of the transaction or because the transaction does not comply with the rules of
the card association. It may be a transaction that is returned by the card issuer to the merchant acquirer because
of a violation of rules or procedures, or because of allegations of invalidity of the transaction by the merchant.
References to "active merchants" are to merchants that registered with us with at least one credit or debit card
transaction during the preceding three-month period.
Certain amounts and percentages in this offering memorandum were rounded up or down. The totals
presented in some of the tables may not be exactly the sum of the preceding amounts.
viii Final_Redecard_e5
The information included in this offering memorandum relating to the industry where we operate, as well
as the estimates concerning market shares, were obtained through internal research, public information and
publications on the industry. Information was used from reports prepared by official public sources, such as the
Central Bank and the Brazilian Institute of Geography and Statistics (Instituto Brasileiro de Geografia e
Estatística), or IBGE, among others. The information in these publications is taken from sources that are
regarded as reliable, but we cannot guarantee the precision and integrity of this information. These internal
findings and estimates have not been independently confirmed. We, the selling shareholders, the Brazilian
underwriters and the international underwriters cannot guarantee the validity of this information.
This offering memorandum contains translations of various real amounts into U.S. dollars at specified rates
solely for your convenience. You should not construe these translations as representations by us that the real
amounts actually represent these U.S. dollar amounts or could be converted into U.S. dollars at the rates
indicated. Unless otherwise indicated, we have translated the real amounts as of and for the year ended
December 31, 2006, and as of and for the three months ended March 31, 2007, using a rate of R$2.0504 to
US$1.00, which was the commercial rate for the purchase of U.S. dollars in effect as of March 31, 2007, as
reported by the Central Bank. As of July 11, 2007, the commercial selling exchange rate was R$1.890 to
US$1.00, as reported by the Central Bank. For further information regarding the translation of reais into
U.S. dollars, see "Exchange Rates."
The information in our website or that may be accessed through it is not part of this offering memorandum
and is not incorporated in this offering memorandum by reference.
ix Final_Redecard_e5
FORWARD-LOOKING STATEMENTS
This offering memorandum includes forward-looking statements in particular in the sections "Summary,"
"Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and
"Business." These statements are based on current expectations and projections related to future events and
financial trends that affect or may affect our business, results of operations, financial condition, cash flow,
prospects and the market price of our common shares and GDSs.
Words such as "believe," "anticipate," "expect," "estimate," "plan," "intend," "will," "may," "can," "seek,"
"could," "predict," "project," and other similar words are used in this offering memorandum to identify
forward-looking statements.
Neither our independent auditors nor any other auditors or independent consultants have compiled,
examined or adopted any procedure concerning the operating or financial projections discussed in this offering
memorandum, or issued any opinion or given any other form of assurance as to their materialization.
While we believe they are based on reasonable assumptions, these forward-looking statements are subject
to risks and uncertainties, and rely on information currently available to us, and therefore do not constitute
guarantees of future results, which could substantially differ from those results anticipated in our
forward-looking statements due to several factors, including, but not limited to, the following:
• general economic, political, and business conditions in Brazil;

• inflation, depreciation of the Brazilian real and interest rate fluctuations; foreign exchange controls
and liquidity in the Brazilian financial and securities markets;
• continued success of our efforts to affiliate merchants and implement partnerships with card issuers of
MasterCard and Diners Club branded credit and debit cards;
• our ability to successfully implement our growth strategy;
• changes in the competitive scenario in the merchant acquiring and payment processing industry;
• availability of credit for cardholders;
• changes in the interests of our controlling shareholders;
• increases in our costs or the interchange fee, as well as reductions in the merchant discount rate or
commercial discount rate;
• the level of our indebtedness and other financial liabilities;
• changes in the policies and rules related to the MasterCard and Diners Club brands;
• loss of the license to operate as an acquirer for MasterCard branded cards;
• changes in the existing laws and regulations that apply to us, as well as future laws and regulations,
including government measures, related to taxation and other matters; and
• other factors discussed under "Risk Factors."
These forward-looking statements are subject to risks and uncertainties, and therefore do not constitute a
guarantee of future results or our future performance, which could substantially differ from those results
anticipated in our forward-looking statements due to any of the factors discussed above or other factors not
specifically addressed in this offering memorandum. In light of the risks and uncertainties described herein, the
forward-looking statements included in this offering memorandum may prove inaccurate. Given these
limitations, you should not make any decision to invest in our common shares or GDSs on the basis of the
forward-looking statements contained in this offering memorandum. The forward-looking statements included
in this offering memorandum are made only as of the date of this offering memorandum, and neither we, the
selling shareholders, the Brazilian underwriters nor the international underwriters undertake any obligation to
update or revise this information.
x Final_Redecard_e5
SUMMARY
This summary of our activities and financial and operating information does not present all of the information that
you should consider before investing in our common shares or GDSs. You should read this entire offering
memorandum, including the information contained in the sections "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," as well as in our financial statements and the explanatory
notes thereto before making a decision to invest in our common shares or GDSs.
Overview
We are one of the leading companies in the merchant acquiring and payment processing industry in Brazil, and
currently we are the only acquirer of MasterCard and Diners Club cards in Brazil. We are responsible for acquiring
merchants to accept credit and debit cards as a means of payment for goods and services, as well as for the capturing,
transmission, processing and settlement of credit and debit card transactions. In 2006, we had a 34.0% market share
based on the value of transactions with credit and debit cards in Brazil, which reached a total of R$246.3 billion.
According to data from the Brazilian Association of Credit Card and Service Companies (Associação Brasileira das
Empresas de Cartões de Crédito e Serviços, or ABECS), this market represented 17.6% of the total private
consumption in Brazil during the same year. In 2002, we captured and processed 569 million transactions, and in 2006
we captured and processed more than 1.5 billion transactions, which represented a 27.8% average annual growth rate
since 2002. In 2006, we had more than one million affiliated merchants and were present in all Brazilian municipalities
with electrical power and telecommunications infrastructure. Out of the total number of our affiliated merchants,
639,000 were active in 2006, which if compared to similar companies in the United States, would make us the
fifth-largest merchant acquirer and payment processor in the United States in terms of number of active merchants,
according to data from the Nilson Report regarding the U.S. market for 2006.
We also offer additional services to our merchants and other customers, which include voucher
management companies and financial companies. These services include rental of point of sale, or POS,
electronic equipment, prepayment to merchants of receivables from credit card sales, check verification
services (credit analysis of consumers) through the POS electronic equipment and capture and transmission
services for transactions carried out with voucher and private-label cards.
The table below sets forth the main financial and operating indicators for the periods indicated:
Three-month period
Growth CAGR Growth
(2004- (2004- (2006-
2004 2005 2006 2006) 2006) 2006 2007 2007)
(in millions of reais) (in millions of reais)
Net revenue ................................................. 1,157.4 1,517.6 1,809.4 56.3% 25.0% 421.3 545.8 29.6%
Adjusted EBITDA(1) ................................. 557.9 808.4 1,087.9 95.0 39.7 224.5 317.0 41.2%
Adjusted EBITDA Margin(2) ................... 48.2% 53.3% 60.1% 11.9p.p. – 53.3% 58.1% 4.8p.p.
Operating income....................................... 479.5 654.9 937.3 95.5% 39.7% 189.0 345.3 82.7%
Pro forma net income ................................. 302.5 411.7 601.9 99.0% 41.1% 123.8 217.0 75.3%
Pro forma net margin(3) ............................ 26.1% 27.1% 33.3% 7.2p.p. – 29.4% 39.8% 10.4p.p.
Credit cards
Value of transactions.................................... 37,021.5 47,285.8 57,240.5 54.6% 24.3% 12,469.7 14,839.3 19.0%
Number of transactions (in thousands) ........ 474,848 586,830 680,972 43.4% 19.8% 152,971 174,204 13.9%
Debit cards
Value of transactions.................................... 13,929.0 19,592.1 25,813.7 85.3% 36.1% 5,660.8 7,346.6 29.8%
Number of transactions (in thousands) ........ 324,033 441,483 559,119 72.6% 31.4% 126,013 156,778 24.4%
Affiliated merchants .................................. 825,104 901,448 1,018,776 23.5% 11.1% 924,355 1,032,948 11.7%
Electronic capture of transactions (%).... 98.6% 99.2% 99.9% 1.3p.p. – 99.4% 99.9% 0.5p.p.
(1) Our Adjusted EBITDA consists of our operating income plus depreciation and amortization and adjusted by net financial results, which, however,
includes financial income related to prepayment of receivables to merchants, which we consider as part of our operating activities and thus we add it back
to our Adjusted EBITDA . By advancing payments to merchants, we anticipate the payment that we would have to make on the due date related to the
credit card transactions. Adjusted EBITDA is not a measure of financial performance under Brazilian GAAP, and should not be considered individually,
as either an alternative to net income as a performance indicator or operating cash flow or a measure of liquidity. Adjusted EBITDA does not have
standardized meanings and our definition of Adjusted EBITDA may not compare to Adjusted EBITDA as used by other companies. For further
information on our Adjusted EBITDA, see "Presentation of Financial Information and Other Information—Adjusted EBITDA Reconciliation."
(2) Adjusted EBITDA margin is the Adjusted EBITDA divided by our net revenue.
(3) Pro forma net income divided by net revenue.
1 Final_Redecard_e5
Our history dates back to 1970, when Citibank, who is among the largest financial institutions and credit card
issuers worldwide, along with Itaucard and Unibanco, who are among the largest financial institutions and credit card
issuers in Brazil, formed Credicard. In 1996, Citibank, Itaucard and Unibanco believed it was necessary to have a
company specialized in merchant acquiring and payment processing and founded Redecard by spinning off
Credicard's merchant acquiring and payment processing activities. In that same year, MasterCard International also
became a shareholder of Redecard. Since then, we have been the only, although non-exclusive, merchant acquirer
and payment processor for MasterCard and Diners Club branded credit and debit cards in Brazil.
Characteristics of the Merchant Acquiring and Payment Processing Industry in Brazil
The prevailing business model in the Brazilian credit card industry is that of association, in which the card
associations, the merchant acquirers and payment processors and the card issuers have specific roles within the
rules established by the card associations. In this model, the merchant acquirers and payment processors,
including us, hold a license to use the card association brands' trademark and are responsible for acquiring
merchants to accept credit and debit cards as a means of payment for goods and services and for the capturing,
transmission, processing and settlement of credit and debit card transactions.
The figure below illustrates how the merchant acquiring and payment processing industry is organized in
Brazil and identifies the five main participants involved in that business model:
1. Card Associations
Other
Brands
5. Issuers 2. Merchant Acquirers and

Others Payment Processors
Others
Unibanco
Itau
Citibank
4. Cardholders 3. Merchants
(1) Card associations determine the general rules for the organization and functioning of the merchant acquiring and
payment processing system and guarantee the settlement of the transactions;
(2) Merchant acquirers and payment processors, such as us, are responsible for acquiring merchants to accept credit and
debit cards as a means of payment for goods and services as well as for the capturing, transmission, processing and
settlement of transactions;
(3) Merchants supply goods and services and are affiliated by merchant acquirers and payment processors to accept credit
and debit cards as a means of payment for goods and services;
(4) Cardholders are individuals or agents of legal entities who hold credit or debit cards as a means of payment granted by
card issuers, and are users and/or consumers of products and services; and
(5) Card issuers grant credit to cardholders for use in Brazil and/or abroad.
According to data from ABECS, the value of transactions paid with credit and debit cards reached R$203.2
billion in 2005 and R$246.3 billion in 2006, of which R$151.2 billion were credit card transactions, R$69.4
billion were debit card transactions and R$25.7 billion were private-label card transactions, representing a
growth of 21.0%, 23.0%, 19.0% and 17.0%, respectively, in 2006 compared to 2005.
In 2006, the use of credit cards in Brazil as a means of payment represented 17.6% of total household consumption,
according to data from ABECS and IBGE, compared to 11.8% in 2002. In the United States and Canada, for example,
transactions with credit and debit cards represented 37.0% and 55.0% of the private household consumption in these
countries in 2005, respectively, according to data from the central banks of each of these countries.
According to data from the Central Bank, in 2005 credit and debit cards represented 45.0% of all non-cash
payment methods in Brazil compared to 21.0% in 2000. During the same period, the use of checks as a means of
payment decreased from 57.0% to 27.0% of all non-cash payment methods, which we believe demonstrates that
consumers are increasingly choosing credit and debit cards over checks.
2 Final_Redecard_e5
Strengths
Strong growth combined with high return to shareholders. In the period from 2002 through 2006, we
achieved a 27.7% average annual growth rate when measured based on the value of credit and debit card
transactions, a 30.0% annual growth rate in Adjusted EBITDA and an 12.0% increase in Adjusted EBITDA
margin. The constant organic growth of our activities and financial results to date stems from economies of
scale that result from our operational efficiency and business model. In 2006, our Adjusted EBITDA margin
was 60.1% over our net revenue and our pro forma net income margin was 34.3% over our net revenue. In 2004,
2005 and 2006, we distributed R$141.3 million, R$177.4 million and R$292.3 million in dividends,
respectively, while the Redecard Consortium distributed R$253.1 million, R$ 369.1 million and R$494.5
million in income, respectively. We believe that our high margins and continued growth assure us of a solid
financial situation and enable us to deliver high levels of return to our shareholders.
Recurring and predictable revenues, combined with diversified base of affiliated merchants. Our
revenues are recurring and predictable due to the nature of our business. Once we affiliate merchants to accept
credit and debit cards as a means of payment for goods and services, merchants generate credit and debit card
transactions on an ongoing basis, which represent sources of recurring and predictable revenues for us. In 2006,
95.6% of the value of our credit and debit card transactions was carried out by merchants who had been acquired
before 2005. Our revenues also consist of rental payments of POS electronic equipment, which we believe
represent another recurring and predictable source of revenues for us. We have adequate staffing and equipment
to provide constant support to merchants in order to stimulate them to encourage the use of MasterCard and
Diners Club credit and debit cards as a means of payment. Our network of affiliated merchants is diverse and
fragmented and there is no significant concentration in any specific market segment. In 2006, our largest
customer represented 3.9% of the total credit and debit card transactions processed.
Broad network of affiliated merchants and market penetration. We have over one million affiliated
merchants, in all Brazilian cities that have electric power and telecommunications infrastructure and processed
1.5 billion transactions annually. Since 2002, we have had a 14.7% average annual growth rate in our number of
affiliated merchants and a 16.8% growth in our number of active merchants, which resulted in a 27.8% average
annual increase in the number of captured transactions. Between 2002 and 2006 we invested approximately
R$459.0 million in the expansion of our network of electronic capture equipment, and we have installed more
than 647,500 devices of this type of equipment. We believe that our broad and diversified network of affiliated
merchants to accept cards as a means of payment will allow us to achieve more activations in our capture
network, regardless of new affiliations of merchants.
High availability, quality and security of equipment and electronic capture network. Our information
processing platforms ensure high availability for our electronic capture network and provide automatic contingency
support in two data centers. We own and operate 84 centers (called concentrators) for electronic capture spread
throughout Brazil, which keep the electronic capture network available 24 hours a day, every day of the year, and
provides us with high capacity for monitoring transactions, allowing us to rarely rely on telephone operators. We
capture 99.9% of credit and debit card transactions electronically, and currently 89.9% of our POS electronic
equipment are able to use card reading technology through the use of chips, which allows us to provide greater
security to all participants in the merchant acquiring and payment processing industry. Our highly secure information
processing systems and platforms are reflected in our very low rate of fraudulent transactions, which represented
only 0.0006% of our captured transactions in 2006. In addition, we have invested in wireless POS electronic capture
equipment, which gives merchants and credit card holders safety and convenience, as well as the development of our
own secure capture application for transactions carried out in the Internet, called Komerci. We believe that the high
availability of our capture network and the security of our technology allow us to provide quality service to our
customers, without compromising the growth in the number of our affiliated merchants.
Diversification of products and services offered to merchants. We offer to merchants value-added products
and services in addition to the capture, transmission, processing and settlement of credit and debit card transactions,
such as rental payments of POS electronic capture equipment, prepayment of receivables to merchants of the sales
performed with the use of credit cards, check verification services (credit analysis of consumers) through the POS
electronic equipment and capture and transmission services for transactions carried out with voucher and
private-label cards. We believe that the broad range of value-added products and services that we offer to merchants
distinguishes us from our competitors, in that it attracts merchants and enables us to affiliate more merchants to
accept MasterCard and Diners Club cards as a means of payment for goods and services.
3 Final_Redecard_e5
Shareholders' support and experienced management. Our controlling shareholders are part of the
financial conglomerates Citibank, Itaú and Unibanco, which are among the largest financial institutions in
Brazil, in the case of Itaú and Unibanco, and worldwide, in the case of Citibank. The financial conglomerates of
which our controlling shareholders are a part are committed to high standards of corporate governance and have
been active in the credit and debit card industry in Brazil for over 35 years. In addition, Itaucard and Unibanco
are also among the largest issuers of credit cards in Brazil and Citibank is one of the largest card issuers
worldwide, which gives them their strategic importance and credibility in the merchant acquiring and payment
processing industry, and enables us to gain access to a broad network of cardholders and merchants. MasterCard
International is also one of our shareholders and is one of the most recognized brands of payment cards, both
domestically and internationally, which gives us strategic strength in the acceptance of our services. We also
count on senior management that combine extensive experience in the merchant acquiring and payment
processing industry with managerial expertise and a strong commitment to results. Our senior management has
been key to our success and includes professionals with more than 30 years of experience in the merchant
acquiring and payment processing industry and with an average industry experience of over 11 years.
Strategies
Increase the activation and market penetration with our capture network. In addition to our sales
structure directed towards constant assistance to merchants, we count on a network of 9,218 bank branches
involved in the affiliation of new merchants on behalf of Redecard, 3,522 of which belong to our controlling
shareholders. We also pursue activations through our sales team, and through companies that provide
specialized services in the merchant acquiring and payment processing industry, as well as by hiring
telemarketing companies.
Stimulate the issuance of MasterCard branded cards by card issuers. To stimulate the issuance of, and to
promote, MasterCard branded credit cards, we and MasterCard International have agreed on March 27, 2006
that (1) MasterCard International management would define and implement a new interchange fee structure,
applicable to all Brazilian MasterCard branded credit card transactions, according to which the interchange fee
was higher than the one generally used in the market at the time, provided that (2) we make available a new
service to all MasterCard branded card issuers who have at least 35.0% of the total value of their portfolio of
card transactions generated by MasterCard branded cards. This new service consists of our depositing of
merchants' receivables in checking accounts of merchants at the financial institution card issuers upon previous
authorization from merchants to us for a certain period of time, called "assurance of banking domicile," and for
a limit of up to 300.0% of the total transactions generated by MasterCard branded credit cards of these financial
institution card issuers. During this period, we commit ourselves not to make prepayments of receivables to
merchants from MasterCard branded credit card sales, which gives to financial institution card issuers the
possibility of offering several banking services to merchants. With this strategy, we expect to increase our
operating results as a result of the increase in (1) the number of MasterCard branded cards issued, and,
consequently, (2) the volume of MasterCard branded card transactions, which we believe should offset the loss
in our results due to the increase in the interchange fee and the decrease in the volume of prepayment to
merchants of receivables from credit card sales.
Encourage the use of credit and debit cards in Brazilian household consumption and in new market
segments. In 2006, the use of credit and debit cards reached 17.6% of private consumption of Brazilian
households, while in more developed markets such as the United States and Canada, the use of credit and debit
cards reached 37.0% and 55.0%, respectively. We constantly develop and carry out market research to identify
new market segments where the use of credit and debit cards is a viable and attractive means of payment. We
believe that there are opportunities for growth in new market segments in which the use of POS electronic
equipment associated with mobile technology is growing, such as door-to-door sales, transportation services
(i.e., taxis) and delivery services, among others. In this connection, we have already tested mobile technology
for electronic capture in door-to-door sales. We are also evaluating the use of credit and debit cards in the
wholesale sector. This will allow us to be present in an increasing number of commercial and financial
transactions in the Brazilian market.
4 Final_Redecard_e5
Constant focus on technological innovation. We will continue to constantly seek technological update
and innovation. As an example of this effort, we have developed our own application for the secure capture of
transactions carried out in the Internet, called Komerci. We were the first merchant acquirer and payment
processor in the Brazilian market to introduce the technology for wireless POS capture, which provides
cardholders with convenience and security at merchant locations, such as restaurants and gas stations.
Furthermore, we have been the pioneer in affiliating merchants in new market segments in Brazil, such as taxi
services and food delivery services. We were the first MasterCard licensees to have capture equipment with
chip reading technology outside of Europe, using the worldwide standard established by the European
MasterCard and Visa Consortium EMV, or EMV. We intend to continue to seek constant improvement of our
technology and for the implementation of new technology, which will allow us to continue to offer electronic
capture and processing services using the industry's most advanced technology.
Continued improvement of operational efficiency. We achieved a 13.1% average annual reduction in cost
per captured transaction in the period between 2002 and 2006. In order to increase our economies of scale we
will continue to improve our business model to maximize the use of our electronic capture network, increasing
standardization, simplicity and speed in capturing transactions through optimized operating processes. We
believe that continued reduction in operating costs and greater agility in installing new POS electronic
equipment will allow us to take advantage of economies of scale and, simultaneously, assure the quality and
security of our services.
Our headquarters are located at 1400 Avenida Presidente Juscelino Kubitschek, 13th floor, São Paulo, São
Paulo, Brazil, and our investor relations telephone number is +55-11-2121-0952. Our website is
www.redecard.com.br. The information available in the website, as well as that included in any marketing
material published through the media and in newspaper and magazine advertisements is not part of this offering
memorandum.
5 Final_Redecard_e5
THE OFFERING
Issuer ........................................... Redecard S.A.
Selling Shareholders .................. Banco Citibank S.A., Banco Itaucard S.A. and Unibanco – Participações
Societárias S.A.
Brazilian Underwriters.............. Banco Itaú BBA S.A., Citigroup Global Markets Brasil, Corretora de
Câmbio, Títulos e Valores Mobiliários S.A. and Unibanco – União de
Bancos Brasileiros S.A.
International Underwriters ...... Citigroup Global Markets Inc., Itaú Securities, Inc. and Unibanco
Securities Inc.
Offering....................................... We and the selling shareholders are offering a total of 150,827,527

common shares, including common shares in the form of GDSs,
represented by GDRs:
• to the public and institutional investors in Brazil pursuant to an
offering registered in Brazil, only in the form of common shares;
• to qualified institutional buyers in the United States in reliance on
exemptions from registration under the Securities Act and the rules
thereunder; and
• to institutions and investors outside the United States and Brazil to
purchasers that are not U.S. persons, in reliance on Regulation S
under the Securities Act.
Investors other than investors in Brazil will have to observe the
investment mechanisms regulated by the CMN, the Central Bank of
Brazil and the CVM.
Offering Price ............................. R$27.00 per common share and US$28.57 per GDS.
Over-allotment Option .............. The selling shareholders have granted Banco Itaú BBA S.A. an option,
exercisable upon consultation with the other bookrunners, to place up to
21,124,128 additional common shares, including common shares in the
form of GDSs, solely to cover over-allotments, if any. The
over-allotment option may be exercised within 30 days after the
announcement of commencement of the offering.
Share Capital.............................. Our share capital immediately prior to the offering consists of 657,415,150
common shares, without par value. After completion of this offering, our
capital stock will consist of 672,970,705 common shares, assuming the full
placement of the common shares initially offered hereby. The common
shares to be issued or sold in this offering rank fully pari passu with all our
common shares outstanding as of the date of this offering memorandum,
including with regard to trading and settlement.
Retail Offering............................ At least 10.0% of 14,083,344 common shares in the offering, are being
offered exclusively to non-institutional investors in Brazil who have executed
a reserve request.
6 Final_Redecard_e5
Institutional Offering................. The common shares in the offering are being marketed to institutional
investors in Brazil, QIBs in the United States, and investors outside of
Brazil and the United States. In the case of QIBs in the United States,
and investors outside of Brazil and the United States, the common shares
may be offered in the form of GDSs.
Distribution Period .................... Up to six months following publication of the announcement of

commencement of the offering (anúncio de início) or up to the
publication of the completion of the offer, whichever occurs first.
Tag-along Rights ........................ In the event of a sale of the controlling stake in us, the holders of our
remaining shares have the right to be included in the public tender offer
to be made by the buyer of shares representing the control, in order to
assure the holders of our remaining shares treatment equal to the one
given to the controlling shareholder selling its stake.
Voting Rights.............................. Each of our common shares entitles its holder to one vote at our annual
or special shareholders meetings. See "Description of Our Share Capital-
Rights of Common Shares". Holders of GDSs will be entitled to instruct
the depositary to vote the underlying common shares, subject to the
terms of the applicable deposit agreement. See "Description of Global
Depositary Shares."
Lock-up Agreements.................. We, our officers and directors, and the selling shareholders have agreed that
we and they will not issue, offer, sell, or otherwise dispose of any common
shares of our share capital or securities convertible or exercisable for any
common shares of our share capital during the 180-day period following the
date of this offering memorandum, except for the additional shares to cover
over-allotment options and in the event of assignment or loans of common
shares for the purpose of exercising stabilization activities.
According to the rules of the Novo Mercado, the controlling

shareholders, the members of our board of directors and our officers,
subject to certain exceptions, cannot sell or offer to sell shares issued by
us for the first six months after the beginning of the trading of our
common shares on the Novo Mercado. After this initial period of six
months, the controlling shareholders and directors and officers will not
be entitled to sell or offer more than 40.0% of the common shares that
they hold for an additional six months.
On June 20, 2007, Itaucard, Unibanco, Citibank and MasterCard International

entered into a lock-up agreement pursuant to which MasterCard International
has agreed that it will not sell, transfer or otherwise dispose of any common
shares of our share capital during the period from the commencement of this
offering through the announcement in Brazil of the completion of this
offering (the “period of restriction”). In addition, during the period
beginning at the end of the period of restriction up until six months after the
date in which our common shares begin trading on the BOVESPA (the
“initial period of restriction”), MasterCard International may sell up to 25%
of its common shares in our share capital in an organized fashion by means
of one or several transactions on the BOVESPA, either by means of
transactions structured as block sales or ordinary sales on the BOVESPA, or
both, provided that the number of shares that MasterCard International may
sell on a certain determination date, at a discount higher than 5% in relation
to the average weighted price on BOVESPA on the immediately preceding
date, shall not exceed 10% of the volume of our common shares traded on
7 Final_Redecard_e5
the BOVESPA during the immediately preceding date to the sale (the
“organized sale”). MasterCard International has also agreed that it will not
sell, transfer or otherwise dispose of 75% of its common shares in our share
capital (the “restricted shares”) during the initial period of restriction. After
expiration of the initial period of restriction and up until six months after the
date in which the initial period of restriction has expired (the “final period of
restriction”), MasterCard International may sell the restricted shares only by
means of an organized sale. MasterCard International may sell part or all its
common shares in our share capital, including the restricted shares at any
time after the period of restriction in block sales to qualified institutional
investors. After the expiration of the final period of restriction, MasterCard
International may sell part of all of the restricted shares in the manner
MasterCard International deems appropriate.
Use of Proceeds........................... We intend to use the net proceeds we receive from the offering for
investment in our technological infrastructure, in particular the purchase
of POS electronic equipment, and acquisition of software related to the
capture, processing and settlement of credit and debit card transactions.
We will not receive any portion of the proceeds of the offering received
by the selling shareholders.
Dividends .................................... Our bylaws as of April 23, 2007 provide that an amount equal to at least
40.0% of our adjusted net income for any given year, after deducting
allocations to the legal reserve, statutory reserve, and contingency reserve,
if any, or adding reversed contingency reserve amounts from prior years,
if any and unrealized profit reserve amounts, upon their realization and if
not absorbed by subsequent losses, if any, should be available for
distribution as a mandatory dividend or interest on shareholders' equity.
Our new shareholders will be entitled to dividends from the third quarter
of 2007 onwards, since we (1) have already declared and paid dividends
related to the first quarter of 2007 in April 2007; and (2) we will declare
and pay dividends related to the second quarter of 2007 before the
completion of the offering. See "Dividends and Dividend Policy."
Listing ......................................... On June 18, 2007, we entered into the Novo Mercado listing agreement.
We have applied to list our common shares on the Novo Mercado
segment of the BOVESPA and after BOVESPA's approval our common
shares will be traded under the symbol "RDCD3" on the first business
day following the publication of the notice of commencement of the
offering in Brazil.
Transfer Restrictions ................. Our common shares and GDSs have not been registered under the
Securities Act and are subject to restrictions on transfer. For information
on restriction on transfer of our common shares and GDSs, see "Transfer
Restrictions." Transfer of our common shares, including by and between
non-residents of Brazil, may only be effected in Brazil.
Risk Factors................................ An investment in our common shares and GDSs involves risks. See
section "Risk Factors" for information on certain factors that should be
carefully analyzed before investing in the common shares.
8 Final_Redecard_e5
SUMMARY FINANCIAL AND OPERATING INFORMATION
You should read and analyze the information below in conjunction with our financial statements and
related notes included elsewhere in this offering memorandum, as well as with the information in the sections
"Presentation of Financial and Other Information," "Selected Financial Information" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
Our financial statements are prepared in accordance with Brazilian GAAP. Our accounting records are
maintained in reais. The following financial information is included in this offering memorandum:
and for the three-month period ended March 31, 2006 and 2007, including balance sheets, statements
of income, statements of changes in shareholders' equity, statements of changes in financial position
and explanatory notes prepared in accordance with Brazilian GAAP.
Our statements of income as of and for the years ended December 31, 2004, 2005 and 2006, and as well as
our statements of income as of and for the three-month periods ended March 31, 2006 and 2007, relate only to
the results of our share in the Redecard Consortium.
To facilitate the analysis of our financial statements, we have in the past prepared an explanatory note to our
financial statements "Result from Redecard Consortium Participation" that showed the revenues, expenses and the
operating income of the Redecard Consortium as a whole, and not only the results attributed to Redecard S.A.
Therefore, we believe that the statement of income that would best reflect the results of operations is the one
contained in the explanatory note to our financial statements "Result from Redecard Consortium Participation" for the
years ended December 31, 2004, 2005 and 2006 and for the three-month periods ended March 31, 2006 and 2007,
because this note shows full statements of income related to the activities that we currently carry out.

2004 2005 2006 2006 2006 2007 2007
of U.S. of U.S.
Net Revenue
Operating revenue ............................... 1,005.6 1,315.0 1,600.4 780.6 361.5 418.2 203.9
Service tax(1)...................................... (39.8) (50.7) (58.8) (28.7) (13.5) (15.3) (7.5)
PIS(2).................................................. (13.4) (9.3) (12.3) (6.0) (3.2) (2.7) (1.3)
COFINS(3).......................................... (58.3) (61.2) (68.6) (33.5) (17.0) (16.7) (8.1)
Financial revenue ................................ 409.0 541.1 562.0 274.1 148.5 208.0 101.5
Financial expenses .............................. (145.7) (217.3) (213.3) (104.0) (55.0) (45.7) (22.3)
1,157.4 1,517.6 1,809.4 882.5 421.3 545.8 266.2
Cost of services rendered .................... (173.7) (214.3) (295.3) (144.0) (70.8) (62.7) (30.6)
Gross profit........................................ 983.7 1,303.3 1,514.1 738.5 350.5 483.1 235.6
Operating expenses
Administrative expenses ..................... (237.7) (283.2) (242.7) (118.4) (73.9) (58.0) (28.3)
Depreciation and amortization ............ (75.0) (153.6) (134.2) (65.5) (34.6) (28.3) (13.8)
Other operating expenses .................... (191.5) (211.6) (199.9) (97.5) (52.9) (51.5) (25.1)
(504.2) (648.2) (576.8) (281.4) (161.5) (137.8) (67.2)
Operating income.............................. 479.5 654.9 937.3 457.1 189.0 345.3 168.4
Redecard S.A. ..................................... 226.4 285.8 442.8 216.0 83.6 149.1 72.7
Other consortium members ................. 253.1 369.1 494.5 241.1 105.4 196.2 95.7
Total ................................................... 479.5 654.9 937.3 457.1 189.0 345.3 168.4

9 Final_Redecard_e5

2004 2005 2006 2006 2006 2007 2007
of U.S. of U.S.
Redecard Consortium
operating income ....................... 479.5 654.9 937.3 457.1 189.0 345.3 168.4
Adjusted PIS/COFINS taxes(1)....... (19.2) (24.5) (31.0) (15.1) (5.6) (11.3) (5.5)
and social contribution taxes ....... 460.3 630.4 906.3 442.0 183.4 334.0 162.9
Social contribution tax(2)................ (41.3) (58.0) (80.6) (39.3) (15.1) (30.0) (14.6)
Income tax(2) .................................. (116.5) (160.7) (223.8) (109.1) (44.5) (87.0) (42.4)
Redecard pro forma net income.... 302.5 411.7 601.9 293.6 123.8 217.0 105.9
(1) We apply the PIS and COFINS rates based on the non-cumulative method. On this calculation basis, we apply the PIS
and COFINS rates of 1.6% and 7.6%, respectively. For more information, see "Management's Discussion and Analysis
of Financial Condition and Results of Operations—Our Main Sources of Revenue and Expenses⎯Description of the
Main Line Items in Our Results of Operations—Net Revenue—PIS and COFINS."
(2) For the calculation of social contribution and income taxes, we used the effective rates ascertained in accordance with
our accounting and tax book records. For this reason, the proportion of these taxes is variable in each of the periods. The
effective social contribution tax rates vary between 8.2% and 9.2%, while the effective income tax rates vary between
24.3% and 26.0%.
Beginning on April 1, 2007, our statements of income should consist substantially of the same line items as
those presented in the explanatory note "Result from Redecard Consortium Participation," and results after this
date will be substantially different from our results, after the distribution of the results in the Redecard
Consortium, for the years ended December 31, 2004, 2005 and 2006 and for the three-month periods ended
March 31, 2006 and 2007.
10 Final_Redecard_e5
The table below sets forth our results of operations after the distribution of operating income to the
members of the Redecard Consortium in the periods indicated:
2004 2005 2006 2006 2006 2007 2007
of U.S. of U.S.
Result from Redecard Consortium

participation................................................. 226.4 285.8 442.8 216.0 83.6 149.1 72.7
Income before income and social contribution
tax .................................................................. 226.4 285.8 442.8 216.0 83.6 149.1 72.7
Social contribution tax....................................... (20.3) (26.2) (39.6) (19.3) (6.9) (13.5) (6.6)
Income tax.......................................................... (57.3) (72.8) (109.4) (53.3) (20.4) (26.7) (13.0)
Net income for the year ................................... 148.7 186.7 293.6 143.2 56.3 108.9 53.1
The table below shows our balance sheet data for the periods indicated:
As of December 31, As of March 31,
2004 2005 2006 2006 2007 2007
(in millions of (in millions of (in millions of
(in millions of reais) U.S. dollars) reais) U.S. dollars)
Assets
Current assets
Cash and cash equivalents............................ 13.4 13.9 215.4 105.1 16.7 8.1
Accounts receivable - issuers ....................... 5,939.0 8,006.1 9,940.5 4,848.1 8,444.3 4,118.4
Other accounts receivable ............................ 33.3 35.3 56.8 27.7 59.0 28.8
Deferred income and social
contribution taxes ...................................... 33.2 45.3 69.2 33.7 54.5 26.6
Total current assets.......................................... 6,018.8 8,100.6 10,281.9 5,014.6 8,574.5 4,181.9
Long-term assets
contribution taxes ...................................... 36.6 48.9 40.7 19.8 26.1 12.7
Judicial deposits ........................................... 9.4 12.4 13.8 6.7 13.7 6.7
Total long-term assets ..................................... 46.0 61.4 54.5 26.5 39.8 19.4
Permanent assets
Fixed assets................................................... 475.1 583.1 677.5 330.4 704.3 343.5
Accumulated depreciation............................ (239.9) (378.2) (502.3) (245.0) (530.3) (258.6)
Total permanent assets.................................... 235.3 204.9 175.3 85.4 174.0 84.9
Total assets........................................................ 6,300.1 8,366.9 10,511.7 5,126.5 8,788.3 4,286.2
Liabilities
Current liabilities
Accounts payable to merchants.................... 5,390.7 7,313.3 9,420.5 4,594.5 7,738.2 3,774.0
Labor obligations.......................................... 8.6 9.9 11.0 5.4 11.7 5.7
Taxes payable ............................................... 11.5 8.6 29.2 14.2 18.7 9.1
Borrowings ................................................... 393.2 362.0 375.7 183.2 361.9 176.6
Other accounts payable ................................ 293.3 414.5 427.3 208.3 477.1 232.7
Total current liabilities.................................... 6,097.3 8,108.3 10,263.7 5,005.6 8,607.7 4,198.1
Long-term liabilities
Provisions for contingent liabilities ............. 149.3 195.8 183.7 89.6 116.3 56.8
Total long-term liabilities................................ 149.3 195.8 183.7 89.6 116.3 56.8
Shareholders' equity........................................ 53.6 62.9 64.3 31.3 64.3 31.3
Capital .......................................................... 45.2 53.6 53.6 26.1 53.6 26.1
Revenue reserve ........................................... 8.4 9.3 10.7 5.2 10.7 5.2
Total liabilities and
shareholders' equity ..................................... 6,300.1 8,366.9 10,511.7 5,126.5 8,788.3 4,286.2
RISK FACTORS
An investment in our common shares and GDS involves a high degree of risk. You should carefully
consider all the information set forth in this offering memorandum, particularly the risks described below,
before making an investment decision. Our business, financial condition and results of operations could be
materially and adversely affected by any of these risks. The risks described below are those that we currently
believe may materially affect us. Additional risks and uncertainties not currently known to us, or those that we
currently deem to be immaterial, may also materially and adversely affect our business, our financial condition
or results of operations. The market price of our common shares and GDSs could decline due to any of these
risks or other factors, and you may lose all or part of your investment.
Risks Relating to Brazil
The Brazilian government has exercised, and continues to exercise, significant influence over the Brazilian
economy. This involvement, as well as Brazilian political and economic conditions, may adversely affect us
and the market price of our common shares and GDSs.
The Brazilian government frequently intervenes in the Brazilian economy and occasionally makes significant
changes in policy and regulations. The Brazilian government's actions to control inflation and other policies and
regulations have often involved, among other measures, increases in interest rates, changes in tax policies, price
controls, currency devaluations, capital controls and limits on imports. Our business, financial condition and results
of operations may be adversely affected by changes in policy or regulations involving or affecting factors, such as:
• interest rates;
• exchange controls and restrictions on remittances abroad;
• currency fluctuations;
• inflation;
• liquidity of domestic capital and lending markets;
• tax policies and rules; and
• other political, social and economic developments in or affecting Brazil.
Uncertainty over whether the Brazilian government will implement changes in policy or regulation
affecting these or other factors in the future may contribute to economic uncertainty in Brazil and to heightened
volatility in the Brazilian securities markets and in the securities issued abroad by Brazilian issuers.
Inflation and the Brazilian government's efforts to combat inflation may contribute significantly to economic
uncertainty in Brazil and could adversely affect us and the market price of our common shares and GDSs.
Brazil has historically experienced extremely high rates of inflation. Inflation, along with government measures to
combat inflation and with public speculation about possible future government measures, has had significant negative
effects on the Brazilian economy, and contributed to economic uncertainty in Brazil and heightened volatility in the
Brazilian securities market. The 12-month accumulated inflation rate at the three months ended March 31, 2007 was
2.9%, as measured by the extended consumer price index (Índice de Preços ao Consumidor Amplo), or IPCA, and for
the end of 2003, 2004, 2005 and 2006, inflation rates were 8.7%, 12.4%, 1.2% and 3.8%, respectively. The Brazilian
government's measures to control inflation have often included maintaining a tight monetary policy with high interest
rates, thereby restricting the availability of credit and reducing economic growth. As a result, interest rates have
fluctuated significantly. For example, the official interest rate in Brazil, as set by the Brazilian Committee on Monetary
Policy (Comitê de Política Monetária), or COPOM, was 3.0% as of the three months ended March 31, 2007, and
16.5%, 17.8%, 18.0% and 13.3% at the end of 2003, 2004, 2005 and 2006, respectively.
Inflation, government measures to combat inflation and speculation related to possible measures regarding
inflation may also significantly contribute to uncertainties regarding the Brazilian economy and weaken
investors' confidence in Brazil, adversely affecting our ability to gain access to financing sources, including the
international markets.
Future Brazilian governmental actions, including interest rate decreases, intervention in the foreign exchange
market and actions to adjust or fix the value of the real, may trigger increases in inflation. If Brazil experiences
high inflation in the future, we may not be able to adjust the prices we charge merchants to offset the effects of
inflation on our cost structure, which could increase our costs and reduce our net and operating margins.
Exchange rate instability may adversely affect the Brazilian economy, us and the market price of our
common shares and GDSs.
The Brazilian currency has been devalued periodically in relation to the U.S. dollar and other foreign currencies
during the last four decades. During this period, the Brazilian government implemented various economic plans and
utilized a number of exchange rate policies, including sudden devaluations, periodic mini-devaluations during which
the frequency of adjustments has ranged from daily to monthly, floating exchange rate systems, exchange controls
and dual exchange rate markets. From time to time, there were significant fluctuations in the exchange rate between
the Brazilian currency and the U.S. dollar and other currencies. For example, the real depreciated 18.7% and 52.3%
against the U.S. dollar in 2001 and 2002, respectively. Although the real appreciated 18.2%, 8.1%, 13.7% and 8.7%
against the U.S. dollar in 2003, 2004, 2005 and 2006, respectively, there can be no assurance that the real will not
depreciate or be devalued against the U.S. dollar again. As of March 31, 2007, the U.S. dollar-real exchange rate was
R$2.0504 per US$1.00. As of July 11, 2007, the U.S. dollar-real exchange rate was R$1.890 per US$1.00.
Depreciation of the real relative to the U.S. dollar could create additional inflationary pressures in Brazil
and lead to increases in interest rates, which may negatively affect the Brazilian economy as a whole, us and the
market price of our common shares and GDSs.
Developments and the perception of risk in other countries, especially emerging market countries, may
adversely affect the market price of Brazilian securities, including our common shares and GDSs.
The market value of securities of Brazilian companies is affected to varying degrees by economic and
market conditions in other countries, including other Latin American and emerging market countries. Although
economic conditions in these countries may differ significantly from economic conditions in Brazil, investors'
reactions to developments in these other countries may have an adverse effect on the market value of securities
of Brazilian issuers. Crises in other emerging market countries or economic policies of other countries may
diminish investor interest in securities of Brazilian issuers, including ours. This could adversely affect the
market price of our common shares and GDSs, and could also make it more difficult for us to access the capital
markets and finance our operations in the future, on acceptable terms or at all.
Risks Relating to Us and to the Merchant Acquiring and Payment Processing Industry
We face competition in the merchant acquiring and payment processing industry in Brazil.
We are currently the only merchant acquirer and payment processor of credit and debit cards for MasterCard
and Diners Club in Brazil. Our profitability depends on our ability to increase and retain the number of merchants
who accept MasterCard and Diners Club cards as a means of payment for goods and services. We do not have an
exclusive license agreement with MasterCard International. If international or local merchant acquirers and
payment processors, with significant scale, capital and technological resources, enter the Brazilian market and
become acquirers and processors for MasterCard and Diners Club cards, our market share may be significantly
reduced, adversely affecting us. Our market share may also be adversely affected if international or local
competitors start to operate new card associations or brands, and introduce these other card associations or brands
to merchants who will start accepting other cards as a means of payment for goods and services.
In addition, there are other entities that already have authorization to act as MasterCard and Diners Club
merchant acquirers and payment processors in Brazil but we believe that they are not currently so acting. If
these companies start operating as merchant acquirers and payment processors of MasterCard and Diners Club
cards in Brazil, our competitive position may be adversely affected.
We also face stiff competition from other means of payments, such as cash and checks. Credit card
transactions represented only 17.6% of the total private consumption in Brazil in 2006. We cannot assure you
that the card industry will expand significantly, which may cause a material adverse effect upon us.
There is no assurance that we will be able to continue to compete successfully in the merchant acquiring
and payment processing industry or at historical levels. If we are unable to respond satisfactorily to competitive
pressure, we may be adversely affected.
We depend on MasterCard International and the number of MasterCard and Diners Club cards issued to
maintain our competitive position.
To date, we have exclusively offered MasterCard and Diners Club cards to merchants to be used as a means
of payment for goods and services. In addition, our competitive position in the industry is also affected by the
number of MasterCard and Diners Club cards issued and by investment, strategic and marketing decisions taken
by MasterCard International. As a result of increased competition from new or existing card associations or
brands against MasterCard and Diners Club in Brazil, or from negative effects resulting from decisions taken by
MasterCard International, there may be an increased number of cards of these competing associations or brands
issued by Brazilian institutions, as well as the decrease in the number of transactions carried out with
MasterCard branded cards. We may be adversely affected if there is a decrease in the number of transactions
carried out with MasterCard branded cards, and if MasterCard and Diners Club cards lose market share in the
Brazilian market to new or existing card associations or brands.
We are subject to policies and rules imposed by MasterCard International and Diners Club card association.
Our business operations must follow the policies and rules set forth by MasterCard International and Diners
Club card association. Any significant changes in the policies and rules of MasterCard International and Diners
Club card association, mainly of MasterCard International, may have a material adverse effect upon us.
We depend upon the merchant acquirer license granted to us by MasterCard International.
We act as merchant acquirer and payment processor in Brazil under a non-exclusive license granted to us by
MasterCard International. Pursuant to the license agreement, MasterCard International is entitled to several rights, such
as the right to grant licenses to other merchant acquirers in Brazil. In addition, under the terms of this license agreement,
we have to previously notify MasterCard International of any change of our control. MasterCard International has the
right, at its sole discretion, to terminate the license agreement or suspend the use of its trademarks by us and/or impose
conditions for the continuity of the agreement according to MasterCard International rules and bylaws. We cannot
assure you that the license granted by MasterCard International to us will not be revoked. We will be materially and
adversely affected if the license agreement is terminated by MasterCard International.
Our inability to adopt new alternative means of payment, associated with new technology, may cause a
material and adverse effect on us.
The merchant acquiring and payment processing sector has to constantly track any changes in the
preferences of credit and debit card holders, as well as technological advances. We expect that new alternative
means of payment associated with new technology, for example, transactions captured by mobile phones, will
be developed and implemented to meet cardholders' demand for ease of use, transaction security and speed in
credit and debit cards transactions. If we are not able to keep up with the trends in the sector and changes in
cardholders' preferences, as well as implement new alternative means of payment and acquire new technology,
we will be materially and adversely affected.
Unauthorized disclosure of merchant and cardholder data through breach of our computer systems or
otherwise could cause a material adverse effect on us.
Our computer systems are exposed to breaches by third parties who may penetrate our systems to obtain
information relating to merchants and cardholders, with an aim to misuse it. If our computer systems are breached
and there is unauthorized disclosure of information relating to merchants and cardholders, we may be exposed to
claims for fraudulent use of this information, loss of reputation and judicial claims with potentially high liability,
which could have a material adverse effect on us.
Our systems and our third-party providers' systems may fail due to factors beyond our control.
We depend on the efficient and uninterrupted operation of our computer network systems, software, data
center and telecommunications networks, as well as the systems of third parties. Our systems and operations or
those of our third-party providers could be exposed to damage or interruption from, among other things, fire,
natural disaster, power loss, telecommunications failure, unauthorized entry and computer viruses. Defects in
our systems or those of third parties, errors or delays in the processing of payment transactions,
telecommunications failures or other difficulties could have a material adverse effect upon us.
Pressure from merchants to decrease the merchant discount rate, as well as increases in the interchange fee
imposed by card associations and brands, may adversely affect us.
We are subject to the effects of changes in the interchange fee imposed by card associations and brands. We
are also subject to decreases in the merchant discount rate because of competition by other means of payment in
the market. In 2006, the interchange fee of MasterCard International increased and we cannot predict when and
if there will be further increases in the interchange fee imposed by MasterCard International. If there are
increases in the interchange fee paid to card issuers or decreases in the merchant discount rate, our profit
margins and results of operations may be adversely affected.
Laws and regulations that may be enacted to regulate the card industry in Brazil may have an adverse effect on us.
Several bills are under debate at the Brazilian Federal Congress to regulate different aspects related to the
card industry. Recently, a new bill was presented to the Senate, which aims at regulating the card industry. This
bill is still in its initial stages and has not been submitted to the appropriate Senate committees. It is not possible
to predict whether this bill or other will be approved and if approved, it is not possible to predict the impact that
the new legislation will have on us.
The loss of our senior management could have a material adverse effect on us.
Our ability to maintain our competitive position depends to a large degree upon the services of our senior
management team. None of the members of our senior management team is subject to a long-term employment
agreement or a non-compete agreement. There can be no assurance that we will be successful in retaining our
current qualified senior management personnel or hiring new qualified personnel. The loss of any of the
members of our senior management team or our inability to attract and retain additional qualified senior
management personnel could prevent us from achieving our targeted results of operations.
Risks Relating to Our Common Shares and GDSs
The international underwriters and the selling shareholders belong to the same financial conglomerates.
The international underwriters and the selling shareholders belong to the same financial conglomerates:
Citigroup, Itaú and Unibanco. Potential investors should take into account the existence of a potential conflict of
interests because of the fact that the international underwriters and the selling shareholders are part of the same
financial conglomerates. We cannot assure you that the Brazilian and international underwriters will carry out the
offering impartially because they are part of the same conglomerates of the selling shareholders.
The volatility and illiquidity of the Brazilian securities markets may substantially limit your ability to sell our
common shares and GDSs at the price and time you desire.
Investing in securities that trade in emerging markets, such as Brazil, often involves greater risk than
investing in securities of issuers in other countries, and these investments are generally considered to be more
speculative in nature. The Brazilian securities market is substantially smaller, less liquid, more concentrated and
can be more volatile than major securities markets, such as the United States. The BOVESPA had a market
capitalization of approximately US$723 billion (R$1.5 trillion) as of December 31, 2006 and an average daily
trading volume of US$1.1 billion (R$2.4 billion) in the year ended December 31, 2006. As a comparison, the
New York Stock Exchange, or NYSE, had a market capitalization of US$25.0 trillion as of December 31, 2006
and an average daily trading volume of US$86.8 billion in the year ended December 31, 2006. There is a
significant concentration in the Brazilian capital markets. The top ten stocks in terms of trading volume
accounted for approximately 46.1% and 42.0% of all trading on the BOVESPA for the year ended
December 31, 2006 and the first quarter ended March 31, 2007, respectively. These features of the Brazilian
capital markets may significantly limit your ability to resell our common shares and GDSs at the price and time
desired, which may have a material adverse effect on the market price of our common shares and GDSs.
The offering price was set based on the bookbuilding procedure and it is not an indication of the price of our
common shares and GDSs that will prevail on the market after this offering. The market price of our common
shares and GDSs may significantly fluctuate due to several reasons, including the risk factors mentioned in this
offering memorandum or reasons not related to our performance.
After completion of this offering, your ability to sell our common shares and GDSs at the price and time
you wish may be substantially limited.
An active and liquid market for our common shares and GDSs may not develop.
Before this offering, there was no market for our common shares and GDSs. There can be no assurance that a
liquid and active market for our common shares and GDSs will develop or be maintained after this offering. Liquid and
active trading markets generally result in lower price volatility and higher efficiency in the performance of sale and
purchase orders from persons who have no relation with the issuer. The liquidity of a securities market is frequently
determined by the volume of outstanding shares and GDSs. In addition, the minimum percentage of 25.0% of free float
(shares not held by the controlling shareholders) required by the Novo Mercado rules may not be reached after
completion of this offering. We requested the BOVESPA to grant us a term of three years to reach this percentage and
during this period we shall maintain at least 16.0% of free float. If we do not reach the minimum of 25.0% of free float
within the three-year term, our controlling shareholders may be obligated to pay fines and the trading of our common
shares may be disclosed separately from the trading of shares of other companies listed on the Novo Mercado segment.
Accordingly, your ability to sell our common shares and GDSs at the price and time you wish may be
substantially limited.
Substantial sales of our common shares and GDSs after this offering could cause the price of our common
shares and GDSs to decrease.
In addition, we, the selling shareholders, and certain of our directors and executive officers have agreed,
subject to certain exceptions, not to issue, offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any common shares or any securities convertible into or
exercisable or exchangeable for common shares; or enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of the common shares, for 180
days after the date of this offering memorandum. After this 180-day period expires, these common shares will
be eligible for sale in the public market. In addition, according to Novo Mercado regulations, our controlling
shareholders, directors and officers, may not sell or offer to sell shares issued by us and derivatives related to
our shares, during the first six months after this offering, beginning on the first trading date of our common
shares on the Novo Mercado. After this initial six-month period, our controlling shareholders, directors and
officers cannot, for an additional six months, sell or offer to sell more than 40.0% of shares issued by us and
derivatives related to our common shares which they held immediately after this offering.
The market price of our common shares and GDSs could drop significantly if the holders of our common
shares and GDSs sell them, or the market perceives that we, our controlling shareholders, and our directors and
officers intend to sell them.
Our bylaws do not contain provisions to prevent amendments to exclude from our bylaws protection
mechanisms for the dispersion of the shareholders' base and against attempts of hostile takeovers by
third parties.
Our bylaws contain provisions for protection against attempts of hostile takeovers by third parties. These
provisions require that any acquiring shareholder (as defined in our bylaws), who may become the holder of
rights to shareholdings related to 26.0% or more of our capital stock (excluded treasury shares and involuntary
increases of shareholdings set forth in our bylaws), carry out a public tender offer to acquire all of our shares at
a price provided in the bylaws and legislation within 30 days from the date of acquisition or the date of the event
that resulted in the ownership of the shares or rights. However, our bylaws do not set forth mechanisms that
impose restrictions to the exclusion from our bylaws of provisions related to the need for the acquiring
shareholder to carry out a public tender offer in the situations provided in our bylaws. Therefore, our general
shareholders' meeting may deliberate the exclusion of these provisions from our bylaws.
The interests of our controlling shareholders may conflict with your interests.
Our controlling shareholders have the power, among others, to elect the majority of our board of directors
and determine the outcome of any action requiring shareholders' approval, including transactions with related
parties, corporate reorganizations, dispositions, partnerships and the timing and amount of any future payment
of dividends, subject to minimum dividend payment requirements imposed under Brazilian Corporate Law. Our
controlling shareholders may have an interest in pursuing acquisitions, dispositions, partnerships, financings or
similar transactions that could conflict with your interests.
In addition, our controlling shareholders operate or may operate, by means of entities that are part of their
respective financial conglomerates, in segments in which we currently operate. This may represent a potential
conflict of interest in decisions of our controlling shareholders related to our strategy in segments in which our
controlling shareholders and us operate or may operate in the future.
We may need additional resources, and may elect to obtain them through the issuance of securities, which
may affect the price of our common shares and GDSs and result in a dilution of your holdings in our
common shares and GDSs.
We may need to obtain additional resources in the future through a public or private issuance of shares or
securities convertible into, or exchangeable for, shares. Any public issue of shares or securities convertible into,
or exchangeable for, shares may affect the price of our common shares and GDSs and result in the dilution of
your holdings in our common shares and GDSs.
Holders of GDSs may be unable to exercise preemptive rights with respect to their common shares unless there
is a registration statement in effect that covers those rights or unless an exemption from registration applies.
Holders of GDSs will not be able to exercise preemptive rights relating to our common shares (including
common shares in the form of GDSs) unless a registration statement under the Securities Act is effective with
respect to those rights, or an exemption from the registration requirements of the Securities Act is available. We
are not obligated to file a registration statement. Unless we file a registration statement or an exemption from
registration applies, you may receive only the net proceeds from the sale of your preemptive rights by the
depositary, or if the preemptive rights cannot be sold, they will lapse and you will not receive any value for them.
For more information on the exercise of your rights, see "Description of Our Share Capital⎯Preemptive Rights."
If a holder of our GDSs exchanges GDSs for our common shares, he or she risks losing Brazilian tax
advantages and the ability to remit foreign currency abroad.
The Brazilian custodian for the common shares underlying our GDSs must obtain a certificate of
registration from the Central Bank to be entitled to remit U.S. dollars abroad for payments of dividends and
other distributions relating to our common shares or upon the disposition of our common shares. If a holder
decides to exchange his or her GDSs for the underlying common shares, he or she will be entitled to continue to
rely, for five business days from the date of exchange, on the custodian's certificate of registration. After that
period, the holder may not be able to obtain and remit U.S. dollars abroad upon the disposition of our common
shares, or distributions relating to our common shares, unless he or she obtains his or her own certificate of
registration or registers under CMN Resolution No. 2,689, which entitles registered foreign investors to buy and
sell shares on the Brazilian stock exchanges without obtaining separate certificates of registration. If the holder
does not obtain a certificate of registration or does not register under CMN Resolution No. 2,689, he or she will
generally be subject to less favorable tax treatment on distributions with respect to our common shares. If a
holder attempts to obtain his or her own certificate of registration, he or she may incur expenses or suffer delays
in the application process, which could delay his or her ability to receive dividends or distributions relating to
our common shares or the return of his or her capital in a timely manner. We cannot assure you that the
custodian's certificate of registration or any foreign capital registration obtained by a holder may not be affected
by future legislative changes, or that additional restrictions applicable to the holder, the disposition of the
underlying common shares or the repatriation of the proceeds from disposition will not be imposed in the future.
Holders of GDSs may find it difficult to exercise voting rights with respect to our shareholders' meetings.
Holders may exercise their voting rights with respect to our common shares represented by the GDSs only in
accordance with the deposit agreements relating to the GDSs. There are practical limitations upon the ability of
holders of GDSs to exercise their voting rights due to the additional steps involved in communicating with holders
of GDSs. For example, we are required to publish a notice of our shareholders' general meetings in certain
newspapers in Brazil. Holders of our common shares can exercise their right to vote at a shareholders' general
meeting by attending the meeting in person or voting by proxy. By contrast, holders of GDSs will receive notice of
a shareholders' general meeting by mail from the GDR depositary following our notice to the GDR depositary
requesting the GDR depositary to do so. To exercise their voting rights, holders of GDSs must instruct the GDR
depositary on a timely basis. This noticed voting process will take longer for holders of GDSs than for direct
holders of our common shares. If it fails to receive timely voting instructions for your GDSs, the GDR depositary
shall not vote your shares. See "Description of Global Depositary Shares."
We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the
depositary to vote our common shares underlying your GDSs. In addition, the depositary and its agents are not
responsible for failing to carry out your voting instructions or for the manner of carrying out your voting
instructions. This means that you may not be able to exercise your right to vote and you may have no recourse if
our common shares held by you are not voted as you requested.
USE OF PROCEEDS
Based on the offering price of R$27.00 per share, we estimate that we will receive net proceeds from the
primary offering of approximately R$404.2 million, after deducting estimated commissions payable by us.
We intend to allocate the gross proceeds from the primary offering to our capital stock account, increasing
the current amount from R$53.6 million to R$473.6 million, based on the assumptions above mentioned.
We intend to allocate the entire net proceeds from the primary offering, of approximately R$404.2 million, to
investments in our technological infrastructure, in particular the purchase of POS electronic capture equipment,
and acquisition of software related to the capture, processing and settlement of credit and debit card transactions.
We will not receive any of the proceeds from the secondary offering. The selling shareholders will receive
the entire net proceeds from their sale of common shares and GDSs in the secondary offering, including in the
event the over-allotment option is exercised.
MARKET INFORMATION
General
On June 18, 2007, we entered into the Novo Mercado listing agreement. We have applied to list our
common shares on the Novo Mercado segment of the BOVESPA and after BOVESPA's approval our common
shares will be traded under the symbol "RDCD3" on the first business day following the publication of the
notice of commencement of the offering in Brazil.
We have not issued any securities other than our common shares and our GDSs.
Trading on the BOVESPA
The BOVESPA is a nonprofit entity owned by its member brokerage firms. Trading on the BOVESPA is
limited to member brokerage firms and a limited number of authorized nonmembers.
Trading is conducted between 10:00 a.m. and 5:00 p.m., or between 11:00 a.m. and 6:00 p.m. during
daylight savings time in Brazil. The BOVESPA also permits trading from 5:45 p.m. to 7:00 p.m., or between
6:45 p.m. to 7:30 p.m. during daylight savings time in Brazil, during a different trading period of time, called
the "after market." Trading on the after market is subject to regulatory limits on price volatility and on the
volume of shares transacted through Internet brokers.
When shareholders trade in common or preferred shares on the BOVESPA, the trade is settled three
business days after the trade date without adjustment of the purchase price for inflation. The seller is generally
required to deliver the shares to the exchange on the morning of the third business day following the trade date.
Delivery of and payment for shares are made through the facilities of the CBLC, an independent clearing house.
In order to better control BOVESPA index variation, the BOVESPA adopted a "circuit breaker" system
pursuant to which trading sessions are suspended for a period of 30 minutes or one hour whenever the index of
the BOVESPA falls below the limits of 10.0% or 15.0%, respectively, in relation to the closing index of the
previous trading session.
Trading on the BOVESPA is significantly less liquid than trading on the New York Stock Exchange or other
major exchanges in the world. Although any of the outstanding shares of a listed company may trade on the
BOVESPA, in most cases fewer than half of the listed shares are actually available for trading by the public, the
remainder being held by a group, by small groups of controlling persons or by government entities. As of the end
of 2006 and the first quarter of 2007, the BOVESPA had a total market capitalization of approximately R$1.54
trillion and R$1.63 trillion, respectively, and an average daily trading volume of R$2.4 billion and R$2.3 billion,
respectively. The top ten stocks in terms of 2006 trading volume accounted for approximately 46.1% of all shares
traded on the BOVESPA as of December 31, 2006. The top ten stocks in terms of the first quarter of 2007 trading
volume accounted for approximately 42.0% of all shares traded on the BOVESPA as of March 31, 2007.
Trading on the BOVESPA by a holder not deemed to be domiciled in Brazil for Brazilian tax and
regulatory purposes, or a "non-Brazilian holder," is subject to certain limitations under Brazilian foreign
investment regulations. With limited exceptions, non-Brazilian holders may trade on Brazilian stock exchanges
in accordance with the requirements of CMN Resolution No. 2,689, which requires that securities held by
non-Brazilian holders be maintained in the custody of financial institutions authorized by the Central Bank and
by the CVM or in deposit accounts with financial institutions. In addition, Resolution No. 2,689 requires
non-Brazilian holders to restrict their securities trading to transactions on the BOVESPA or qualified
over-the-counter markets. With limited exceptions, non-Brazilian holders may not transfer the ownership of
investments made under Resolution No. 2,689 to other non-Brazilian holders through a private transaction.
Regulation of the Brazilian Securities Market
The Brazilian securities markets are regulated by the CVM, which has regulatory authority over the stock
exchanges and securities markets, as well as by the Central Bank, which has, among other powers, licensing
authority over brokerage firms and regulates foreign investment and foreign exchange transactions. The
Brazilian securities markets are governed by Law No. 6,385, of December 7, 1976, as amended, as well as by
the Brazilian Corporate Law and by regulations issued by the CVM. These laws and regulations provide for,
among other things, disclosure requirements, restrictions on insider trading and price manipulation and
protection of minority shareholders.
Under the Brazilian Corporate Law, a company is either publicly-held and listed, a sociedade por ações de
capital aberto, or privately held and unlisted, a sociedade por ações de capital fechado. All listed companies are
registered with the CVM and are subject to reporting and regulatory requirements. A company registered with
the CVM may trade its securities either on the BOVESPA or in the Brazilian over-the-counter market. Shares of
companies listed on the BOVESPA, once duly registered with the CVM may also be traded privately, subject to
several limitations.
The Brazilian over-the-counter market consists of direct trades between individuals in which a financial
institution registered with the CVM serves as intermediary. No special application, other than registration with the
CVM, is necessary for securities of a publicly-held company to be traded in this market. The CVM requires that it
be given notice of all trades carried out in the Brazilian over-the-counter market by the respective intermediaries.
The trading of securities of a listed company on the BOVESPA may be halted at the request of such
company in prepayment of a material announcement. The company should also halt its trading in international
stock exchanges where its securities are traded. Trading may also be suspended on the initiative of the
BOVESPA or the CVM, among other reasons, based on or due to a belief that a company has provided
inadequate information regarding a significant event or has provided inadequate responses to inquiries by the
CVM or the BOVESPA.
The Brazilian Corporate Law, the regulations issued by the CVM and the Novo Mercado regulations
establish, among other things, requirements of disclosure of information, restrictions on transactions based on
privileged information and price manipulation, as well as protection to minority shareholders. See "Description
of Our Share Capital."
Corporate Governance Practices and the Novo Mercado
In 2000, the BOVESPA introduced three special listing segments, known as Nível 1, Nível 2 and the Novo
Mercado, aiming at fostering a secondary market for securities issued by Brazilian companies with securities
listed on the BOVESPA by prompting such companies to follow good practices of corporate governance. The
listing segments were designed for the trading of shares issued by companies voluntarily undertaking to abide
by corporate governance practices and disclosure requirements in addition to those already imposed by
applicable Brazilian law.
These rules generally increase shareholders' rights and enhance the quality of information provided to
shareholders. To become a Nível 1 company, in addition to the obligations imposed by applicable law, the issuer
must agree to: (1) ensure that shares of the issuer representing at least 25.0% of its total capital are effectively
available for trading; (2) adopt offering procedures that favor widespread ownership of shares whenever
making a public offering; (3) comply with minimum quarterly disclosure standards; (4) follow stricter
disclosure policies with respect to transactions made by controlling shareholders, members of its board of
directors and its executive officers involving securities issued by the issuer; (5) submit any existing
shareholders' agreement and stock option plans to the BOVESPA; and (6) make a schedule of corporate events
available to shareholders.
To become a Nível 2 company, in addition to the obligations imposed by applicable law, an issuer must
agree to: (1) comply with all of the listing requirements for Nível 1 companies; (2) grant tag-along rights for all
shareholders in connection with a transfer of control of the company (a) offering the same price paid per share
of controlling block for each common share and (b) 80.0% of the price paid per share of controlling block for
each preferred share; (3) grant voting rights to holders of preferred shares in connection with certain corporate
restructurings and related party transactions, such as (a) any transformation of the company into another
corporate form; (b) any merger, consolidation or spin-off of the company; (c) approval of any transactions
between the company and its controlling shareholder or parties related to the controlling shareholder;
(d) approval of any valuation of assets to be delivered to the company in payment for shares issued in a capital
increase; (e) appointment of an expert to ascertain the fair value of the company in connection with any
deregistration and delisting tender offer from Nível 2; and (f) any changes to these voting rights, which will
prevail as long as the adhesion contract to the Nível 2 regulation with the BOVESPA is in effect; (4) have a
board of directors consisting of at least five members out of which a minimum of 20.0% of the directors must be
independent and limit the term of all members to two years; (5) prepare annual financial statements in English,
including cash flow statements, in accordance with international accounting standards, such as U.S. GAAP or
IFRS; (6) if it elects to delist from the Nível 2 segment, conduct a tender offer by the company's controlling
shareholder (the minimum price of the shares to be offered will be the economic value determined by an
independent specialized firm with requisite experience); and (7) adhere exclusively to the Market Arbitration
Chamber for resolution of disputes between the company and its investors.
To be listed in the Novo Mercado, an issuer must meet all of the requirements for Nível 1 and Nível 2
companies and, in addition, the issuer must: (1) issue only common shares; and (2) grant tag-along rights for all
shareholders in connection with a transfer of control of the company, offering to the minority shareholders the
same price paid per share of controlling block.
Investment in Our Common Shares by Non-residents of Brazil
Investors residing outside Brazil, including institutional investors, are authorized to purchase equity
instruments, including our common shares, on the Brazilian stock exchange provided that they comply with the
registration requirements set forth in Resolution No. 2,689 of the CMN, which we refer to as Resolution
No. 2,689, and CVM Instruction No. 325, from January 27, 2000, as amended.
With certain limited exceptions, under Resolution No. 2,689 investors are permitted to carry out any type
of transaction in the Brazilian financial capital markets involving a security traded on a stock, future or
organized over-the-counter market. Investments and remittances outside Brazil of gains, dividends, profits or
other payments under our common shares are made through the exchange market.
In order to become a Resolution No. 2,689 investor, an investor residing outside Brazil must:
• appoint a representative in Brazil with powers to take actions relating to the investment;
• appoint an authorized custodian in Brazil for the investments, which must be a financial institution
duly authorized by the Central Bank and CVM; and
• through its representative, register itself as a foreign investor with the CVM and register the
investment with the Central Bank.
Securities and other financial assets held by foreign investors pursuant to Resolution No. 2,689 must be
registered or maintained in deposit accounts or under the custody of an entity duly licensed by the Central Bank
or the CVM. In addition, securities trading by foreign investors are generally restricted to transactions involving
securities listed on the Brazilian stock exchanges or traded in organized over-the-counter markets licensed by
the CVM. See "Taxation––Brazilian Tax Considerations––Gains" for a description of certain tax benefits
extended to non-Brazilian holders who qualify under Resolution 2,689.
Provisional Contribution on Financial Transactions (Contribuição Provisória sobre a Movimentação
Financeira)
The offering of our shares constitutes a "non-organized over-the-counter transaction" under Brazilian law.
Each investor who is not a resident of Brazil should note that because our shares will be acquired in a
"non-organized over-the-counter transaction," provisional contribution on financial transactions (Contribuição
Provisória sobre a Movimentação Financeira), or CPMF tax, in the amount of 0.38% of the purchase price may
be withheld by the custodian or other party closing the foreign exchange transaction from the amounts deposited
by such investor when such amounts are transferred to the CBLC. Any amounts withheld would have the effect
of reducing the amount of our common shares purchased by the investor. Therefore, each such investor should
consult its own legal and financial advisors with respect to the applicability of CPMF tax to its purchase as well
as other tax consequences of such investment.
For a detailed description of the tax consequences to an investor residing outside Brazil of investing in our
common shares in Brazil, see "Taxation––Brazilian Tax Considerations."
DIVIDENDS AND DIVIDEND POLICY
Amounts Available for Distribution
At each annual shareholders' meeting, our board of directors is required to advise our shareholders on how
to allocate our net income for the preceding year. The allocation is subject to approval by our shareholders. The
Brazilian Corporate Law defines "net income" for any fiscal year as the results in a given year after the
deduction of accrued losses from prior years, the provisions for income and social contribution taxes for that
year, and any amounts allocated to profit-sharing payments to the employees and management.
Our bylaws provide that an amount equal to at least 40.0% of our adjusted net income for any given year,
after deducting allocations to the legal reserve, statutory reserve, and contingency reserve, if any, or adding
reversed contingency reserve amounts from prior years, if any and unrealized profit reserve amounts, upon their
realization and if not absorbed by subsequent losses, if any, should be available for distribution as a mandatory
dividend or interest on shareholders' equity. Such amount represents the minimum mandatory dividend.
Moreover, the minimum mandatory dividend may be limited to the 'realized' portion of net income. Our
calculation of net income and allocations to reserves for any year, as well as the amounts available for
distribution, are determined on the basis of our financial statements prepared in accordance with Brazilian
Corporate Law. For more information, see "⎯Payment of Dividends and Interest on Shareholders'
Equity⎯Dividends" below.
Reserve Accounts. The financial statements of companies incorporated under Brazilian law usually present two
main reserve accounts under the line 'shareholders' equity': income reserve account and capital reserve account.
Income Reserve Accounts. Pursuant to the Brazilian Corporate Law, our profit reserve accounts are
comprised of the legal reserve, unrealized profit reserve, contingency reserve, statutory reserves and retained
income reserve.
Legal Reserve. Under the Brazilian Corporate Law, we are required to maintain a legal reserve to which we
must allocate 5.0% of our net income for each fiscal year until the aggregate amount of the reserve equals 20.0%
of our share capital. However, we are not required to make any allocations to our legal reserve in a year in which
the legal reserve, when added to our other established capital reserves, exceeds 30.0% of our share capital. The
purpose of the legal reserve is to ensure the integrity of a company's share capital. The amounts allocated to
such reserve must be approved by our shareholders in a shareholders' meeting, and may only be used to increase
our share capital or to offset net losses. Therefore, they are not available for the payment of dividends. As of
December 31, 2006, the balance of our legal reserve amounted to R$10.7 million.
Unrealized Income Reserve. Pursuant to Brazilian Corporate Law, the amount by which the mandatory
dividend exceeds the 'realized' net income in a given year may be allocated to an unrealized income reserve
account, and the mandatory dividends may be limited to the 'realized' portion of the net income. Brazilian
Corporate Law defines 'realized' net income as the amount by which our net income exceeds the sum of our net
positive results, if any, from the equity method of accounting; and the income, gains or profits resulting from
transactions that occurred in the relevant fiscal year but that will be received by us after the end of the next year.
Income recorded in the unrealized income reserve, if realized and not absorbed by losses in subsequent years,
must be added to the next mandatory dividend distributed after the realization. As of December 31, 2006, we
did not have an unrealized income reserve.
Contingency Reserve. Pursuant to Brazilian Corporate Law, a percentage of our net income may be
allocated to a contingency reserve for anticipated losses that are deemed probable in future years, if their
amount may be estimated. Management must indicate the cause of the anticipated loss and justify the
establishment of the reserve for allocation of the percentage of our net income. Any amount so allocated must
be reversed in the fiscal year in which a loss that had been anticipated fails to occur as projected or charged off
in the event that the anticipated loss occurs. The allocations to the contingency reserve are also subject to
approval of our shareholders in a shareholders' meeting. As of December 31, 2006, we did not have a
contingency reserve.
Statutory Reserves. Pursuant to Brazilian Corporate Law, we are permitted to provide for the allocation of
part of our net income to discretionary reserve accounts that may be established in accordance with our bylaws,
which must also indicate the purpose, allotment criteria and maximum amount of the reserve. The allocation of
our net income to discretionary reserve accounts may not be made if it affects the payment of the minimum
mandatory dividend. Our bylaws do not contemplate any statutory reserve.
Retained Profit Reserve. Pursuant to Brazilian Corporate Law, our shareholders may decide at the annual
shareholders' meeting to retain a portion of our net income, as provided for in a capital expenditure budget that
has been previously approved. The allocation of funds to this reserve cannot jeopardize the payment of the
minimum mandatory dividends. As of December 31, 2006, we did not have a retained income reserve.
Payment of Dividends and Interest on Shareholders' Equity
Brazilian Corporate Law requires that the bylaws of a Brazilian company specify a minimum percentage of
the available income for the annual distribution of dividends, known as mandatory dividend, which must be
paid to shareholders as either dividends or interest on shareholders' equity. The basis of the mandatory dividend
is a percentage of the net income, as adjusted pursuant to Brazilian Corporate Law. Under our bylaws, a
minimum of 40.0% of our adjusted net income should be intended for the distribution and payment of the
mandatory dividend to our shareholders. However, the payment of mandatory dividends to our shareholders
may be limited to the amount of realized net income in a given year, provided the difference should be recorded
as unrealized income reserve. Our calculation of net income and allocations to reserves for any year, as well as
the amounts available for distribution, are determined on the basis of our non-consolidated financial statements
prepared in accordance with the Brazilian Corporate Law.
Additionally, our board of directors may advise our shareholders that additional dividends may be
distributed from other income or reserves legally available for distribution.
Brazilian Corporate Law allows, however, a company to suspend such dividend distribution if its board of
directors reports at our annual shareholders' meeting that the distribution would be inadvisable given the
company's financial condition. The fiscal council, if in place at the time, should review any suspension of the
mandatory dividend. In addition, our management should submit a report to the CVM setting forth the reasons
for the suspension. Net income not distributed by virtue of a suspension is allocated to a separate reserve and, if
not absorbed by subsequent losses, is required to be distributed as dividends as soon as the financial condition of
the company should permit such payment.
The mandatory dividend may also be paid as interest on shareholders' equity, in which event it is deemed a
deductible expense for purposes of our corporate income and social contribution taxes on net income.
Our new shareholders will be entitled to dividends from the third quarter of 2007 onwards, since we (1)
have already declared and paid dividends related to the first quarter of 2007 in April 2007; and (2) we will
declare and pay dividends related to the second quarter of 2007 before the completion of the offering.
Dividends
We are required by Brazilian Corporate Law and our bylaws to hold an annual shareholders' meeting no
later than April 30 of each year, at which time the allocation of the results of operations in any year and the
distribution of an annual dividend are reviewed. The payment of annual dividends is based on our
unconsolidated, audited financial statements prepared for the immediately preceding fiscal year.
Any holder of record of shares at the time a dividend is declared is entitled to receive dividends. Under
Brazilian Corporate Law, dividends are generally required to be paid within 60 days following the date on
which the dividend is declared, unless the shareholders' resolution established another payment date, which, in
any event, must occur before the end of the year in which the dividend is declared. Our bylaws do not require
that dividend payments be adjusted for inflation.
Shareholders have a three-year period from the date of the dividend payment to claim the dividends or
interest on shareholders' equity with respect to their shares, after which the aggregate amount of any unclaimed
dividend legally reverts to us.
Pursuant to our bylaws, our board of directors may declare interim dividends or interest on shareholders'
equity based on realized profits verified in semi-annual financial statements. Additionally, our board of
directors may declare dividends based on our unaudited quarterly financial statements, provided that the total
amount of dividends paid in each semester should not exceed the amounts accounted for in our capital reserve
account, ascertained in the latest annual or semi-annual financial statements. Interim dividends may also be paid
from profit reserve accounts based on the latest annual or semi-annual financial statements. Any payment of
interim dividends may be set off against the amount of mandatory dividends relating to the net income earned in
the year in which the interim dividends were paid.
Interest on Shareholders' Equity
Since January 1, 1996, Brazilian companies have been authorized to pay interest on shareholders' equity to
shareholders, and to treat those payments as a deductible expense for purposes of calculating corporate income
tax and, since 1998, the social contribution tax. The amount of the tax deduction in each year is limited to the
greater of 50.0% of our net income (before the distribution and any deduction of allowances for social
contribution and income taxes and before any interest attributable to shareholders' equity) for the period in
respect of which the payment is made; and 50.0% of our accumulated profits and profit reserves at the
beginning of the relevant period. Payments of interest on shareholders' equity, net of withholding income tax,
may be considered as part of the mandatory dividend distribution. The rate applied in calculating interest on
shareholders' equity cannot exceed the pro rata die variation of the long-term interest rate (Taxa de Juros de
Longo Prazo), or TJLP. Under applicable law, we are required to pay to our shareholders an amount sufficient
to ensure that the net amount they receive in respect of interest on shareholders' equity, after payment of any
applicable withholding tax, plus the amount of distributed dividends, is at least equivalent to the minimum
mandatory dividend amount.
Payments of interest on shareholders' equity to our shareholders, whether or not residing in Brazil, are
subject to Brazilian withholding tax at the rate of 15.0%, provided that a tax rate of 25.0% applies if the
shareholder receiving such interest on shareholders' equity is a resident of a tax haven jurisdiction (defined as a
country where income tax is not levied or is levied at a maximum rate lower than 20.0% or where the local
legislation imposes restrictions on disclosure of shareholding composition or ownership of the investment). See
"Taxation—Brazilian Tax Considerations."
Under applicable tax law N. 9,249/95, interest on shareholders' equity paid or payable to our shareholders,
should be computed in our results for the year under financial expenses. For purposes of the presentation of
financial statements, however, these amounts revert to the statement of income charged to accumulated
earnings as profit distribution.
As of December 31, 2006, we had not distributed interest on shareholders' equity.
EXCHANGE RATES
Until March 4, 2005, there were two legal foreign exchange markets in Brazil: the commercial rate
exchange market and the floating rate exchange market. On March 4, 2005, the Central Bank issued Resolution
No. 3,265, providing for several changes in Brazilian foreign exchange regulation, including: the unification of
the foreign exchange markets into a single exchange market, the easing of several rules for acquisition of
foreign currency by Brazilian residents, and the extension of the term for converting foreign currency derived
from Brazilian exports. Additionally, on March 9, 2005, the Central Bank issued Circular No. 3,280, which
governs the Brazilian foreign exchange market, capital held offshore by Brazilians and foreign capital in Brazil.
It is expected that the Central Bank will issue further regulations in relation to foreign exchange transactions, as
well as on payments and transfers of Brazilian currency between Brazilian residents and non-residents (these
transfers being commonly known as the international transfer of Brazilian reais).
Since the beginning of 2001, the Brazilian exchange market has been increasingly volatile, and, until early
2003, the value of the Brazilian real declined relative to the U.S. dollar, primarily due to financial and political
instability in Brazil and Argentina. In 2004 and 2005 and 2006, however, on average the Brazilian real
appreciated in relation to the U.S. dollar 8.1%, 13.7% and 8.7%, respectively. Although the Central Bank has
intervened occasionally to control unstable movements in the foreign exchange rates, the exchange market may
continue to be volatile as a result of this instability or other factors, and, therefore, the Brazilian real may
substantially decline or appreciate in value in relation to the U.S. dollar in the future.
The following tables set forth the selling rate expressed in Brazilian reais per U.S. dollar for the periods
indicated.
Average for
Year-end year(1) Low High
(reais per U.S. dollar)
Year
2002 ...................................................................... 3.533 2.930 2.270 3.955
2003 ...................................................................... 2.889 3.072 2.821 3.662
2004 ...................................................................... 2.654 2.926 2.654 3.205
2005 ...................................................................... 2.341 2.434 2.163 2.762
2006 ...................................................................... 2.138 2.177 2.059 2.371
Average for
Period-end period(2) Low High
(reais per U.S. dollar)
Month
November 2006..................................................... 2.167 2.161 2.135 2.167
December 2006 ..................................................... 2.138 2.154 2.138 2.169
January 2007 ......................................................... 2.125 2.140 2.125 2.156
February 2007 ....................................................... 2.118 2.097 2.077 2.118
March 2007 ........................................................... 2.050 2.095 2.050 2.139
April 2007 ............................................................. 2.032 2.036 2.023 2.048
May 2007 .............................................................. 1.929 1.980 1.929 2.031
June 2007 .............................................................. 1.926 1.934 1.904 1.963
July 2007 (through July 11) .................................. 1.890 1.904 1.890 1.918
Source: Central Bank.

(1) Represents the average of the exchange rates of each trading date.
(2) Represents the average of the lowest and highest rates in the month.
As of July 11, 2007 the selling rate published by the Central Bank was R$1.890 per US$1.00.
CAPITALIZATION
The table below presents our short- and long-term indebtedness, shareholders' equity and our total
capitalization as of March 31, 2007, and as adjusted to reflect receipt of about R$404.2 million in estimated net
proceeds from the primary offering, based on the offering price per share of R$27.00 without giving effect to the
exercise of the over-allotment option, and after deducting estimated commissions payable by us.
The information provided below (in reais) has been derived from our audited financial statements for the
three-month period ended March 31, 2007, prepared in accordance with Brazilian GAAP. You should read it in
conjunction with the information included in the sections "Selected Financial Information" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements, and
related notes, included elsewhere in this offering memorandum.
The "as adjusted" information below is illustrative only and our capitalization after this offering is subject
to adjustment based on the actual initial offering price and other terms of this offering determined at pricing.
As of March 31, 2007

Before this After this offering
offering Actual As adjusted(1)
(in millions (in millions of (in millions (in millions of
of reais) U.S. dollars) of reais) U.S. dollars)
Short-term indebtedness ..................................................... 361.9 176.5 361.9 176.5
Long-term indebtedness ..................................................... – – – –
Total indebtedness.............................................................. 361.9 176.5 361.9 176.5

Shareholders' equity ........................................................... 64.3 31.3 468.5 228.5
Total capitalization(2) ........................................................ 426.2 207.8 830.4 404.9
(1) As adjusted based on the offering price per share of R$27.00 to reflect receipt of the net proceeds from this offering in
the amount of approximately R$15.0 million.
(2) Corresponds to the sum of total loans and financing and total shareholders' equity.
There have not been significant changes in our capitalization since March 31, 2007.
DILUTION
As of March 31, 2007, our shareholders' equity was R$64.3 million, and our shareholders' equity per share as of
the same date was R$0.10 per share. Shareholders' equity per share represents the net book value of our total assets
less the net book value of our total liabilities, divided by the total number of shares issued by us as of March 31, 2007.
After giving effect to the issue of 15,555,555 shares in the primary offering, based on the offering price per
share of R$27.00, after deducting estimated commissions payable by us, the adjusted net book value of our
shareholders' equity as of March 31, 2007, would be approximately R$468.5 million, or R$0.70 per share
issued by us. Based on the above offering price per share, this offering would represent to existing shareholders
an immediate increase in the book value of our shareholders' equity per share of R$0.60, whereas to new
shareholders purchasing shares in this offering, it would represent an immediate dilution in the book value of
our shareholders' equity as of March 31, 2007, of R$26.30 per share. Dilution for this purpose represents the
difference between the price per share paid by investors in this offering and the shareholders' equity per share
immediately after completion of this offering.
The table below illustrates this dilution:

In reais except In U.S. dollars except
percentages percentages
Price per share ......................................................................... 27.00 13.17
Shareholders' equity per share as of March 31, 2007 .............. 0.10 0.05
Increase in the shareholders' equity per share attributed to
existing shareholders .......................................................... 0.60 0.29
Shareholders' equity per share after this offering .................... 0.70 0.34
Dilution in net book value per share to new shareholders ....... 26.30 12.83
Percentage of dilution per share to new shareholders.............. 97.4% 97.4%
The price per share to be paid by investors in this offering is not related to our shareholders' equity, and will
be determined on the basis of a bookbuilding process, pursuant to Article 44 of CVM Instruction No. 400,
having as parameter the level of interest shown by prospective institutional buyers in Brazil and abroad with
respect to the demand in terms of volume and price of the common shares. For a more detailed description of
pricing and the conditions of this offering, see "The Offering."
On June 18, 2007, the shareholders present at the special shareholders' meeting approved the hiring of a
specialized company to study a stock option plan of acquisition or subscription of Redecard shares, addressed to
our directors, executive officers and employees, as well as individuals who provide services to us and to
directors, executive officers and employees of other entities that are directly or indirectly controlled by us. This
plan will be implemented in the course of the years, and the option will be granted in the proportion of up to
0.5% of maximum dilution of Redecard shares, limited to our authorized capital stock.
The terms and conditions of the stock option plan have not yet been defined, and when defined, they will be
subject to the approval of our shareholders at a general shareholders' meeting. After approval, the beneficiaries, the
grant of the plan, the number of shares that each of the beneficiaries will have the right to subscribe for, as well as the
price of exercise of the stock option will be submitted to the approval of our board of directors. The price of exercise
of the stock option that may be granted has not yet been defined and it may be established at a price below the
offering price of our common shares in connection with this offering, or the stock option may even be granted
without any consideration. According to Article 171, Paragraph 3, of Brazilian Corporate Law, shareholders will not
have rights of first refusal in the exercise of the stock option plan. As of the date of this offering memorandum, stock
option plans have not been approved by our shareholders at a general shareholders' meeting or by our board of
directors, nor any stock option has been granted. The issuance of shares upon the exercise of the stock option
according to the terms of a plan that will be implemented would result in the dilution of our shareholders.
Taking into account the capital increase in connection with the stock option plan, the offering price per share of
R$27.00, after deducting estimated commissions payable by us, the estimated net book value of our shareholders'
equity as of March 31, 2007, would be approximately R$559.4 million, or R$0.83 per share issued by us, resulting,
therefore, in an immediate increase in the book value of our shareholders' equity per share of R$0.73 to existing
shareholders, and an immediate dilution in the book value of our shareholders' equity as of March 31, 2007, of
R$26.17 per share to new shareholders purchasing shares in this offering. Dilution for this purpose represents the
difference between the price per share paid by investors in this offering and the shareholders' equity per share
immediately after completion of this offering.
The table below illustrates this dilution:

In reais except In U.S. dollars
percentages except percentages
Price per share ..................................................................................................... 27.00 13.17
Shareholders' equity per share as of March 31, 2007........................................... 0.10 0.05
Increase in the shareholders' equity per share attributed to existing shareholders ........ 0.73 0.35
Shareholders' equity per share after this offering................................................. 0.83 0.40
Dilution in net book value per share to new shareholders.................................... 26.17 12.76
Percentage of dilution per share to new shareholders .......................................... 96.9% 96.9%
SELECTED FINANCIAL INFORMATION
of income, statements of changes in shareholders' equity and the statements of changes in financial
position and explanatory notes, prepared in accordance with Brazilian GAAP.
To facilitate the analysis of our financial statements, we have in the past prepared an explanatory note to
our financial statements "Result from Redecard Consortium Participation" that showed the revenues, expenses
and the operating income of the Redecard Consortium as a whole, and not only the results attributed to
Redecard S.A.
Therefore, we believe that the statement of income that would best reflect the results of operations is the
one contained in the explanatory note to our financial statements "Result from Redecard Consortium
Participation" for the years ended December 31, 2004, 2005 and 2006, and for the three-month periods ended
March 31, 2006 and 2007, because this note shows full statements of income related to the activities that we
currently carry out.
Three-month period
2004 2005 2006 2006 2006 2007 2007
of U.S. of U.S.
Net Revenue
Operating revenue..................................... 1,005.6 1,315.0 1,600.4 780.6 361.5 418.2 203.9
Service tax(1)............................................ (39.8) (50.7) (58.8) (28.7) (13.5) (15.3) (7.5)
PIS(2) ........................................................ (13.4) (9.3) (12.3) (6.0) (3.2) (2.7) (1.3)
COFINS(3) ............................................... (58.3) (61.2) (68.6) (33.5) (17.0) (16.7) (8.1)
Financial revenue...................................... 409.0 541.1 562.0 274.1 148.5 208.0 101.5
Financial expenses.................................... (145.7) (217.3) (213.3) (104.0) (55.0) (45.7) (22.3)
1,157.4 1,517.6 1,809.4 882.5 421.3 545.8 266.2
Cost of services rendered.......................... (173.7) (214.3) (295.3) (144.0) (70.8) (62.7) (30.6)
Gross profit.............................................. 983.7 1,303.3 1,514.1 738.5 350.5 483.1 235.6
Operating expenses
Administrative expenses........................... (237.7) (283.2) (242.7) (118.4) (73.9) (58.0) (28.3)
Depreciation and amortization ................. (75.0) (153.6) (134.2) (65.5) (34.6) (28.3) (13.8)
Other operating expenses ......................... (191.5) (211.6) (199.9) (97.5) (52.9) (51.5) (25.1)
(504.2) (648.4) (576.8) (281.4) (161.5) (137.8) (67.2)
Operating income ................................... 479.5 654.9 937.3 457.1 189.0 345.3 168.4
Distribution of income Redecard S.A. ..... 226.4 285.8 442.8 216.0 83.6 149.1 72.7
Other consortium members ...................... 253.1 369.1 494.5 241.1 105.4 196.2 95.7
Total ......................................................... 479.5 654.9 937.3 457.1 189.0 345.3 168.4

Three-month period
2004 2005 2006 2006 2006 2007 2007
of U.S. of U.S.
Redecard Consortium operating
income .................................................. 479.5 654.9 937.3 457.1 189.0 345.3 168.4
Adjusted PIS/COFINS taxes(1)................ (19.2) (24.5) (31.0) (15.1) (5.6) (11.3) (5.5)
Pro forma income before income and
social contribution taxes ....................... 460.3 630.4 906.3 442.0 183.4 334.0 162.9
Social contribution tax(2) ......................... (41.3) (58.0) (80.6) (39.3) (15.1) (30.0) (14.6)
Income tax(2)............................................ (116.5) (160.7) (223.8) (109.1) (44.5) (87.0) (42.4)
Redecard pro forma net income ............ 302.5 411.7 601.9 293.6 123.8 217.0 105.9
(1) We apply the PIS and COFINS rates based on the non-cumulative method. On this calculation basis, we apply the PIS and COFINS
rates of 1.6% and 7.6%, respectively. For more information, see "Management's Discussion and Analysis of Financial Condition and
Results of Operations—Our Main Sources of Revenue and Expenses⎯Description of the Main Line Items in Our Results of
Operations—Net Revenue—PIS and COFINS."
(2) For the calculation of social contribution and income taxes, we used the effective rates ascertained in accordance with our accounting
and tax book records. For this reason, the proportion of these taxes is variable in each of the periods. The effective social contribution
tax rates vary between 8.2% and 9.2%, while the effective income tax rates vary between 24.3% and 26.0%.
those presented in the explanatory note "Result from Redecard Consortium Participation," and results after this
date will be substantially different from our results, after the distribution of the results in the Redecard
Consortium, for the years ended December 31, 2004, 2005 and 2006 and for the three-month periods ended
March 31, 2006 and 2007.
The table below sets forth our results of operations after the distribution of operating income to the
members of the Redecard Consortium in the periods indicated:
Three-month period
2004 2005 2006 2006 2006 2007 2007
of U.S. of U.S.
Result from Redecard Consortium

participation ......................................... 226.4 285.8 442.8 216.0 83.6 149.1 72.7
Income before income and social
contribution tax ..................................... 226.4 285.8 442.8 216.0 83.6 149.1 72.7
Social contribution tax.............................. (20.3) (26.2) (39.6) (19.3) (6.9) (13.5) (6.6)
Income tax................................................. (57.3) (72.8) (109.4) (53.3) (20.4) (26.7) (13.0)
Net income for the year ........................... 148.7 186.7 293.6 143.2 56.3 108.9 53.1
The table below shows our balance sheet data for the periods indicated:
As of December 31, As of March 31,
2004 2005 2006 2006 2007 2007
(in millions of (in millions (in millions of
(in millions of reais) U.S. dollars) of reais) U.S. dollars)
Assets
Current assets
Cash and cash equivalents...................................... 13.4 13.9 215.4 105.1 16.7 8.1
Accounts receivable - issuers ................................. 5,939.0 8,006.1 9,940.5 4,848.1 8,444.3 4,118.4
Other accounts receivable ...................................... 33.3 35.3 56.8 27.7 59.0 28.8
contribution taxes ............................................... 33.2 45.3 69.2 33.7 54.5 26.6
Total current assets.................................................... 6,018.8 8,100.6 10,281.9 5,014.6 8,574.5 4,181.9
Long-term assets
contribution taxes ............................................... 36.6 48.9 40.7 19.8 26.1 12.7
Judicial deposits...................................................... 9.4 12.4 13.8 6.7 13.7 6.7
Total long-term assets................................................ 46.0 61.4 54.5 26.5 39.8 19.4
Permanent assets
Fixed assets............................................................. 475.1 583.1 677.5 330.4 704.3 343.5
Accumulated depreciation...................................... (239.9) (378.2) (502.3) (245.0) (530.3) (258.6)
Total permanent assets.............................................. 235.3 204.9 175.3 85.4 174.0 84.9
Total assets.................................................................. 6,300.1 8,366.9 10,511.7 5,126.5 8,788.3 4,286.2
Liabilities
Current liabilities
Accounts payable to merchants.............................. 5,390.7 7,313.3 9,420.5 4,594.5 7,738.2 3,774.0
Labor obligations.................................................... 8.6 9.9 11.0 5.4 11.7 5.7
Taxes payable ......................................................... 11.5 8.6 29.2 14.2 18.7 9.1
Borrowings ............................................................. 393.2 362.0 375.7 183.2 361.9 176.6
Other accounts payable .......................................... 293.3 414.5 427.3 208.3 477.1 232.7
Total current liabilities.............................................. 6,097.3 8,108.3 10,263.7 5,005.6 8,607.7 4,198.1
Long-term liabilities
Provisions for contingent liabilities ....................... 149.3 195.8 183.7 89.6 116.3 56.8
Total long-term liabilities.......................................... 149.3 195.8 183.7 89.6 116.3 56.8
Shareholders' equity .................................................. 53.6 62.9 64.3 31.3 64.3 31.3
Capital..................................................................... 45.2 53.6 53.6 26.1 53.6 26.1
Revenue reserve...................................................... 8.4 9.3 10.7 5.2 10.7 5.2
Total liabilities and shareholders' equity ................ 6,300.1 8,366.9 10,511.7 5,126.5 8,788.3 4,286.2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion concerning our financial condition and results of operations is based on, and
should be read in conjunction with, our audited financial statements for the years ended December 31, 2004,
2005 and 2006, our unaudited financial statements for the three-month period ended March 31, 2006, which
have been the subject of limited review, our audited financial statements for the three-month period ended
March 31, 2007, and related notes included elsewhere in this offering memorandum, as well as the information
contained in the sections "Presentation of Financial and Other Information", "Summary Financial and
Operating Information" and "Selected Financial Information."
The preparation of the financial statements referred to in this section required the adoption of assumptions
and estimates that affect the amounts recorded as assets, liabilities, revenues and expenses in the years
addressed and are subject to certain risks and uncertainties. The actual results may vary substantially from
those indicated as a result of various factors that affect our business including, among others, those mentioned
in the sections "Forward-looking Statements" and "Risk Factors", and other questions discussed elsewhere in
this offering memorandum.
Overview
We are one of the leading companies in the merchant acquiring and payment processing industry in
Brazil, and are currently the only acquirer of the MasterCard and Diners Club cards in Brazil. We are
responsible for acquiring merchants to accept credit and debit cards as a means of payment for goods and
services, as well as for the capturing, transmission, processing and settlement of credit and debit card
transactions. In 2006, we had a 34.0% market share based on the value of transactions with credit and debit
cards in Brazil, which reached a total of R$246.3 billion. According to data from the ABECS, this market
represented 17.6% of the total private consumption in Brazil during the same year. In 2002, we captured and
processed 569 million transactions, and in 2006 we captured and processed more than 1.5 billion
transactions, which represented a 27.8% average annual growth rate since 2002. In 2006, we had more than
1.0 million affiliated merchants and were present in all Brazilian municipalities with electrical power and
telecommunications infrastructure. Out of the total number of our affiliated merchants, 639,000 were active
in 2006, which if compared to similar companies in the United States, would make us the fifth-largest
merchant acquirer and payment processor in the United States in terms of number of active merchants,
according to data from the Nilson Report regarding the U.S. market for 2006.
In addition to our activities of affiliating merchants to accept credit and debit cards as a means of payment
for goods and services, and the capturing, transmission, processing and settlement of credit and debit card
transactions, we also offer additional services to our merchants and other customers, which include voucher
electronic capture equipment, prepayment to merchants of receivables from credit card sales, check verification
Three-month period
Growth Growth
2004 2005 2006 (2004-2006) CAGR 2006 2007 (2006-2007)
Net revenue ......................................... 1,157.4 1,517.6 1,809.4 56.3% 25.0% 421.3 545.8 29.6%
Adjusted EBITDA(1) ......................... 557.9 808.4 1,087.9 95.0 39.7% 224.5 317.0 41.2%
Adjusted EBITDA Margin(2) ........... 48.2% 53.3% 60.1% 11.9p.p. – 53.3% 58.1% 4.8.p.
Operating income............................... 479.5 654.9 937.3 95.5% 39.8% 189.0 345.3 82.7%
Pro forma net income ......................... 302.5 411.7 601.9 99.0% 41.1% 123.8 217.0 75.3%
Pro forma net margin(3) .................... 26.1% 27.1% 33.3% 7.2p.p. – 29.4% 39.8% 10.4p.p.
Credit cards
Value of transactions............................ 37,021.5 47,285.8 57,240.5 54.6% 24.3% 12,469.7 14,839.3 19.0%
Number of transactions
(in thousands).................................... 474,848 586,830 680,972 43.4% 19.8% 152,971 174,204 13.9%
Debit cards
Value of transactions............................ 13,929.0 19,592.1 25,813.7 85.3% 36.1% 5,660.8 7,346.6 29.8%
(in thousands).................................... 324,033 441,483 559,119 72.6% 31.4% 126,013 156,778 24.4%
Affiliated merchants .......................... 825,104 901,448 1,018,776 23.5% 11.1% 924,355 1,032,948 11.7%
Electronic capture
of transactions (%).......................... 98.6% 99.2% 99.9% 1.3p.p. – 99.4% 99.9% 0.5p.p.
(1) Our Adjusted EBITDA consists of our operating income plus depreciation and amortization and adjusted by net financial results,
which, however, includes financial income related to prepayment of receivables to merchants, which we consider as part of our
operating activities and thus we add it back to our Adjusted EBITDA . By advancing payments to merchants, we anticipate the
payment that we would have to make on the due date related to the credit card transactions. Adjusted EBITDA is not a measure of
financial performance under Brazilian GAAP, and should not be considered individually, as either an alternative to net income as a
performance indicator or operating cash flow or a measure of liquidity. Adjusted EBITDA does not have standardized meanings and
our definition of Adjusted EBITDA may not compare to Adjusted EBITDA as used by other companies. For further information on our
Adjusted EBITDA, see "Presentation of Financial Information and Other Information—Adjusted EBITDA Reconciliation."
Brazilian Economic Situation
Since 2004, the main Brazilian economic indicators have improved significantly. In 2004, Brazil's gross
domestic product, or GDP, increased by 5.7%. The average unemployment rate in the main metropolitan
regions of Brazil decreased from 12.3% for the year ended December 31, 2003, to 11.5% for the year ended
December 31, 2004, according to IBGE estimates, resulting in an increase in demand for goods and services in
those regions. The primary tax surplus was 4.2% of the GDP for the year ended December 31, 2004, and the
current account balance was US$11.7 billion. Average inflation, as measured by the IPCA, was 7.6%, and the
average Brazilian long-term interest rate, or TJLP interest rate, was 9.8%. In 2004, the real appreciated 8.1%
against the U.S. dollar as compared to 2003.
Between December 31, 2004 and 2005, the real appreciated by 11.8% against the U.S. dollar. Despite this
appreciation, Brazil's current account balance was US$14.0 billion, a historic high. The average unemployment
rate in the principal metropolitan regions of Brazil decreased from 11.5% for the year ended December 31,
2004, to 9.8% for the year ended December 31, 2005, according to the IBGE estimates. In 2005, inflation, as
measured by the IPCA, was 5.7% and the average TJLP interest rate was 9.8% per annum. GDP grew by 2.9%
in the same year.
The real appreciated 8.7% against the U.S. dollar between December 31, 2005 and 2006. Notwithstanding
the real's appreciation, Brazil's current account balance was US$13.5 billion. The average unemployment rate
in the principal metropolitan regions of Brazil increased from 9.8% for the year ended December 31, 2005, to
10.0% for the year ended December 31, 2006, according to IBGE estimates. In 2006, inflation, as measured by
the IPCA, was 3.1% and the average TJLP interest rate was 7.9% per annum.
The real apreciated 4.10% against the U.S. dollar between December 31, 2006 and March 31, 2007.
Brazil's current account balance was US$13.79 billion, twelve months roll, as of March 31, 2007. The average
unemployment rate in the principal metropolitan regions of Brazil decreased from 9.9% in the first quarter of
2006, to 9.77% in the first quarter of 2007, according to IBGE estimates. In the first quarter of 2007, inflation,
as measured by the IPCA, was 1.3% and the average TJLP interest rate was 6.54% per annum.
The table below sets forth the rate of GDP growth, exchange rate variation, inflation rate and interest rates
for the periods indicated:
Three-month
period ended
Year ended December 31, March 31,
2002 2003 2004 2005 2006 2007
GDP growth(1)............................................................. 2.7% 1.1% 5.7% 2.9% 3.7% 0.8%
Inflation (IGP-M)(2) .................................................... 25.3% 8.7% 12.4% 1.2% 3.8% 1.1%
Inflation (IPCA)(3) ...................................................... 12.5% 9.3% 7.6% 5.7% 3.1% 1.3%
CDI rate(4) ................................................................... 22.7% 16.9% 17.5% 18.2% 13.1% 12.7%
TJLP(5) ........................................................................ 10.0% 11.0% 9.8% 9.8% 6.8% 6.5%
Increase in real value against U.S. dollar .................... (52.3)% 18.2% 8.1% 11.8% 8.7% (4.1)%
Exchange rate (at period end) R$ per US$1.00 ........... R$3.533 R$3.533 R$2.889 R$2.341 R$2.138 R$2.050
Average exchange rate R$ per US$1.00(6) ................. R$2.929 R$3.071 R$2.927 R$2.435 R$2.177 R$2.089
Sources: Brazilian National Bank for Socio-Economic Development (Banco Nacional de Desenvolvimento Econômico e Social), or BNDES,
Central Bank and Fundação Getúlio Vargas.
(1) Calculated according to the currently applicable methodology as revised in 2007. Source: IBGE.
(2) The inflation rate (IGP-M) is the general index of market prices (Índice Geral de Preços-Mercado), as calculated by Fundação Getúlio Vargas.
(3) The inflation rate (IPCA) is the extended consumer price index (Índice de Preços ao Consumidor Amplo), as calculated by the IBGE.
(4) The Interbank Deposit Certificate (Certificado de Depósito Interbancário), or CDI rate, is the average daily interbank deposit index in
Brazil (at the end of each month and annually).
(5) Represents the Taxa de Juros de Longo Prazo, which is the interest rate applied by BNDES for long-term financing (at the end of the period).
(6) Average of the exchange rate for the last day of each month during the period.
Factors that Affect Our Results of Operations
Inflation
Inflation affects the costs of the major agreements we have entered into with our suppliers, in particular,
agreements with: (1) fixed and cellular telephone operators, due to the price adjustments linked to the General
Market Price Index (Índice Geral de Preços – Mercado), or IGP-M, and (2) suppliers of data processing
services, because these suppliers have a large number of employees whose remuneration is subject to inflation
adjustment. Our revenues are indirectly adjusted for inflation because (1) the increased costs resulting from
inflation are automatically reflected in the value of credit and debit card transactions, and (2) our revenues
derive from a merchant discount rate, which is measured as a percentage of the total value of the transactions.
Interest Rates
Our practice of prepayment of receivables from credit card sales is related to our very short-term liquidity.
We anticipate receivables to merchants 47 days on average. If we face difficulties in our very short-term
liquidity, we may ask for prepayment of receivables to card issuers. However, this prepayment of receivables
from card issuers or any raising of funds in the capital markets is subject to changes in interest rates.
We did not incur any financial losses arising from increasing interest rates during the years ended
December 31, 2004, 2005 and 2006 and the three-month periods ended March 31, 2006 and 2007.
Exchange Rates
The purchase price of POS electronic capture equipment, as well as maintenance parts, is indexed to the
U.S. dollar. Consequently, variations in the price of the U.S. dollar may affect our results of operations. In 2002,
due to the significant devaluation of the real, we reduced our investment in the expansion of our installed
equipment base, because there was a disparity between the rise in rental prices and the price to acquire the
equipment. In the following year, 2003, we reviewed the equipment maintenance prices with our suppliers and
as a result we granted suppliers price increases that were greater than the rate of inflation. This caused merchant
acquirers to seek new equipment from other suppliers and, during the following three years, both the
strengthening of the real and the entry of new suppliers into the business caused prices for the acquisition and
maintenance of POS electronic capture equipment to decrease. We have passed on these savings to merchants
by reducing the equipment's average rental price. In addition, we have no material obligations indexed to
foreign currencies that could substantially affect our results of operations.
Increased Use of Credit and Debit Cards
Our results of operations are affected by the use of credit and debit cards in Brazil. According to the Central
Bank, the use of checks in total transactions except for cash transactions decreased from 57.0% in 2000 to
27.0% in 2005, while the use of cards increased from 21.0% to 45.0% in the same period. Comparing this data
with the Bank for International Settlements, or BIS', statistics, Brazil registered the fastest rate of substitution of
credit and debit cards for checks among all the countries that were analyzed by the BIS. However, Brazil faces
material obstacles that could affect this trend. These obstacles are: (1) restricted access of low-income
consumers to the banking system, and (2) informal economy and tax evasion.
Presentation of Financial Statements
of income, statements of changes in shareholders' equity, statements of changes in financial position
and explanatory notes prepared in accordance with Brazilian GAAP.
Redecard Consortium
History
Late in the 1970's Citibank, Itaucard and Unibanco formed Credicard, a credit card management company.
It was a successful initiative from the very beginning, which set successive records both as a card issuer and in
terms of the number of affiliated merchants. In 1983, in a joint venture with Visa International, Credicard began
to issue Visa branded cards. In 1987, Credicard terminated its agreement with Visa International and a joint
venture was formed with MasterCard International.
In 1990, Credicard managed a credit card portfolio encompassing 60 financial institutions located in Brazil.
Credicard did not undertake the risks of granting credit to cardholders, it had a share of the results from
operations related to the credit card portfolio then carried out jointly with these financial institutions, as it was
still the exclusive issuer of MasterCard branded cards.
This exclusivity terminated in 1996, mainly as a result of changes in the financial market, including the
merger of former Banco Nacional by Unibanco. As a result of this merger, one financial conglomerate
concentrated operations as a card issuer for Visa branded cards (Banco Nacional) and for MasterCard branded
cards (Unibanco, who had exclusivity through Credicard to issue MasterCard branded credit cards).
At the time, thus, MasterCard and Visa card issuers operated both in granting credit to cardholders and in
the affiliation of merchants to accept either these credit card brands as a means of payment for goods and
services, as well as other local and international card brands.
Redecard S.A was founded on September 2, 1996 as a result of the spin-off of the merchant acquiring and
payment processing departments of Credicard. The shareholders of Redecard were the same shareholders of
Credicard. After its formation, MasterCard International also became a shareholder of Redecard. Redecard's
focus has been on relationships with merchants and development and maintenance of specific systems and
processes to serve issuers of MasterCard and Diners Club credit cards in Brazil, in addition to Redeshop and
Maestro branded debit card issuers.
On November 1, 1996, the shareholders of Redecard decided that the most effective vehicle to implement
their joint venture was a consortium and, as a result, the Redecard Consortium was created with the purpose of
managing the base of credit cards already issued by Credicard, as well as Credicard's merchant acquiring and
payment processing network and systems that were already in place and had been transferred to Redecard.
The Redecard Consortium was organized in accordance with Articles 278 and 279 of Brazilian Corporate
Law. Under these provisions, the Redecard Consortium was not considered as a partnership or a corporation.
The consortium's contractually stated business purpose was that of a "joint venture for provision of services
related to the use of Redecard system in connection with cards issued by the associated issuers: (1) management
of affiliated merchants network; (2) capture, transmission, processing and settlement of transactions resulting
from the use of credit and debit cards; and (3) development of other related or connected businesses."
Initially, Credicard and Redecard were members of the Redecard Consortium. Later, in April 1997,
pursuant to a first amendment to the Redecard Consortium formation contract, Credicard assigned to our
controlling shareholders part of its rights in the income distribution of the Redecard Consortium according to its
share in the consortium's revenues. Subsequently, in December 1997, pursuant to a second amendment to the
Redecard Consortium formation contract, Itaucard had the same rights as Credicard in the income distribution
of the Redecard Consortium as a result of the assignment of another portion of Credicard's share in the
consortium's revenues, which corresponded to the credit card base issued by Itaucard. Then, in January 2006,
pursuant to a third amendment to the Redecard Consortium formation contract, Credicard withdrew from the
Redecard Consortium and assigned to the shareholders of Redecard its remaining rights to income distribution
of the Redecard Consortium. Lastly, pursuant to a fourth amendment to the Redecard Consortium formation
contract, dated March 31, 2007, the Redecard Consortium was terminated.
Results of Operations
To facilitate the analysis of our financial statements, we have in the past prepared an explanatory note to our
financial statements "Result from Redecard Consortium Participation" that showed the revenues, expenses and the
operating income of the Redecard Consortium as a whole, and not only the results attributed to Redecard S.A.
Therefore, we believe that the statement of income that would best reflect the results of operations is the one
contained in the explanatory note to our financial statements "Result from Redecard Consortium Participation" for
the years ended December 31, 2004, 2005 and 2006, and for the three-month periods ended March 31, 2006 and
2007, because this note shows full statements of income related to the activities that we currently carry out.
Three-month period
2004 2005 2006 2006 2006 2007 2007
Net Revenue
Operating revenue ................................... 1,005.6 1,315.0 1,600.4 780.6 361.5 418.2 203.9
Service tax(1) .......................................... (39.8) (50.7) (58.8) (28.7) (13.5) (15.3) (7.5)
PIS(2) ...................................................... (13.4) (9.3) (12.3) (6.0) (3.2) (2.7) (1.3)
COFINS(3).............................................. (58.3) (61.2) (68.6) (33.5) (17.0) (16.7) (8.1)
Financial revenue .................................... 409.0 541.1 562.0 274.1 148.5 208.0 101.5
Financial expenses .................................. (145.7) (217.3) (213.3) (104.0) (55.0) (45.7) (22.3)
1,157.4 1,517.6 1,809.4 882.5 421.3 545.8 266.2
Cost of services rendered ........................ (173.7) (214.3) (295.3) (144.0) (70.8) (62.7) (30.6)
Gross profit............................................ 983.7 1,303.3 1,514.1 738.5 350.5 483.1 235.6
Operating expenses
Administrative expenses ......................... (237.7) (283.2) (242.7) (118.4) (73.9) (58.0) (28.3)
Depreciation and amortization................ (75.0) (153.6) (134.2) (65.5) (34.6) (28.3) (13.8)
Other operating expenses........................ (191.5) (211.6) (199.9) (97.5) (52.9) (51.5) (25.1)
(504.2) (648.4) (576.8) (281.4) (161.5) (137.8) (67.2)
Operating income.................................. 479.5 654.9 937.3 457.1 189.0 345.3 168.4
Redecard S.A. ...................................... 226.4 285.8 442.8 216.0 83.6 149.1 72.7
Other consortium members..................... 253.1 369.1 494.5 241.1 105.4 196.2 95.7
Total........................................................ 479.5 654.9 937.3 457.1 189.0 345.3 168.4

income conform to the presentation of those of the three months ended March 31, 2006 and 2007."
Three-month period
2004 2005 2006 2006 2006 2007 2007
Redecard Consortium operating income........ 479.5 654.9 937.3 457.1 189.0 345.3 168.4
Adjusted PIS/COFINS taxes(1) .......................... (19.2) (24.5) (31.0) (15.1) (5.6) (11.3) (5.5)
and social contribution taxes............................ 460.3 630.4 906.3 442.0 183.4 334.0 162.9
Social contribution tax(2) ................................... (41.3) (58.0) (80.6) (39.3) (15.1) (30.0) (14.6)
Income tax(2) ...................................................... (116.5) (160.7) (223.8) (109.1) (44.5) (87.0) (42.4)
Redecard pro forma net income....................... 302.5 411.7 601.9 293.6 123.8 217.0 105.9
(1) We apply the PIS and COFINS rates based on the non-cumulative method. On this calculation basis, we apply the PIS and COFINS rates of 1.6% and 7.6%,
respectively. For more information, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Our Main Sources of
Revenue and Expenses⎯Description of the Main Line Items in Our Results of Operations—Net Revenue—PIS and COFINS."
(2) For the calculation of social contribution and income taxes, we used the effective rates ascertained in accordance with our accounting and tax
book records. For this reason, the proportion of these taxes is variable in each of the periods. The effective social contribution tax rates vary
between 8.2% and 9.2%, while the effective income tax rates vary between 24.3% and 26.0%.
those presented in the explanatory note "Result from Redecard Consortium Participation," and results after this date
will be substantially different from our results, after the distribution of the results in the Redecard Consortium, for the
years ended December 31, 2004, 2005 and 2006 and for the three-month periods ended March 31, 2006 and 2007.
Critical Accounting Policies
We describe below our main accounting policies that currently affect our financial condition and results of
operations and which require that our management make specific estimates and assumptions using its
experience and other factors that are considered reasonable and relevant. These include estimates and
assumptions related to the provision for doubtful accounts and for contingent liabilities as well as to determine
the residual value of property, plant and equipment. The adoption of these estimates and assumptions requires
that our management make assumptions relating to the effects on its financial condition and results of
operations of matters that are inherently uncertain. Should our management decide to change these estimates
and assumptions, our financial condition and results of operations could be materially affected.
Below is information relating to our critical accounting policies. See the notes to our financial statements
included elsewhere in this offering memorandum for more information on the accounting policies set forth
below and the other accounting policies used by us.
Provisions for Doubtful Accounts
Provisions for doubtful accounts are made on the basis of risk analyses of the amounts receivable from card
issuers and merchants, mainly based on default history. The provisions are recorded for amounts that our
management considered sufficient to cover probable losses. In the years ended December 31, 2005 and 2006, it
was not necessary to record a provision for accounts receivable from card issuers. In these periods we recorded
provisions for the amounts of: (1) rent for non-active POS electronic capture equipment installed at merchant
locations, considered to be inactive by us, and (2) transactions not accepted by credit card holders
(chargebacks). All provisions are fully recorded in the results of the Redecard Consortium and are disclosed in
the explanatoru note to our financial statements "Result from Redecard Consortium Participation."
Contingent Liabilities
Contingent liabilities arise from judicial proceedings related to the normal course of our business. The
contingencies are evaluated by internal counsel, external counsel and experts and are quantified using criteria that
allow for their adequate measurement, despite the inherent uncertainty concerning the duration and amounts of these
lawsuits. We make provisions for contingencies classified as probable. For contingencies classified as possible, we
disclose the risks of the contingency according to Brazilian GAAP and do not make any provisions. For
contingencies classified as remote, there is no disclosure of the risks involved in the contingency or provision. Our
policy is to make provisions for all tax and labor proceedings. For civil contingencies, we make provisions based on
our internal counsel's opinion in light of the evolution of the proceedings and considering our external legal counsel's
opinion. We make provisions for civil contingencies that are considered as probable loss.
Depreciation and Amortization
We periodically reevaluate the need for tests on the ability to recover long-term assets based on many
indicators, including the level of profitability of the business and technological development. When necessary,
upon the occurrence of any negative event, such as a significant drop in the market value of fixed assets or a
material adverse change in the manner in which long-term assets are being used, cash flow statements are
prepared to determine whether the book value of fixed assets and deferred assets are recoverable. To estimate
future cash flows, we use several assumptions and estimates that may be influenced by different internal and
external factors, such as economic and industry trends, interest rates, exchange rates, changes in business
strategies and in the types of products offered to the market.
We record fixed asset depreciation expenses using the straight-line method. The assets' useful life is periodically
revised based on existing facts and circumstances. Due to the nature of our business, determining the useful life of the
equipment requires considerable judgment. If we are required to significantly change the assumptions used,
depreciation expenses, losses from obsolescence and book value of fixed assets may be materially different. During
2005, based on a technical opinion issued by a specialized institute and in accordance with applicable legislation, the
depreciation rate for the POS electronic capture equipment was changed from 20.0% to 33.3% per year to better
reflect the useful economic life of the equipment in the results of the Redecard Consortium.
Our Main Sources of Revenues and Expenses
The main sources of our revenues and expenses are the capture, transmission, processing and settlement of
transactions performed with the use of MasterCard and Diners Club credit and debit cards. They consist essentially
of: (1) the merchant discount rate charged to merchants based on the value of the transactions processed and (2) costs
related to these activities, such as: equipment maintenance, processing, handling and telephone use, among others.
The table below sets forth our operating results for the periods indicated:
For the three-month
For years ended December 31, periods ended March 31,
2004 2005 2006 2006 2006 2007 2007
Credit .............................................. 606.2 790.7 921.1 449.2 206.8 226.4 110.4
Debit................................................ 107.7 151.7 202.9 99.0 44.2 57.8 28.2
Equipment rental............................. 248.0 315.5 406.3 198.2 93.6 115.0 56.1
Check verification........................... 12.7 16.8 23.4 11.4 5.6 6.1 3.0
Voucher........................................... 19.7 23.2 29.6 14.4 6.7 8.3 4.0
Private-label.................................... 4.7 6.3 10.6 5.2 1.3 4.6 2.2
Others.............................................. 6.6 10.8 6.5 3.2 3.3 0 0
Operating revenue........................... 1,005.6 1,315.0 1,600.4 780.5 361.5 418.2 204.0
ISS................................................... (39.8) (50.7) (58.8) (28.7) (13.5) (15.3) (7.5)
PIS................................................... (13.4) (9.3) (12.3) (6.0) (3.2) (2.7) (1.3)
COFINS .......................................... (58.3) (61.2) (68.5) (33.4) (17.0) (16.7) (8.1)
Taxes............................................... (111.6) (121.2) (139.6) (68.1) (33.7) (34.7) (16.9)
Net financial income....................... 263.3 323.8 348.6 170.0 93.5 162.3 79.2
Net revenue.................................... 1,157.4 1,517.6 1,809.4 882.5 421.3 545.8 266.2
Cost of services rendered................ (173.7) (214.3) (295.3) (144.0) (70.9) (62.7) (30.6)
Administrative expenses................. (237.7) (283.2) (242.7) (118.4) (73.9) (58.0) (28.3)
Depreciation and amortization........ (75.0) (153.6) (134.2) (65.5) (34.6) (28.3) (13.8)
Other operating expenses................ (191.5) (211.6) (199.9) (97.5) (52.9) (51.5) (25.1)
Operating expenses....................... (504.2) (648.4) (576.8) (281.4) (161.4) (137.8) (67.2)
Operating income ......................... 479.5 654.9 937.3 457.1 189.0 345.3 168.4
Description of the Main Line Items in Our Results of Operations
Net Revenue
Operating Revenue
Our main source of revenues is the capture, transmission, processing and settlement of transactions
performed with MasterCard and Diners Club credit and debit cards. These revenues are calculated based on the
merchant discount rate negotiated with merchants on the value of the captured transactions, which is charged to
our results on the date the respective transaction is processed. These revenues are realized when we receive the
amount of the captured transaction from the card issuer, net of the interchange fee. This occurs, on average,
28 days after the capture of the transaction with credit cards and one day after the capture of the transaction with
debit cards. We pay the amount of the transaction, net of the merchant discount rate, on average, 30 days after
the capture of the transactions. The merchant discount rate for credit card transactions for payments in
installments is charged to merchants when we receive the amount of each installment from card issuers.
In addition, we receive revenues from the rental of POS electronic capture equipment. Equipment rental fees
vary in accordance with criteria such as the merchant's business segment and its location. The rental arrangement is
formalized through a technology lease agreement. Charging of the equipment rental does not depend on the
merchant's use of equipment and is discounted when we pay the merchant the transaction amounts.
We have other sources of revenues from the provision of services, such as vouchers, private-labels, check
verification, from which we receive a fee for each captured transaction.
Service Tax (ISS tax)
Our revenues are subject to ISS tax at a 5.0% rate on (1) revenues from the merchant discount rate charged to
merchants on transactions, (2) revenues from the provision of services for check verification, and (3) fees charged with
respect to the voucher and private-labels businesses. ISS tax is not charged on revenues from: (1) rental of POS
electronic capture equipment and (2) commercial discount rates charged to merchants on the prepayment of receivables.
PIS and COFINS
Prior to March 31, 2007, we used two methods for calculating PIS and COFINS on revenues from the provision of
services (except financial revenue) from the Redecard Consortium: the cumulative method and the non-cumulative
method. Under the cumulative method, rates for PIS and COFINS were 0.6% and 4.0%, respectively. The cumulative
method was used by the financial institutions that were members of the Redecard Consortium. Itaucard and Unibanco
always operated under this method. Citibank joined in June 2006, when FNC Comércio e Participações Ltda., or FNC, a
non-financial institution affiliated to Citibank, assigned its shareholding in Redecard to Citibank.
Under the non-cumulative method, the rates for PIS and COFINS were 1.6% and 7.6%, respectively. This
method was used by Redecard for revenues from the provision of services (except financial revenue) from the
Redecard Consortium.
On March 31, 2007, according to the "Termination Agreement of the Redecard Consortium," the members
of the Redecard Consortium approved its winding up and termination. Beginning on April 1, 2007, we assumed
all activities that were under the responsibility of the Redecard Consortium related to the management and
operation of Redecard network. The obligations, rights, revenues, expenses and financial and operating results
of the Redecard Consortium have been fully allocated to us.
The subsequent effects on us are directly related to the calculation of taxes, especially PIS, COFINS and
income and social contribution taxes. With respect to PIS and COFINS, the rates levied on operating revenue
will be levied according to the non-cumulative method provided by Laws No. 10,637/02 and 10,833/03, i.e., the
rates of 1.65% and 7.6% for PIS and COFINS, respectively. This change will cause an adverse effect on our
results. Previously, the rates of PIS and COFINS for the members of the Redecard Consortium were levied
according to the cumulative method (1.65% and 3.0% for PIS and COFINS, respectively). In 2007, this effect
will be of approximately R$50.0 million, i.e., 3.2% on our operating revenue. For income and social
contribution taxes, the change will be in the calculation basis for the taxes, which will be our income before
income tax. Previously, our income before income tax was distributed to the members of the Redecard
Consortium and the taxation on Redecard's results was based on its share in the Redecard Consortium.
Net Financial Income
Our financial revenue derives from the commercial discount rate on the prepayment of receivables to
merchants, when receivables from transactions using MasterCard and Diners Club credit cards captured by us
are paid in advance.
These revenues are generated when we pay merchants, settling our obligation (recorded under "Accounts
payable to merchants").
Financial expenses corresponding to the prepayment of our receivables by card issuers are recorded at the
time we obtain the necessary funds to anticipate receivables to merchants.
We believe the net financial income obtained in anticipating receivables to merchants is operating income
because, as a merchant acquirer and payment processor, we anticipate our compliance with our obligation to
settle the captured transaction to the merchant.
In addition, financial expenses arising from bank loans are accounted for in accordance with the accrual
basis method.
Cost of Services Rendered
Cost of services rendered includes all costs related to our operations and varies according to the number of
captured transactions. Main costs are: (1) fees paid to the MasterCard and Diners Club brands; (2) expenses on
the telecommunications network and with telephone operating companies; (3) data-processing expenses; (4)
expenses providing telephone assistance to merchants; (5) POS electronic capture equipment maintenance
expenses; and (6) expenses on materials used by merchants such as rolls of paper.
Operating Expenses
Our operating expenses include general and administrative expenses, depreciation and amortization and
other operating expenses.
Administrative Expenses
Administrative expenses consist mainly of (1) expenses related to salaries, charges and benefits of employees,
including executive officers; (2) expenses on infrastructure of our head offices building, such as rental and
maintenance of property; (3) expenses related to marketing and development of products; (4) expenses related to
maintenance of information technology systems and automation of our administrative operations, such as expenses
on software licenses, as well as maintenance of systems of integrated management of accounting, treasury, financial
planning and costs; and (5) advisors' services, such as auditors and external legal counsel.
Depreciation and amortization expenses include depreciation of POS electronic capture equipment,
computer and office automation equipment, as well as amortization of improvements made to rented properties.
As of December 31, 2005, we changed the estimated useful life of POS electronic capture equipment, based on
a technical report issued by a specialized institute. This change resulted in an increase in the depreciation and
amortization expenses in 2005, from 20.0% to 33.3% per year.
Other Operating Expenses
Other operating expenses include all expenses related to (1) acquiring merchants through the use of our
employees, such as trips, accommodation, transportation, among others, and remuneration expenses related to third
parties, such as card issuers and service providers; (2) fees paid to MasterCard International; (3) maintenance of
software and equipment that are not directed to capturing and processing transactions; and (4) provisions for losses
related to default in payment of rental of POS electronic capture equipment and for losses arising from fraud.
Discussion and Analysis of the Results of Operations
Three-month Period Ended March 31, 2007 Compared to Three-month Period Ended March 31, 2006
Net Revenue
Net revenue increased R$124.5 million, or 29.6% from R$421.3 million in the three-month period ended
March 31, 2006, to R$545.8 million in the same three-month period in 2007. This increase in net revenue
occurred due to the factors described below.
Operating Revenue
Operating revenue increased R$56.7 million, or 15.7%, from R$361.5 million in the three-month period
ended March 31, 2006 to R$418.2 million in the same three-month period in 2007. This increase in operating
revenue occurred mainly due to the factors described below:
(1) Increase in rental revenue from POS electronic capture equipment, in the amount of R$21.4 million,
representing a 22.9% increase, mainly as a result of the 15.5% increase in the number of devices of
POS electronic capture equipment, and, to a lesser extent, the increase in the average monthly rent paid
by merchants;
(2) Increase of R$19.6 million, or 9.5%, in revenues from the merchant discount rate charged to merchants
for the capture of credit card transactions, due to the 19.0% increase in the total value of transactions.
This 9.4% increase in revenues from the merchant discount rate reflected little of the 19.0% increase in
the total value of credit card transactions as a result of the increase in the interchange fee of
approximately 12.8%, which was negotiated with card issuers and MasterCard International and
implemented on March 27, 2006. The interchange fee showed an increase of 14.4% in the period; and
(3) Increase of R$13.6 million, or 30.9%, in revenues from the merchant discount rate charged to
merchants for the capture of debit card transactions, due to a 29.8% increase in the total value of debit
card transactions.
ISS tax payments increased R$1.8 million, or 13.3%, from R$13.5 million in the three-month period ended
March 31, 2006 to R$15.3 million in the same three-month period in 2007. This increase is a direct result of the
increase in revenues from the merchant discount rate charged to merchants on credit and debit card transactions.
PIS and COFINS
PIS and COFINS tax payments calculated on our operating income decreased R$0.5 million and R$0.3 million,
or 15.6% and 1.5%, from R$3.2 million and R$17.0 million, respectively, in the three-month period ended
March 31, 2006 to R$2.7 million and R$16.7 million, respectively, in the same three-month period in 2007. The
decrease in the amount of PIS and COFINS was due to the fact that in the three-month period ended March 31,
2006, FNC, the non-financial institution affiliated with Citibank, was still our shareholder. As a result, the PIS
and COFINS rates applicable to revenues received by FNC in the Redecard Consortium were 1.6% and 7.6%,
respectively. In the three-month period ended March 31, 2007, PIS and COFINS rates applicable to the
revenues received by Citibank were lower (0.6% for PIS and 4.0% for COFINS), because FNC assigned its
stake in Redecard to Citibank in June 2006.
Net financial income increased R$68.8 million, or 73.6%, from R$93.5 million in the three-month period
ended March 31, 2006 to R$162.3 million in the same three-month period in 2007. This increase was mainly a
result of the reversion of the provision for tax contingency related to the inclusion of financial revenue in the
calculation base of PIS and COFINS, in the amount of R$62.7 million because of a decision in our favor issued
by the Brazilian Federal Supreme Court.
Cost of services rendered decreased R$8.2 million, or 11.6%, from R$70.9 million in the three-month period
ended March 31, 2006 to R$62.7 million in the same three-month period in 2007, mainly as a result of a decrease in
costs in the amount of (1) R$3.0 million in maintenance expenses of POS electronic capture equipment because
of changes in operating processes and price negotiations with suppliers of POS electronic capture equipment,
(2) R$2.5 million in maintenance expenses related to capture software, (3) R$1.5 million in processing expenses of
data resulting from price negotiations and system improvements, and (4) R$1.2 million in expenses on materials due
to price negotiations with suppliers of paper rolls used in POS electronic capture equipment.
Operating Expenses
Administrative expenses decreased R$15.9 million, or 21.5%, from R$79.9 million in the three-month
period ended March 31, 2006 to R$58.0 million in the same three-month period in 2007, due to the decrease of:
(1) R$2.9 million in marketing expenses due to increased seasonal marketing activities in the first quarter of
2006, which resulted in a decrease in marketing expenses in the three-month period ended March 31, 2007,
(2) R$6.5 million in maintenance expenses and advisory expenses related to systems and administrative
infrastructure, (3) R$2.0 million in expenses related to data-processing system and (4) R$3.8 million related to
several other expenses, including the amount of R$1.1 million in labor expenses.
Depreciation and amortization expenses decreased R$6.3 million, or 18.3%, from R$34.6 million in the
three-month period ended March 31, 2006 to R$28.3 million in the same three-month period in 2007, mainly
due to the reduction in the acquisition price of POS electronic capture equipment, which, for example, fell by
approximately 15.0% between the three-month periods ended March 31, 2007 and 2006.
There has not been any relevant variation in the amount of other operating expenses from the three-month period
ended March 31, 2006 to the three-month period ended March 31, 2007.
Operating Income
Operating income increased R$156.3 million, or 82.7%, from R$189.0 million in the three-month period
ended March 31, 2006 to R$345.3 million in the same three-month period in 2007.
This increase was mainly due to the following factors:
(1) Non-recurring reversion of provisions for tax contingencies in the amount of R$62.7 million, with
respect to a lawsuit decided in our favor related to the inclusion of financial revenue in the calculation
basis for PIS and COFINS;
(2) Increase in operating income in the amount of R$56.7 million from merchant discount rates charged to
merchants in credit and debit card transactions, and also in revenues from POS electronic equipment
rental; and
(3) Decrease in cost of services rendered in the amount of R$8.2 million and in operating expenses in the
amount of R$23.6 million.
ProForma Net Income
The pro forma net income increased R$93.2 million, or 75.3%, from R$123.8 million in the three-month
period ended March 31, 2006 to R$217.0 million in the same three-month period in 2007.
The pro forma net income assumed the PIS and COFINS expenses of R$11.3 million, social contribution
tax of R$30.0 million and income tax of R$87.0 million.
We applied to both the social contribution tax and the income tax calculations the effective rates
determined in accordance with our accounting and tax records . As a result, the proportion of these taxes varies
in each of the periods.
The table below contains the reconciliation of the pro forma net income for the periods indicated:
Three-month period ended March 31,
2006 2007
(in millions of reais)
Redecard Consortium operating income ............................................................. 189.0 345.3
Adjusted PIS/COFINS taxes(1)................................................................................ (5.6) (11.3)
Pro forma income before income and social contribution taxes ............................. 183.4 334.0
Social contribution tax(2) ......................................................................................... (15.1) (30.0)
Income tax(2)............................................................................................................ (44.5) (87.0)
Redecard pro forma net income............................................................................. 123.8 217.0
(1) We apply the PIS and COFINS rates for the non-cumulative method. On this calculation basis, we apply the PIS and COFINS rates of
1.6% and 7.6%, respectively. For more information, see "⎯Description of the Main Line Items in Our Results of Operations—Net
Revenue—PIS and COFINS."
and tax books. For this reason, the proportion of these taxes is variable in each of the periods. The effective social contribution tax rates
vary between 8.2% and 9.2%, while the effective income tax rates vary between 24.3% and 26.0%.
Year Ended December 31, 2006 Compared to the Year Ended December 31, 2005
Net Revenue
Net revenue increased R$291.8 million, or 19.2%, from R$1,517.6 million in 2005 to R$1,809.4 million in
2006. The increase in revenue is a result of the factors described below.
Operating Revenue
Operating revenue increased R$285.4 million, or 21.7%, from R$1,315.0 million in 2005 to R$1,600.4 million
in 2006. This growth was mainly due to the following factors:
(1) Increase of R$130.4 million, or 16.5%, in revenues resulting from the merchant discount rate charged
to merchants for the capture of credit card transactions, which reached R$921.1 million in 2006 from
R$790.7 million in 2005. This variation resulted from (a) an increase of 21.0% in the value of credit
card transactions and (b) an increase in the merchant discount rate charged to merchants for the capture
credit card transactions of 0.03 percentage points, due to the increase of the participation of
interest-free installment transactions in the total value of transactions. This increase was partially
offset by the increase of the interchange fee by approximately 12.8% from March 27, 2006;
(2) Increase in rental revenues from POS electronic capture equipment of R$90.8 million, or 28.8%, to
R$406.3 million in 2006 from R$315.5 million in 2005. The monthly average installed equipment for
the electronic capture of transactions increased by 31.3% between 2005 and 2006. This increase was
partially offset by the decrease in average monthly rental value by 7.0%; and
merchants for the capture of debit card transactions, to R$202.9 million in 2006 from R$151.7 million
in 2005. This increase results from the growth of 31.8% in the total value of these transactions and
from an increase of 0.7% in the merchant discount rate charged to merchants.
ISS tax payments increased R$8.1 million, or 15.9%, to R$58.8 million in 2006 from R$50.7 million in
2005. This increase was mainly due to the increase in revenues from the merchant discount rate charged to
merchants and from the provision of services.
PIS and COFINS
PIS and COFINS tax payments calculated on our operating income increased R$3.0 million and R$7.3 million,
or 32.3% and 12.0%, respectively, from R$9.3 million and R$61.2 million in 2005, respectively, to R$12.3 million
and R$68.6 million in 2006. Before June 2006, Itaucard and Unibanco were the only members of the Redecard
Consortium considered to be financial institutions. The PIS and COFINS rates applicable on their revenues was
lower than the PIS and COFINS rates on the revenues of Redecard and FNC. FNC assigned its stake in
Redecard to Citibank in June 2006.
Net financial income increased R$24.8 million, or 7.7%, from R$323.8 million in 2005 to R$348.6 million
in 2006. This variation is due to an increase of 12.6% in the volume of prepayment of receivables to merchants.
This increase was partially offset by the decrease in the commercial discount rate applied to prepayment of
receivables to merchants, as a result of the reduction of the basic interest rate that has occurred during the last
two years, from 19.1% in 2005 per year to 15.2% in 2006 per year.
Cost of services rendered increased R$81.0 million, or 37.8%, from R$214.3 million in 2005 to R$295.3 million
in 2006, as a result of a 20.6% increase in the number of credit and debit card transactions we captured between
2005 and 2006, which corresponded to an increase in direct costs.
Operating Expenses
Administrative expenses decreased R$40.5 million, or 14.3%, from R$283.2 million in 2005 to
R$242.7 million in 2006, mainly because of the reversion of part of the provision for tax contingencies,
regarding the ISS tax levied on POS electronic capture equipment rental, due to a change in the law and in the
rule of the IBRACON, which favored us, resulting in the reversion of the amount of R$46.0 million. These
decreases were partially offset by the increase in marketing expenses, in the amount of R$4.0 million, due to our
efforts to encourage the use of credit or debit cards in merchant locations.
Depreciation and amortization expenses decreased R$19.4 million, or 12.6%, from R$153.6 million in
2005 to R$134.2 million in 2006, mainly due to the decrease of the acquisition price of POS electronic capture
equipment, which between 2006 and 2005 decreased approximately 26.6%.
Other operating expenses decreased R$11.7 million, or 5.5%, from R$211.6 million in 2005 to R$199.9 million
in 2006. The decrease was mainly due to a reduction in the amount of (1) R$5.2 million in expenses on fees paid to
MasterCard International; (2) R$2.4 million in commissions paid to banks for acquiring merchants; (3) R$2.9 million
in the provision for loss in POS electronic capture equipment, and (4) R$1.1 million in other expenses.
Operating Income
Operating income increased R$282.4 million, or 43.1%, from R$654.9 million in 2005 to R$937.3 million
in 2006. This increase was mainly due to an increase in operating income, which was R$285.4 million, during
the years ended December 31, 2006 and 2005.
Pro Forma Net Income
Pro forma net income increased R$190.2 million, or 46.2%, from R$411.7 million in 2005 to
R$601.9 million in 2006.
Pro forma net income assumed expenses with PIS and COFINS taxes of R$31 million, social contribution
tax of R$80.6 million and income tax of R$223.8 million.
For the calculation of both the social contribution and income taxes, we used the effective rate applied in
accordance with our accounting and tax records. The proportion of these taxes varies within each of the periods.
Set forth below is a table with the reconciliation of the pro forma net income for the years indicated:
For the years ended December 31,
2004 2005 2006
Redecard Consortium operating income ..................................................... 479.5 654.9 937.3
Adjusted PIS/COFINS taxes(1)........................................................................ (19.2) (24.5) (31.0)
Pro forma income before income and social contribution taxes ..................... 460.3 630.4 906.3
Social contribution tax(2) ................................................................................. (41.3) (58.0) (80.6)
Income tax(2).................................................................................................... (116.5) (160.7) (223.8)
Redecard pro forma net income..................................................................... 302.5 411.7 601.9
(1) We apply the PIS and COFINS rates for the non-cumulative method. On this calculation basis, we apply the PIS and COFINS rates of
1.65% and 7.6%, respectively. For more information, see "⎯Description of the Main Line Items in Our Results of Operations—Net
Revenue—PIS and COFINS."
and tax books. For this reason, the proportion of these taxes is variable in each of the periods. The effective social contribution tax rates
vary between 8.2% and 9.2%, while the effective income tax rates vary between 24.3% and 26.0%.
Year Ended December 31, 2005 Compared to Year Ended December 31, 2004
Net Revenue
Net revenue increased R$360.2 million, or 31.1%, from R$1,157.4 million in 2004 to R$1,517.6 million in
2005. The increase in net revenue is a result of the factors described below.
Operating Revenue
Operating revenue increased R$309.4 million, or 30.8%, from R$1,005.6 million in 2004 to R$1,315.0 million
in 2005. This increase was mainly due to the following factors:
merchants for the capture of credit card transactions to R$790.7 million in 2005 from R$606.2 million
in 2004 mainly due to a 27.7% increase of in the value of the transactions captured;
(2) Increase in rental revenues from POS electronic capture equipment in the amount of R$67.5 million, or
27.2%, as a result of a 32.5% increase in the number of devices of equipment rented, which was
partially offset by the 4.1% decrease in the average amount of monthly rent; and
merchants for the capture of debit card transactions, resulting from a 40.7% increase in the value of
transactions captured during 2004 and 2005.
ISS tax payments increased R$10.9 million, or 27.3%, from R$39.8 million in 2004 to R$50.7 million in
2005. This increase was a result of the increase of revenues from merchant discount rate charged to merchants
on credit and debit card transactions.
PIS and COFINS
PIS decreased R$4.1 million, or 30.7%, and COFINS increased R$2.9 million, or 5.0%, from R$13.4 million
and R$58.3 million, respectively, in 2004 to R$9.3 million and R$61.2 million, respectively, in 2005. The
amount of PIS and COFINS taxes paid reflected a decrease that was proportional to gross revenues. The PIS and
COFINS rates levied on Itaucard and Unibanco, considered financial institutions, were 0.6% and 4.0%,
respectively, while for Redecard and FNC, the rates for PIS and COFINS were 1.6% and 7.6%, respectively.
Net financial income increased R$60.5 million, or 23.0%, from R$263.3 million in 2004 to R$323.8 million in
2005. This increase was mainly due to a 26.4% increase of in the volume of prepayment of receivables to
merchants during 2004 and 2005.
Cost of services rendered increased R$40.6 million, or 23.4%, from R$173.7 in 2004 to R$214.3 million in
2005, mainly as a result of a 28.7% increase in the number of credit and debit card transactions captured by us
between 2004 and 2005. The increase in the cost of services rendered was of (1) R$23.4 million in maintenance
of POS electronic capture equipment; (2) R$8.7 million in sales materials and signaling of merchant locations;
(3) R$3.8 million in capturing and processing of transactions; and (4) R$4.5 million in costs related to
assistance call center to merchants.
Operating Expenses
Administrative expenses increased R$45.5 million, or 19.1%, from R$237.7 million in 2004 to R$283.2 million
in 2005, mainly due to the increase of (1) R$14.5 million in personnel expenses due to a salary adjustment of
14.0%, (2) R$13.6 million in expenses with outsourced services due to the separation of our information
technology system from that of Credicard because of its corporate reorganization at the end of 2004,
(3) R$5.4 million in processing expenses and financial administrative services provided by Orbitall, whose
prices increased after its corporate reorganization in the beginning of 2005, (4) R$2.7 million in marketing
expenses, and (5) R$4.5 million in other expenses represented by corporate telephone calls, expenses with rent
and building maintenance and banking expenses, among others.
Depreciation and Amortization Expenses
Depreciation and amortization expenses increased R$78.6 million, from R$75.0 million in 2004 to
R$153.6 million in 2005, due to the adjustment in the amount of R$62.0 million recorded on our accounting in
2005, resulting in the adjustment of the depreciation of the equipment to the new estimate of useful life (reduced
from five years to three), i.e., to the change in the rates of depreciation of the equipment, from 20.0% per year to
33.3% per year, in accordance with the technical report prepared by a specialized institute.
Other operating expenses increased R$20.1 million, or 10.5%, from R$191.5 million in 2004 to R$211.6 million
in 2005, mainly as a result of a R$16.0 million increase in fees paid to MasterCard International and
R$2.4 million in provisions for civil lawsuits.
Operating Income
Operating income increased R$175.4 million, or 36.6%, from R$479.5 million in 2004 to R$654.9 million
in 2005. This increase was mainly due to an increase in operating income and gains in operational efficiency.
Pro Forma Net Income
Pro forma net income increased R$109.2 million, or 36.0%, from R$302.5 million in 2004 to R$411.7 million
in 2005.
Pro forma net income assumed expenses with PIS and COFINS of R$24.5 million, social contribution tax
of R$58.0 million and income tax of R$100.7 million.
We used the effective rates determined in accordance with our accounting and tax records to calculate the
social contribution and the income taxes. The proportion of these taxes varies within each of the periods.
Adjusted EBITDA
Our Adjusted EBITDA consists of our operating income plus depreciation and amortization and adjusted
by net financial results, which, however, includes financial income related to prepayment of receivables to
merchants, which we consider as part of our operating activities and thus we add it back to our Adjusted
EBITDA. By advancing payments to merchants, we anticipate the payment that we would have to make on the
due date related to the credit card transactions. Adjusted EBITDA is not a measure of financial performance
under Brazilian GAAP, and should not be considered individually, as either an alternative to net income as a
performance indicator or operating cash flow or a measure of liquidity. Adjusted EBITDA does not have
standardized meanings and our definition of Adjusted EBITDA may not compare to Adjusted EBITDA as used
by other companies.
We believe that the Adjusted EBITDA reconciliation that best reflects our activities is that based on the
results of operations for the years ended December 31, 2004, 2005 and 2006 and for the three-month periods
ended March 31, 2006 and 2007 as set forth in the explanatory note "Result from Redecard Consortium
Participation, "as explained in"—Redecard Consortium."
The table below sets forth the Adjusted EBITDA calculation for the periods indicated:
Three-month period
2004 2005 2006 2006 2006 2007 2007
Operating income..................................... 479.5 654.9 937.3 457.1 189.0 345.3 168.4
(+) Depreciation and amortization(1)........ 75.0 153.6 134.2 65.5 34.6 28.3 13.8
(-) Total financial revenue ........................ (409.0) (541.1) (562.0) (274.1) (148.5) (208.0) (101.4)
(+) Total financial expenses ...................... 145.7 217.3 213.3 104.0 55.0 45.7 22.3
(+) Net financial income related to
prepayment of receivables................. 266.7 323.7 365.0 178.0 94.3 105.8 51.6
Adjusted EBITDA ................................... 557.9 808.4 1,087.9 530.5 224.5 317.0 154.7
(1) The variation in depreciation and amortization expenses occurred in 2004 and 2005 was due to the reduction in the depreciation period
of the POS electronic capture equipment, on the basis of a technical report issued by a specialized institute. The depreciated value of the
equipment was adjusted to the new useful life of the equipment in 2005. For more information, see "—Critical Accounting
Policies—Depreciation and Amortization."
Liquidity and Capital Resources
Our operations are substantially financed by the cash generated by our operating activities, through loans
and financing for working capital and, after this offering, by the proceeds from the primary offering.
We believe that the operating cash flow generated and the proceeds from the primary offering will be
sufficient to meet our liquidity needs and our financial commitments.
Sources and Use of Proceeds
We mainly rely on cash flow from our operations to finance our operating activities and investments.
Cash Flow
Three-month period
2004 2005 2006 2006 2007
Cash generated by operating activities....................... 889.2 701.5 1,049.8 186.7 146.9
Cash used in investment activities.............................. (127.1) (123.4) (75.2) (41.7) (26.7)
Cash from financing activities.................................... (507.0) (208.5) (278.6) (43.0) (122.6)
Income distribution from Redecard
Consortium participation ......................................... (253.1) (369.1) (494.6) (105.5) (196.2)
2.0 0.5 201.4 (3.5) (198.6)
Cash generated by operating activities decreased by 21.1%, or R$187.7 million from 2004 to 2005, an
increase of 49.6%, or R$348.3 million from 2005 to 2006 and a decrease by 21.3%, or R$39.8 million from the
three-month period ended March 31, 2006 to the same period in 2007. These variations are basically a result of
the accounts receivable from card issuers and the accounts payable to merchants affected by credit card
transactions and possibly by prepayment of receivables to merchants from credit card transactions.
Cash used in investment activities decreased by 2.9%, or R$3.7 million from 2004 to 2005, and by 39.1%,
or R$48.2 million from 2005 to 2006 and from the three-month period ended March 31, 2006 to the same period
in 2007, there was a decrease of 35.9%, or R$15.0 million, because of the reduction in the purchase price of
POS electronic capture devices.
Cash from financing activities decreased R$298.5 million from 2004 to 2005, due to the amortization of the
principal amount and interest of loans we had contracted. From 2004, we began to use the prepayment of our
receivables with card issuers for the purpose of obtaining less expensive financial resources for the prepayment of
receivables. This led us to liquidate part of the loans we had contracted with resources generated by our operating
activities and our need to take out bank loans decreased from 2004. The 33.0% increase, or R$70.1 million, and
the 185.0% increase, or R$79.6 million, from 2005 to 2006 and from the three-month periods ended March 31,
2006 and 2007, respectively, were a result of the increase on the amount of dividends paid.
The amounts presented in the line item "income distribution from Redecard Consortium participation"
represent the amounts paid to each member of the consortium. The changes occurred during 2004, 2005 and
2006 and from the three-month period ended March 31, 2006 to the same period of 2007, were a result of the
increase in our operating revenues.
Investments
Our main investments are being made in the expansion of our activities and were distributed in the
following manner for the periods indicated:
Three-month periods
Years ended December 31, ended March 31,
2004 2005 2006 2006 2007
POS electronic equipment ......................................................... 106.2 113.5 95.3 38.9 25.9
Information technology equipment (office automation)........... 11.8 4.9 6.0 1.3 0.8
Others......................................................................................... 9.9 5.9 6.2 1.5 0.5
127.9 124.3 107.5 41.7 27.2
Investments for POS electronic equipment are made as a function of the increase in the base of active
merchants. Currently almost all of the transactions we capture (99.9%) derive from electronic equipment that
belongs either to us or to merchants. These investments reduce our operating costs and those of merchants, as
well as improve the security of the transactions made with credit and debit cards.
In recent years, we have been investing in office automation, which has contributed to the increase in
operational efficiency, improving the internal control system and integration among our areas.
Debt
Our debt as of December 31, 2006 reached R$375.7 million, remaining relatively stable in relation to 2005 and
2004. All of our debt is short term. The table below summarizes our debt by type and line of financing for the
three-month periods ended March 31, 2007 and 2006 and the years ended December 31, 2006, 2005 and 2004:
Three-month period
2004 2005 2006 2006 2007
Working capital agreements ...................................................... 379.6 348.6 348.6 348.6 348.6
Interest on working capital agreements..................................... 13.6 13.4 10.1 13.8 7.0
Credit balances in bank checking accounts
(reclassified from available) .................................................. – – 17.0 11.5 6.3
393.2 362.0 375.7 373.9 361.9
As of March 31, 2007, the average rates for our working capital agreements were 103.4% of the interbank
deposit rate, and the contracts had an average maturity of 149 days, while as of March 31, 2006, the average rates for
our working capital contracts were 103.4% of the interbank deposit rate and the average maturity was 154 days.
As of December 31, 2006, our working capital agreements matured within 148 days and had an average
rate of 103.5% of the interbank deposit rate, while as of December 31, 2005 and 2004, the average rates were
103.3% of the interbank deposit rate and 103.1% of the interbank deposit rate, respectively.
We have been extending the maturity of our working capital contracts because the cost of extension is
lower than the cost incurred with prepayment of our receivables from card issuers and than the cost of other
credit mechanisms and lines of credit available on the financial market.
Contractual Obligations
The table below summarizes the maturity of material contractual obligations with an impact on our
liquidity as of December 31, 2006, including obligations related to loans and financing obligations, as well as
other material contractual obligations. The table below does not include provisions for contingencies, deferred
income tax and estimated interest payments on our loans and financing. The amounts of the contracts included
as other contractual obligations represent estimated amounts related to agreements with our major suppliers,
whose prices are based on estimated volume resulting from our normal course of business, according to the
estimated time, as described in the table below:
Maturity by period
Less than 1 More than
Total year 1-3 years 3-5 years 5 years
Loans and financing............................ 348.6 348.6 – – –
Contractual obligations....................... 1,225.1 234.5 530.5 460.1 –
Total contractual obligations........... 1,573.7 583.1 530.5 460.1 –
The contractual obligations refer to service contracts we entered into with (1) Atento related to the
provision of call center and telemarketing services, (2) Orbitall related to the provision of data-processing
services, (3) MasterCard International related to the fees on the number and value of the transactions, and (4)
manufacturers of POS electronic capture equipment related to the maintenance of this equipment. For more
details about these contracts, see the section "Business—Material Contracts."
Off-balance Sheet Arrangements
We do not have any operations, agreements, obligations or other types of commitments in companies that
are not consolidated in our results or other operations that may generate a material effect, in the present or
future, on our financial condition and changes in our financial condition, revenues or expenses, results of
operations, liquidity, expenses with capital or capital resources, that are not registered on our balance sheet.
Quantitative and Qualitative Information on Market Risks

We are exposed to market risks as a result of our business. These market risks mainly involve changes in interest
rates and foreign exchange rate, which could adversely affect the amount of financial liabilities or future cash flow, as
well as our results. Market risk is the potential loss resulting from adverse changes in interest and foreign exchange rates.
Interest Rate Risk

We are not materially exposed to the risk of changes in interest rates. We are exposed to a very short-term
interest rate risk. For further information, see "—Factors that Affect Our Results of Operations—Interest Rates."
Our exposure to financial instruments subject to interest rates as of March 31, 2007 was limited to working capital
agreements entered into with financial institutions in Brazil in the amount of R$361.9 million, with interest indexed to
the interbank deposit rate, at an average of 103.4% of the interbank deposit rate for terms of up to 149 days.
Foreign Exchange Rate Risk

We are not directly and materially exposed to foreign exchange rate risk since all of our loans and financing
are denominated in reais. We had not entered into any derivative or hedge agreements as of March 31, 2007.
There is foreign exchange risk that is not material to credit card transactions issued abroad and captured in
merchant locations. The bearers of these cards purchase in Brazil and the transactions are directed to the issuer
abroad, through the MasterCard or Diners Club brands. At the time of authorization, MasterCard International's
and Diners Club card association's systems convert the amount of the transaction in reais to dollars, using a
conversion rate based on the foreign exchange rate for the day before the transaction as published by the Central
Bank. We receive the amount in dollars in a checking account abroad on the second business day after the
transaction. We sell the dollars that are available in our checking account abroad on a daily basis. The currency
risk therefore lasts for two days on the amount of these transactions. For the year ended December 31, 2006, the
value of the transactions carried out with credit cards issued abroad represented 1.4% of the total value of credit
card transactions captured, while for the years ended December 31, 2005 and 2004, the value of the transactions
with credit cards issued abroad represented 1.8% and 2.2%, respectively.
INDUSTRY OVERVIEW
The current business model in the Brazilian credit card industry is the association model, in which the credit card
brands, the merchant acquirers and payment processors and the issuers have specific roles within the rules
established by the credit card brands. In this model, merchant acquirers and payment processors, including us, hold
licenses to use the credit card brands' trademarks and are responsible for acquiring merchants to execute the
transactions and for the capture, transmission, processing and settlement of credit and debit cards transactions.
The figure below illustrates how the merchant acquiring and payment processing card industry is organized
in Brazil and identifies the five main participants involved in that business model:
1. Brands
Other
Brands
5. Issuers 2. Merchant Acquirers and
Payment Processors
Others
Others
Unibanco
Itaú
Citibank
4. Cardholders 3. Merchants
(1) Brands determine the general rules for the organization and functioning of the merchant acquiring and payment
processing system and guarantee the settlement of the transactions;
(2) Merchant acquirers and payment processors, such as us, are responsible for acquiring merchants to execute transactions
and for the capture, transmission, processing and settlement of transactions;
(3) Merchants supply goods and services and request affiliation to accept credit and debit cards as a means of payment;
(4) Cardholders are individuals or agents of legal entities who use credit and debit cards as a means of payment granted by
card issuers, and are users and/or consumers of products and services; and
(5) Card issuers give credit to the cardholders for use by cardholders in Brazil and abroad.
History of Credit Cards
There are several versions of the history that attempt to trace the origin of the credit card. The most famous dates
back to 1950, when Frank McNamara introduced the Diners card, whose instant success led other companies to issue
cards for the purchase of goods and payment of services. In 1951, Franklin National Bank became the first bank to
issue a plastic card to replace the former paper card, increasing its use and acceptance among merchants connected
with the bank. This new concept soon spread to other banks, which also started to issue credit cards.
In 1958 Bank of America successfully launched its BankAmericard, the first to offer credit to its cardholders.
In 1966, the Interbank Card Association was organized as an association of banks. In 1974, this association
changed its name to Master Charge Cards and in 1979, to MasterCard. Before this, in 1970, after facing
problems with some franchisees, Bank of America converted its system into an association of members called
NBI (National Bank Americard, Inc.), which in 1976 was renamed Visa.
In Brazil, the first steps toward introducing a credit card were taken in 1954, when businessman Hanus Tauber
purchased the Diners Club franchise, in partnership with Horácio Klabin. The first card under this partnership was
launched in 1956. However, this card was only used as a payment card and did not feature the credit function.
Banco Bradesco S.A. launched the first card with a credit function in Brazil in 1968, under the name Elo.
Starting in 1971, this card was adopted by a pool of 23 banks associated with BankAmericard, and in 1977,
when this pool was terminated, each bank began issuing its own credit card.
In 1970, Citibank, Itaucard and Unibanco together founded a company that played a critical role in the
consolidation of the credit card market in Brazil: Credicard. The Company was an immediate success, and by
the end of that year had issued over 180,000 cards and affiliated 15,000 merchants.
Starting in the 1990's, the market for credit and debit cards witnessed significant growth, which was due to
a number of factors: (1) the end of the exclusivity of brands in credit card issuance; (2) the opening of the
market and resulting entry of international cards; (3) emergence of new card issuers; (4) economic stability
brought by the Plano Real; and (5) the early stages of electronic commerce.
The Credit and Debit Card Market
The card market in Brazil has achieved significant growth in recent years. In 2006 the industry reached
R$246.3 billion, according to data from ABECS, in terms of the value of transactions carried out with credit
cards, debit cards and private-label cards. Out of this total volume of transactions paid for with cards, credit
cards were responsible for approximately 61.0% of the total transaction value in 2006. In addition, the share of
debit card transactions reached 28.0% in 2006. The increase in credit card transactions is due to their use as
credit granted by the financial institutions issuing the card and, as a result, credit cards are normally used for
higher value transactions in comparison to debit cards. ABECS data for the card industry in 2004, 2005 and
2006 is set forth below:
Growth CAGR
2004 2005 2006 2004-2006 (2004-2006)
Total Cards (million) ........................................... 277 338 379 36.8% 17.0%
Transactions (billion) ................................. 2.9 3.7 4.3 48.3% 21.8%
Value of transactions (R$ billion) .............. 164.1 203.2 246.3 50.1% 22.5%
Credit Cards (million) ........................................... 53 68 79 49.1% 22.1%

Debit Cards (million) ........................................... 138 171 187 35.5% 16.4%

Private-label Cards (million) ........................................... 86 99 112 30.2% 14.1%

Source: ABECS.
The increase in the number of transactions with debit cards linked to checking accounts is a result of the growth
in the percentage of the population holding a bank account. This shift also results in increased access to financial
services, as well as changes in the habits of consumers and merchants, who consider debit cards to be a safer payment
method. All debit card transactions require the use of passwords and both issuers and merchant acquirers and
payment processors have been making significant investments to enhance the safety of debit card transactions.
Despite this expansion, the main challenge for companies in the industry is to increase the usage of credit
cards by current cardholders, given that the usage rate for cards is still low. This is an indication of the industry's
significant growth potential.
According to data from the Central Bank, in 2006, credit and debit cards accounted for 45.0% of all
transactions, when all non-cash payment methods are considered, compared with 21.0% in 2000. During the
same period, the use of checks decreased from 57.0% to 27.0%, indicating that consumers are increasingly
replacing checks by credit and debit cards.
Checks Versus Electronic Means of Payment
The historical evolution of different payment methods in Brazil shows that checks were the most used
instrument in 1999, with approximately 2.5 billion checks issued that year, representing 63.4% of all non-cash
payments. During the same year, electronic instruments, including credit cards, debit cards, direct deposits,
credit transfers, which include available electronic transfers (Transferências Eletrônicas Disponíveis, or TEDs)
and credit documents (Documentos de Crédito, or DOCs), and payment vouchers, were responsible for the
remaining 36.6%, led by credit transfers (626 million), credit cards (553 million), direct debit (219 million) and
debit cards (107 million).
By 2002, the use of checks had already fallen to less than 46.0% of total non-cash payments, with electronic
instruments representing the majority of payments. In 2004 the use of checks, which represented 34.0% of total
non-cash payments, was surpassed by the use of credit and debit cards, which together were responsible for
37.0% of non-cash payments.
In 2005, there were 1.87 billion credit card payment transactions, representing 28.0% of total non-cash
payments, while the number of checks issued was approximately 1.83 billion, representing 27.4% of total
non-cash payments. The graph below sets forth the percentage of the various non-cash payment methods in
2005, against the total number of transactions:
Interbank Credit Transfer

16.0%
Checks(1)
27.4%
Direct Debit
11.4%
Credit Cards Debit Cards

28.0% 17.2%
(1) Checks with interbank liquidation.

Source: Central Bank and clearinghouses and compensation liquidation service providers.
In 2005, over 1.15 billion transactions were carried out with debit cards, representing 17.2% of total
non-cash payments, closely followed by credit transfers, with 1.07 billion transactions, representing 16.0% of
total non-cash payments.
Use of Checks in the Brazilian Market
An ABECS study, released in July 2006, compares payment transactions made by final consumers, using
as a reference only checks below the limit of R$299.99, as defined by the Central Bank . The study assumed
that, within this limit, the focus of comparison would be on private consumption, such as those most frequently
carried out by credit and debit cards.
According to data from the ABECS study, since mid-2004, the monthly volume of transactions paid with
cards (including credit, debit and private-label cards) has been higher than payments with checks issued by
individuals for the purchase of goods and services (within the limit mentioned).
In January 2004, payments with cards totaled approximately R$12.0 billion, reaching R$20.0 billion per
month in May 2006. The total value of checks under R$299.99, on the other hand, decreased from
R$13.0 billion in January 2004 to R$11.9 billion in May 2006, with more significant drops in some months.
The study also reported a decrease in the number of checks issued per month within the same value limit,
from 135.9 million to 105.6 million in the same period, vis-à-vis, the growth in the number of monthly
transactions with credit and debit cards from 211.1 million to 353.1 million, also in the same period.
Even with the decrease in the use of checks, in terms of the total amount paid, they are second in
importance only to credit transfers. These two methods are responsible for payment values much higher than
credit and debit cards, which are normally used for much smaller amounts.
In 2005, credit transfers totaled R$3.0 trillion, which represents 69.2% of all non-cash payments. Checks
totaled R$1.0 trillion, representing 23.2% in the same year. In 1999, checks had a much larger share,
representing 41.2% of all non-cash payments. Credit and debit cards together totaled approximately
R$190.0 billion in payments, with a share of 3.1% and 1.2%, respectively. Although they have a much smaller
share, cards have recorded strong growth in terms of values. From 1999 to 2005, the use of credit cards
increased approximately 285.0% in volume of payments and the use of debit cards increased 958.0%, according
to Central Bank data.
Use of Checks in Other Countries
The trend in Brazil is in line with the worldwide trend of replacing checks with electronic means of payment.
Despite the significant decrease, the use of checks in the payment structure in Brazil still stands out in comparison
with other countries, and is second only to the United States. In 2004, checks represented nearly 40.0% of non-cash
transactions in the United States, according to data from the Central Bank. Credit and debit card usage has also
increased in the United States and represents 47.5% of the total non-cash payments. Another market in which checks
have an important share is France, where they represent 30.0% of total non-cash payments. On the other hand, there
are various countries in Europe where the usage of checks is very low, representing less than 1.0% of all non-cash
payments. These countries include Germany, Belgium, Finland, Holland and Switzerland.
In Brazil, the process of migration to electronic means of payment is taking place via credit and debit cards
and this pattern indicates that the process will continue in the medium-term. In other countries, however, this
change has taken place by other means, such as credit transfers and direct debit, as in Japan, Germany, Belgium,
Finland and Switzerland, where there is a strong use of credit transfers representing more than 40.0% of
non-cash payments. Direct debit transactions stand out in Germany and Spain, also representing approximately
40.0% of non-cash payments.
Increase in the Acceptance of Cards
The constant expansion of the network of merchants able to accept payment by cards is also one of the
fundamental factors that explains the industry's performance, since an increase in the acceptance network
reinforces the use of cards and attracts new consumers to the market. Currently, over 1.0 million merchants are
able to accept cards as a means of payment.
Credit Expansion
The performance of the cards industry is also tied to the evolution of the volume of consumer credit granted
by banks and consumer finance companies. Eleven years ago, in 1996, the volume of credit granted to
individuals was approximately R$18.0 billion and represented 2.9% of the gross domestic product, or GDP. In
recent years, this figure has grown substantially, reaching R$155.88 billion at the end of 2005, the equivalent of
9.7% of the GDP. In June 2006, the balance was R$177.16 billion, demonstrating that credit has been growing
at a faster rate than the GDP.
Increase in the Number of Bank Accounts
The recent increase in the percentage of the Brazilian population having bank accounts can be seen by the
creation of approximately 31.4 million new checking accounts between 2000 and 2005, according to data from the
Central Bank. In 2000, there were 63.7 million accounts, and, in the end of 2005, 50.0 million people held
95.1 million accounts. This growth was reflected in the recent expansion of debit cards, linked to these new accounts.
Increase in Employment and Income Indicators
Recent economic growth has improved the employment rate and income levels of workers – variables that
directly affect cardholders' expenditures. In 2006, with a GDP growth of 3.7%, family consumption grew by
4.3%, marking the second consecutive year of growth.
OUR BUSINESS
Overview
We are one of the leading companies in the merchant acquiring and payment processing industry in Brazil,
and currently we are the only acquirer of MasterCard and Diners Club cards in Brazil. We are responsible for
acquiring merchants to accept credit and debit cards as a means of payment for goods and services, as well as for
the capturing, transmission, processing and settlement of credit and debit card transactions. In 2006, we had a
34.0% market share based on the value of transactions with credit and debit cards in Brazil, which reached a
total of R$246.3 billion. According to data from the Brazilian Association of Credit Card and Service
Companies, this market represented 17.6% of the total private consumption in Brazil during the same year. In
2002, we captured and processed 569 million transactions, and in 2006 we captured and processed more than
1.5 billion transactions, which represented a 27.8% average annual growth rate since 2002. In 2006, we had
more than one million affiliated merchants and were present in all Brazilian municipalities with electrical power
and telecommunications infrastructure. Out of the total number of our affiliated merchants, 639,000 were active
in 2006, which if compared to similar companies in the United States, would make us the fifth-largest merchant
acquirer and payment processor in the United States in terms of number of active merchants, according to data
from the Nilson Report regarding the U.S. market for 2006.
We also offer additional services to our merchants and other customers, which include voucher
electronic equipment, prepayment to merchants of receivables from credit card sales, check verification
Three-month period
Growth CAGR Growth
2004 2005 2006 (2004-2006) (2004-2006) 2006 2007 (2006-2007)
(in millions of reais) (in millions of reais)
Net revenue ............................... 1,157.4 1,517.6 1,809.4 56.3% 25.0% 421.3 545.8 29.6%
Adjusted EBITDA(1)............... 557.9 808.4 1,087.9 95.0 39.7 224.5 317.0 41.2%
Adjusted EBITDA
Margin(2) .............................. 48.2% 53.3% 60.1% 11.9p.p. – 53.3% 58.1% 4.8p.p.
Operating income..................... 479.5 654.9 937.3 95.5% 39.7% 189.0 345.3 82.7%
Pro forma net income............... 302.5 411.7 601.9 99.0% 41.1% 123.8 217.0 75.3%
Pro forma net margin(3).......... 26.1% 27.1% 33.3% 7.2p.p. – 29.4% 39.8% 10.4p.p.
Credit cards
Value of transactions ................. 37,021.5 47,285.8 57,240.5 54.6% 24.3% 12,469.7 14,839.3 19.0%
(in thousands) ......................... 474,848 586,830 680,972 43.4% 19.8% 152,971 174,204 13.9%
Debit cards
Value of transactions ................. 13,929.0 19,592.1 25,813.7 85.3% 36.1% 5,660.8 7,346.6 29.8%
(in thousands) ......................... 324,033 441,483 559,119 72.6% 31.4% 126,013 156,778 24.4%
Affiliated merchants ................ 825,104 901,448 1,018,776 23.5% 11.1% 924,355 1,032,948 11.7%
Electronic capture of
transactions (%) ................... 98.6% 99.2% 99.9% 1.3p.p. – 99.4% 99.9% 0.5p.p.
(1) Our Adjusted EBITDA consists of our operating income plus depreciation and amortization and adjusted by net financial results,
which, however, includes financial income related to prepayment of receivables to merchants, which we consider as part of our
operating activities and thus we add it back to our Adjusted EBITDA . By advancing payments to merchants, we anticipate the
payment that we would have to make on the due date related to the credit card transactions. Adjusted EBITDA is not a measure of
financial performance under Brazilian GAAP, and should not be considered individually, as either an alternative to net income as a
performance indicator or operating cash flow or a measure of liquidity. Adjusted EBITDA does not have standardized meanings and
our definition of Adjusted EBITDA may not compare to Adjusted EBITDA as used by other companies. For further information on our
Adjusted EBITDA, see "Presentation of Financial Information and Other Information—Adjusted EBITDA Reconciliation."
Our history dates back to 1970, when Citibank, who is among the largest financial institutions and credit card
issuers worldwide, along with Itaucard and Unibanco, who are among the largest financial institutions and credit
card issuers in Brazil, formed Credicard. In 1996, Citibank, Itaucard and Unibanco believed it was necessary to
have a company specialized in merchant acquiring and payment processing and founded Redecard by spinning off
Credicard's merchant acquiring and payment processing activities. In that same year, MasterCard International
also became a shareholder of Redecard. Since then, we have been the only, although non-exclusive, merchant
acquirer and payment processor for MasterCard and Diners Club branded credit and debit cards in Brazil.
Strengths
Strong growth combined with high return to shareholders. In the period from 2002 through 2006, we
achieved a 27.7% average annual growth rate when measured based on the value of credit and debit card
transactions, a 30.0% annual growth rate in Adjusted EBITDA and an 12.0% increase in Adjusted EBITDA
margin. The constant organic growth of our activities and financial results to date stems from economies of
scale that result from our operational efficiency and business model. In 2006, our Adjusted EBITDA margin
was 60.1% over our net revenue and our pro forma net income margin was 34.3% over our net revenue. In 2004,
2005 and 2006, we distributed R$141.3 million, R$177.4 million and R$292.3 million in dividends,
respectively, while the Redecard Consortium distributed R$253.1 million, R$ 369.1 million and R$494.5
million in income, respectively. We believe that our high margins and continued growth assure us of a solid
financial situation and enable us to deliver high levels of return to our shareholders.
Recurring and predictable revenues, combined with diversified base of affiliated merchants. Our
revenues are recurring and predictable due to the nature of our business. Once we affiliate merchants to accept
credit and debit cards as a means of payment for goods and services, merchants generate credit and debit card
transactions on an ongoing basis, which represent sources of recurring and predictable revenues for us. In 2006,
95.6% of the value of our credit and debit card transactions was carried out by merchants who had been acquired
before 2005. Our revenues also consist of rental payments of POS electronic equipment, which we believe
represent another recurring and predictable source of revenues for us. We have adequate staffing and equipment
to provide constant support to merchants in order to stimulate them to encourage the use of MasterCard and
Diners Club credit and debit cards as a means of payment. Our network of affiliated merchants is diverse and
fragmented and there is no significant concentration in any specific market segment. In 2006, our largest
customer represented 3.9% of the total credit and debit card transactions processed.
Broad network of affiliated merchants and market penetration. We have over one million affiliated
merchants, in all Brazilian cities that have electric power and telecommunications infrastructure and processed
1.5 billion transactions annually. Since 2002, we have had a 14.7% average annual growth rate in our number of
affiliated merchants and a 16.8% growth in our number of active merchants, which resulted in a 27.8% average
annual increase in the number of captured transactions. Between 2002 and 2006 we invested approximately
R$459.0 million in the expansion of our network of electronic capture equipment, and we have installed more
than 647,500 devices of this type of equipment. We believe that our broad and diversified network of affiliated
merchants to accept cards as a means of payment will allow us to achieve more activations in our capture
network, regardless of new affiliations of merchants.
High availability, quality and security of equipment and electronic capture network. Our information
processing platforms ensure high availability for our electronic capture network and provide automatic
contingency support in two data centers. We own and operate 84 centers (called concentrators) for electronic
capture spread throughout Brazil, which keep the electronic capture network available 24 hours a day, every day
of the year, and provides us with high capacity for monitoring transactions, allowing us to rarely rely on
telephone operators. We capture 99.9% of credit and debit card transactions electronically, and currently 89.9%
of our POS electronic equipment are able to use card reading technology through the use of chips, which allows
us to provide greater security to all participants in the merchant acquiring and payment processing industry. Our
highly secure information processing systems and platforms are reflected in our very low rate of fraudulent
transactions, which represented only 0.0006% of our captured transactions in 2006. In addition, we have
invested in wireless POS electronic capture equipment, which gives merchants and credit card holders safety
and convenience, as well as the development of our own secure capture application for transactions carried out
in the Internet, called Komerci. We believe that the high availability of our capture network and the security of
our technology allow us to provide quality service to our customers, without compromising the growth in the
number of our affiliated merchants.
Diversification of products and services offered to merchants. We offer to merchants value-added products
and services in addition to the capture, transmission, processing and settlement of credit and debit card
transactions, such as rental payments of POS electronic capture equipment, prepayment of receivables to
merchants of the sales performed with the use of credit cards, check verification services (credit analysis of
consumers) through the POS electronic equipment and capture and transmission services for transactions carried
out with voucher and private-label cards. We believe that the broad range of value-added products and services
that we offer to merchants distinguishes us from our competitors, in that it attracts merchants and enables us to
affiliate more merchants to accept MasterCard and Diners Club cards as a means of payment for goods and services.
Shareholders' support and experienced management. Our controlling shareholders are part of the
financial conglomerates Citibank, Itaú and Unibanco, which are among the largest financial institutions in
Brazil, in the case of Itaú and Unibanco, and worldwide, in the case of Citibank. The financial conglomerates of
which our controlling shareholders are a part are committed to high standards of corporate governance and have
been active in the credit and debit card industry in Brazil for over 35 years. In addition, Itaucard and Unibanco
are also among the largest issuers of credit cards in Brazil and Citibank is one of the largest card issuers
worldwide, which gives them their strategic importance and credibility in the merchant acquiring and payment
processing industry, and enables us to gain access to a broad network of cardholders and merchants. MasterCard
International is also one of our shareholders and is one of the most recognized brands of payment cards, both
domestically and internationally, which gives us strategic strength in the acceptance of our services. We also
count on senior management that combine extensive experience in the merchant acquiring and payment
processing industry with managerial expertise and a strong commitment to results. Our senior management has
been key to our success and includes professionals with more than 30 years of experience in the merchant
acquiring and payment processing industry and with an average industry experience of over 11 years.
Strategies
Increase the activation and market penetration with our capture network. In addition to our sales structure
directed towards constant assistance to merchants, we count on a network of 9,218 bank branches involved in the
affiliation of new merchants on behalf of Redecard, 3,522 of which belong to our controlling shareholders. We
also pursue activations through our sales team, and through companies that provide specialized services in the
merchant acquiring and payment processing industry, as well as by hiring telemarketing companies.
Stimulate the issuance of MasterCard branded cards by card issuers. To stimulate the issuance of, and to
promote, MasterCard branded credit cards, we and MasterCard International have agreed on March 27, 2006 that
(1) MasterCard International management would define and implement a new interchange fee structure,
applicable to all Brazilian MasterCard branded credit card transactions, according to which the interchange fee
was higher than the one generally used in the market at the time, provided that (2) we make available a new
service to all MasterCard branded card issuers who have at least 35.0% of the total value of their portfolio of
card transactions generated by MasterCard branded cards. This new service consists of our depositing of
merchants' receivables in checking accounts of merchants at the financial institution card issuers upon previous
authorization from merchants to us for a certain period of time, called "assurance of banking domicile," and for
a limit of up to 300.0% of the total transactions generated by MasterCard branded credit cards of these financial
institution card issuers. During this period, we commit ourselves not to make prepayments of receivables to
merchants from MasterCard branded credit card sales, which gives to financial institution card issuers the
possibility of offering several banking services to merchants. With this strategy, we expect to increase our
operating results as a result of the increase in (1) the number of MasterCard branded cards issued, and,
consequently, (2) the volume of MasterCard branded card transactions, which we believe should offset the loss
in our results due to the increase in the interchange fee and the decrease in the volume of prepayment to
merchants of receivables from credit card sales.
Encourage the use of credit and debit cards in Brazilian household consumption and in new market
segments. In 2006, the use of credit and debit cards reached 17.6% of private consumption of Brazilian
households, while in more developed markets such as the United States and Canada, the use of credit and debit
cards reached 37.0% and 55.0%, respectively. We constantly develop and carry out market research to identify
new market segments where the use of credit and debit cards is a viable and attractive means of payment. We
believe that there are opportunities for growth in new market segments in which the use of POS electronic
equipment associated with mobile technology is growing, such as door-to-door sales, transportation services
(i.e., taxis) and delivery services, among others. In this connection, we have already tested mobile technology
for electronic capture in door-to-door sales. We are also evaluating the use of credit and debit cards in the
wholesale sector. This will allow us to be present in an increasing number of commercial and financial
transactions in the Brazilian market.
Constant focus on technological innovation. We will continue to constantly seek technological update
and innovation. As an example of this effort, we have developed our own application for the secure capture of
transactions carried out in the Internet, called Komerci. We were the first merchant acquirer and payment
processor in the Brazilian market to introduce the technology for wireless POS capture, which provides
cardholders with convenience and security at merchant locations, such as restaurants and gas stations.
Furthermore, we have been the pioneer in affiliating merchants in new market segments in Brazil, such as taxi
services and food delivery services. We were the first MasterCard licensees to have capture equipment with
chip reading technology outside of Europe, using the worldwide standard established by the European
MasterCard and Visa Consortium EMV, or EMV. We intend to continue to seek constant improvement of our
technology and for the implementation of new technology, which will allow us to continue to offer electronic
capture and processing services using the industry's most advanced technology.
Continued improvement of operational efficiency. We achieved a 13.1% average annual reduction in cost
per captured transaction in the period between 2002 and 2006. In order to increase our economies of scale we
will continue to improve our business model to maximize the use of our electronic capture network, increasing
standardization, simplicity and speed in capturing transactions through optimized operating processes. We
believe that continued reduction in operating costs and greater agility in installing new POS electronic
equipment will allow us to take advantage of economies of scale and, simultaneously, assure the quality and
security of our services.
Company History
Our history dates back to 1970, when Citibank, which is among the largest financial institutions and card
issuers in the world, and Itaucard and Unibanco, which are among the largest financial institutions and card
issuers in Brazil, founded Credicard. Credicard's activities included those of a credit card brand, an issuer and a
merchant acquirer and payment processor. By 1980, Credicard had issued 500,000 cards and affiliated 120,000
merchants. In 1987, Credicard began issuing MasterCard branded cards and, by 1994, it had issued 5 million
cards. During that same year, Credicard launched the Redeshop debit card, which was the first debit card in the
Brazilian market and allowed merchants to receive payment for their sales on the first business day following
the charge to the cardholder's account by the issuer.
In 1996, in order to specialize in the provision of merchant acquiring and payment processing services,
Citibank, Itaucard and Unibanco jointly decided to form Redecard, as the spin-off of Credicard's merchant
acquiring and payment processing activities. In that same year, MasterCard International also became
shareholder of Redecard. Since then, Redecard has been the only MasterCard and Diners Club merchant
acquirer and payment processor in Brazil.
Since its formation, Redecard was the leader of the Redecard Consortium. The corporate purposes of the
Redecard Consortium, which was incorporated according to Brazilian Corporate Law, were the same as the
ones we currently pursue: affiliating merchants to accept credit and debit cards, and capturing, transmitting,
processing and settling transactions carried out with MasterCard and Diners Club International credit and debit
cards in Brazil. The members of the Redecard Consortium included the controlling shareholders of Redecard
and Redecard. The Redecard Consortium ceased to exist on March 31, 2007, and after its termination, all its
assets were fully transferred to us and we assumed all its rights and obligations.
As the leader of the Redecard Consortium, we performed and carried out all the activities necessary for the
development of the Redecard Consortium. Redecard Consortium's results were distributed in accordance with
the share of each consortium member in its revenues and certain revenues and expenses were borne by the
consortium members in the same proportion as their respective shareholdings in Redecard, in accordance with
criteria defined in the consortium formation contract.
Corporate Structure
As of the date of this offering memorandum, we have six shareholders: the controlling shareholders, UPS
and MasterCard International. The table below sets forth the shareholding held by each shareholder as of the
date of this offering memorandum:
Shareholders Redecard Shares Held % of Overall Redecard Shares Held

Banco Citibank S.A.................................................... 209,999,998 31.9
Banco Itaucard S.A. ................................................... 209,999,998 31.9
Unibanco – União de Bancos Brasileiros S.A............ 350 0.0
Unibanco Participacões Societárias S.A..................... 82,178,949 12.5
Dibens Leasing S.A. – Arrendamento Mercantil(1) ... 127,820,698 19.4
Members of management(2) ...................................... 7 0.0
Others......................................................................... 27,415,150 4.2
Total .......................................................................... 657,415,150 100.0
(1) Legal entity that is part of the same financial conglomerate of Unibanco.
(2) Except for Mr. Castro Neto, who owns one share of Redecard, the other members of our board of directors hold shares
issued by the Company by means of usufruct of shares owned by our controlling shareholders.
Our Activities
Our main activities include the affiliation of merchants to accept credit and debit cards as means of
payment for goods and services, and the capture, transmission, processing and settlement of transactions using
MasterCard and Diners Club credit and debit cards. We also offer other products and services to merchants such
as the rental of POS electronic equipment, prepayment of receivables to merchants for sales made using credit
cards, check verification services through POS electronic equipment, and capture and transmission services for
voucher and private-label transactions.
Market Segments of Merchants
We classify merchants according to the following market segments:
• Clothing – including clothing, shoes, jewelry and watch retailers and dry cleaners and laundry services;
• Home – including furniture stores, electronic equipment and appliances stores and hardware stores;
• Food – including supermarkets, hypermarkets, butcher shops, bakeries, candy stores and
convenience stores;
• Vehicle – including car dealerships, mechanical shops, vehicles parts and accessory stores, gas
stations, parking lots, toll booths and couriers;
• Health – including drugstores, hospitals, specialized medical centers, physicians, healthcare facilities
and laboratories;
• Travel and entertainment – including restaurants, hotels, travel agencies, airlines, car rental stores and
movie theaters;
• Education – including schools, universities, school and office supplies stores, bookstores and
newspaper/magazine stands;
• Hobbies – sports stores, fitness centers, beauty salons, photo centers, toy stores, information
technology stores and musical instruments stores;
• Other – financing companies, public utilities, fairs and events, telephone operators and insurance companies.
Products
Credit Cards
The process of capturing, transmitting, processing and settling transactions for merchants performed using
MasterCard and Diners Club credit cards is our main product. Revenues from the capture, transmission,
processing and settlement of credit card transactions represented 50.9% of our net revenue as of December 31,
2006, which represented an increase of 16.5% over our net revenue as of December 31, 2005, and average annual
growth of 18.7% during the period between 2002 and 2006. In the three-month period ended March 31, 2007, our
net revenue was R$226.3 million, representing an increase of 9.4% compared to the same period in 2006.
The interchange fee (part of the merchant discount rate we charge merchants) paid to credit card issuers
increased by 12.6% compared to interchange fees paid in 2005. This was the result of a MasterCard policy
implemented in 2006 after negotiations between card issuers and us, as a means of distinguished remuneration
for card issuers and ourselves, based on the type of credit card used in each transaction and the segment in which
the merchant closing a transaction operates. We cannot predict when and if there will be new increases in the
interchange fee by MasterCard International.
In the Brazilian market, credit cards may be used in two ways:
• Immediate payment – when the cardholder has an average of 30 days after the transaction to pay the
respective bill, and
• Payment in installments – the payment of the purchase price is made in installments, pursuant to one of
the following:
– Interest-bearing financing, which is granted by the card issuer, and whereby the merchant is paid the
sale amount in one lump sum, and
– Interest-free financing, which is granted by the merchant so that payment for the sale is made in the
same number of installments extended to the cardholder.
In either case, whether immediate payment or in installments, the merchant receives the amount of the
transaction directly from Redecard within the contractually agreed period, unless the merchant requests
prepayment of its receivables. The financial settlement is guaranteed by Redecard, which in turn receives a
guarantee from the card issuer for payment of the transaction as authorized. Card issuers are responsible for
authorizing all credit card transactions. Below is a flow chart showing a credit card transaction.
Transaction
D: date of transaction.
D + 26: date of payment of the credit card bill by the cardholder.
D + 28: date of payment by the card issuer to Redecard.
D + 30: date of payment by Redecard to the merchant.
Payment may be split into up to twelve installments with the average being 3.5. Interest-free installment
payments represented 47.8% of our total volume of transactions captured for the year ended December 31, 2006
and 47.4% of this volume in the three-month period ended March 31, 2007. The clothing and home segments
represented approximately 59.3% of our net revenues from the capture of credit card transactions payable in
installments based on data related to the period from April through September 2006.
The amount represented by credit card transactions captured presented an average annual growth of 23.1%
between 2002 and 2006 and 21.1% between 2005 and 2006.
The table below sets forth the share of each market segment in our total billing volume from the capture of
credit card transactions based on data related to the period from January through December 2006:
% of total
Market segment: transactions
Food..................................................................................................................... 22.0
Clothing ............................................................................................................... 19.0
Home ................................................................................................................... 17.0
Vehicles............................................................................................................... 12.0
Travel and entertainment ..................................................................................... 13.0
Health .................................................................................................................. 6.0
Education............................................................................................................. 2.0
Hobbies................................................................................................................ 2.0
Other.................................................................................................................... 7.0
The number of credit card transactions captured and processed by us exceeded 680 million in the year
ended December 31, 2006, representing an average annual growth rate of 17.7% since 2002.
Debit Cards
We capture, transmit, process and settle transactions for merchants performed using MasterCard Maestro
and Redeshop branded debit cards. MasterCard International acquired the Redeshop brand in 2004. It is in the
process of being replaced by MasterCard Maestro.
Revenues from the capture, transmission, processing and settlement of debit card transactions represented
11.2% of our net revenues for the year ended December 31, 2006, representing a growth of 33.7%, compared to
the year ended December 31, 2005, and average annual of 43.3% for the period between 2002 and 2006. In the
three-month period ended March 31, 2007, our net revenue was R$57.8 million, representing a growth of 30.9%
compared to the same period in 2006.
Currently, the interchange fee paid to debit card issuers corresponds to 50.0% of the merchant discount rate.
Increasingly, in the Brazilian market, debit cards are replacing checks as a means of payment because they
offer greater security to merchants, as there is need to use a password and electronically confirm personal data.
Settlement takes place on the business day following capture by Redecard, which in turn is fully captured and
approved by the issuer electronically. Below is a flow chart showing a debit card transaction.
Debit Card
Transaction Flow
Transaction
D: date of transaction.
D + 1: date of charge to the cardholder's bank account and corresponding payment of the transaction by the card issuer to Redecard.
D + 1: date of payment of the transaction by Redecard to the merchant.
The table below sets forth the share of each market segment in our total amount of billing from the capture
of debit card transactions based on data related to the period from January through December 2006:
% of amount of
Market segment: transactions
Food....................................................................................................................... 33.0
Clothing ................................................................................................................. 17.0
Home ..................................................................................................................... 14.0
Vehicles................................................................................................................. 14.0
Travel and entertainment ....................................................................................... 9.0
Health .................................................................................................................... 6.0
Education............................................................................................................... 2.0
Hobbies.................................................................................................................. 2.0
Other...................................................................................................................... 3.0
The number of debit card transactions captured and processed by us amounted to approximately 559
million in the year ended December 31, 2006, representing an average annual growth rate of 38.1% since 2002.
Prepayment of Receivables to Merchants
The net financial revenues from prepayment of receivables to merchants resulting from credit card
transactions captured by us represented 20.2% of our net revenue for the year ended December 31, 2006. This
represented a growth of 12.8% compared to 2005, and an average annual growth of 31.9% for the period
between 2002 and 2006. In the three-month period ended March 31, 2007, this revenue was R$105.8 million,
representing a growth of 12.2% compared to the same period in 2006.
The affiliation and adhesion agreements to the Redecard system that we execute with merchants require us
to pay the merchants on average on the 30th day after each transaction, provided there is no chargeback. We
usually receive payment from Brazilian card issuers on average on the 28th day following the date of
authorization of the transaction. In the case of foreign card issuers, MasterCard International pays Redecard on
the second day following the date of authorization of the transaction.
Prepayment of receivables to merchants from credit card transactions takes place when the merchant
requests to us the payment of receivables from credit card transactions prior to the settlement date. After the
merchant and we have agreed on the commercial discount rate to be charged on these advances, actual advances
take place until the first business date following the request.
We adopt certain measures to mitigate risks related to prepayment of receivables to merchants, which
include: (1) definition of an overall limit which applies to each merchant, based on the business segment of each
merchant; (2) follow up of the record of chargebacks and cancellation of transactions.
Our revenues from prepayment of receivables to merchants should reflect a declining trend in the coming
years, as we have adopted a strategy of seeking greater involvement by credit card issuers in operations related
to prepayment of receivables, in exchange for increases in the volume of MasterCard and Diners Club branded
credit cards issued by them. See "Summary—Strategies."
Other Products and Services
Rental of POS Electronic Equipment
We own the equipment we rent to merchants. Our revenues from the lease of POS electronic equipment for
electronic capture of transactions represented 22.5% of our net revenue for the year ended December 31, 2006,
corresponding to a 28.8% increase compared to 2005 and an average annual growth of 29.7% for the period
between 2002 and 2006. In the three-month period ended March 31, 2007, this revenue totaled R$115.0 million,
representing an increase of 22.9% compared to the same period in 2006.
Check Verification
Revenues from check verification services provided to merchants represented 1.2% of our gross revenues
for the year ended December 31, 2006. This was an increase of 39.6% compared to our gross revenues for the
year ended December 31, 2005, and our average annual growth rate was 43.0% for the period between 2002 and
2006. In the three-month period ended March 31, 2007, revenues from check verification services totaled R$6.1
million, representing an increase of 10.2% over the same period in 2006.
Our check verification services involve checking the Credit Protection Service of the Bank Services
Centralizing Corporation (Centralização de Serviços de Bancos S.A.), or SERASA, credit bureau database through
the same POS electronic equipment used for credit and debit cards. Our remuneration derives from a monthly
subscription paid by the merchants. Through this subscription, each merchant has the right to make a specific number
of check verification requests, and each additional request is charged at a unit price set forth in the contract with the
merchant. We pay SERASA a monthly fee per check verified. The number of check verifications increased at an
average annual rate of 9.4% in the period between 2002 and 2006. However, there was a reduction of 9.9% in the
number of check verifications between 2005 and 2006 as a result of a reduction in the use of checks in Brazil.
Vouchers
The revenues from the capture, routing and transmission of data on voucher transactions in merchants'
stores represented 1.6% of our revenues for the year ended December 31, 2006. These revenues increased
27.7% compared to the year ended December 31, 2005, and grew at an average annual growth rate of 46.1% for
the period between 2002 and 2006. In the three-month period ended March 31, 2007, these revenues totaled
R$8.3 million, an increase of 23.8% over the same period in 2006.
Our remuneration is determined pursuant to a price list based on the number of captured and routed transactions,
rather than a percentage of the value of transactions. Our customers voucher management companies are responsible
for processing and settling the transactions with merchants. These customers are large voucher management
companies such as Ticket, Sodexho and VR. The value of voucher transactions we captured exceeded R$200.0
million in the year ended December 31, 2006, representing an average annual growth of 55.4% since 2002.
Private-label Cards
Revenues from the data capturing, routing and transmitting related to private-label card transactions with
merchants represented 0.6% of our net revenue for the year ended December 31, 2006. These revenues grew 67.4%
in the year ended December 31, 2006, as compared to the year ended December 31, 2005, and achieved an average
annual growth rate of 51.7% during the period between 2002 and 2006. In the three-month period ended March 31,
2007, these revenues totaled R$4.6 million, representing an increase of 253.9% compared to the same period in 2006.
Our remuneration for private-label card transactions is determined pursuant to a price list based on the
number of captured and routed transactions, rather than a percentage over the value of transactions. Our
customers are financial companies, who are responsible for processing and settling the transactions with
merchants. These financial companies have a large number of credit operations of small values. The number of
private-label transactions we captured exceeded 60 million in the year ended December 31, 2006, representing
an average annual growth of 36.9% since 2002.
Capture Network and Commercial Structure
Our capture network is present in all Brazilian municipalities where electricity and telecommunications
infrastructure is available. Our commercial structure is divided into five regional centers covering all of Brazil.
Each regional center is composed of one executive officer, managers for each of our branches, account
executives and sales agents. The allocation of these human resources per regional center takes into account the
geographic distribution of affiliated merchants and card issuer banking branches. The map below shows the
geographic division into regional centers and their share in (1) the overall amount of credit and debit card
transactions captured by us; and in (2) our capture network base:
Northeastern Region 25%

Valor das Transações:
Estabelecimentos: 24%
Percentage over total transactions: 13%
Northern Region
Merchants: 17%
Merchants: 10%
States of Rio de Janeiro, Minas Gerais and
Espirito Santo

Merchants: 24%
Interior of the State of São Paulo and
Southern Region
Greater São Paulo
Merchants: 35% Percentage over total transactions: 28%
Merchants: 14%
In addition, we have two commercial teams, one of which provides differentiated and specialized services
to certain merchants, such as hotel chains, airlines and renowned restaurants in the principal Brazilian urban
centers. The second team provides services to large wholesale and retailer chains, such as hypermarkets and
electrical and electronic equipment stores, construction materials, clothing and other commercial businesses.
Services to merchants are generally divided into market segments, based on the value of transactions
captured per POS terminal. This segmentation defines our commercial approach, coverage and type of services
provided. We classify the type of services provided into seven segments, where groups I, II and III pertain to
one larger class of billing and receive preferential services. This classification is shown as follows by revenue:
Gro up VII 9%
Gro up VI 10%
Gro up I 32%
Gro up V 6%
Gro up IV 7%
Gro up III 16%

Gro up II 20%
The breakdown of the segments by the number of points of sale of affiliated merchants is as follows:
Gro up I 3%
Gro up II 6%
Gro up III 6%
Gro up IV 3%
Gro up V 4%
Gro up VI 15%
Gro up VII 63%
Merchants are affiliated to accept MasterCard and Diners Club credit and debit cards as a means of
payment by banks with which we maintain sales agreements, as well as by service providers, by our sales team
and telemarketing team. In the year ended December 31, 2006, merchant affiliations by banks represented
73.0% of all affiliations, whereas 12.0% were affiliations by service providers, 11.0% were affiliations by our
sales team and 3.0% affiliations by our telemarketing team. The number of our affiliated merchants has been
growing at an average annual rate of 14.7% since 2002, whereas the number of active merchants grew at a rate
of 16.8% in the same period. In the year ended December 31, 2006, we had over 1.0 million affiliated merchants
in our capture network.
Our affiliated merchant base is divided into market segments as follows:
Food 4%
Education 7% Clothing 12%
Others 4%
Hobby 10%
Housing 23%
Travel &
Entertainment 11%
Vehicle 10%
Health 19%
According to data collected by the Nilson Report related to the U.S. market, if we operated in the U.S.
market with a capture network comprising 640,000 active merchants, we would be among the five largest
merchant acquirers and payment processors in terms of active merchants. Below is a list of the five principal
merchant acquirers payment processors operating in the American market:
Number of active
Company merchants (in thousands)
Chase Paymentech Solutions ............................................................................................. 1,027.2
Bank of America Merchant Services.................................................................................. 880.3
Nova................................................................................................................................... 861.0
FDC.................................................................................................................................... 800.1
Global Payments ................................................................................................................ 486.0
Electronic Capture Equipment and Applications
We have a variety of electronic capture equipment or systems. The principal equipment we adopt include:
• Fixed equipment, also known as POS equipment;

• Wireless equipment, also known as wireless POS, and
• Electronic cash transfers or electronic capture register, or ECR technology (Transferência Eletrônica
de Fundos – TEF ), adopted in the case of large merchants with their own electronic cash registers to
which we provide ECR technology.
In the year ended December 31, 2006, 99.9% of the transactions that we captured were electronically
captured. More than 60.0% of the total transactions captured, were captured through fixed or wireless
equipment, whereas approximately 39.0% was captured through the use of our ECR technology by the
merchants' POS equipment.
Fixed Equipment or POS Desktop
In the three-month period ended March 31, 2007, we had 623,417 POS desktop terminals installed, which
represented 50.8% of the volume of transactions that we captured.
Wireless Equipment or Wireless POS
There are two types of wireless POS electronic equipment: indoor terminals and outdoor terminals.
In the three-month period ended March 31, 2007, we had 36,160 wireless POS electronic capture
equipment installed, which represented 7.6% of the volume of transactions we captured.
ECR Technology
ECR technology is a software that interfaces with the automated sales system used by the merchants to
allow transaction capture and access to the products and services we provide through our system, including POS
equipment, which we call ECR equipment, compatible with all types of transactions we offer.
We approve certain companies specialized in automated sales solutions to make the ECR technology
available and provide activation and support services. ECR equipment is different from POS equipment
because ECR equipment is the merchant's property and has models and accessories that the merchant acquires
according to its needs and volume of the transactions carried out.
We have also been investing in pin pads, as a means to read and encrypt transaction data, as well as card
data originating from ECR equipment. Pin pads have been installed at all merchant locations that carry out large
volumes of card transactions as part of our efforts to improve security of our entire capture network.
In the three-month period ended March 31, 2007, transactions captured from ECR equipment with ECR
technology approved by us represented 41.0% of our overall transactions captured.
Internet Transactions
We have developed our own capture application which we call the Komerci system. In the three-month
period ended March 31, 2007, we had 10,263 customers who were active users of this system, which
represented 0.1% of all transactions carried out in this period.
Technology
We were the first merchant acquirer and payment processor of MasterCard International, outside Europe, to
capture a transaction by means of chip reading technology according to the worldwide standard established by
EMV. To date, 89.0% of our POS electronic equipment are already equipped with this technology, which offers
greater security to all parties in credit and debit card transactions. We were the first merchant acquirer and
payment processor in the Americas to adopt the MasterCard TIP (Terminal Integration Process) certification in
the POS electronic capture equipment, contributing to the inter-functionality of this technology worldwide.
We were the first merchant acquirer and payment processor in the Brazilian market to introduce the
technology for wireless POS capture, which provides cardholders with convenience and security in merchant
locations, such as restaurants and gas stations. Furthermore, we have been pioneers in affiliating merchants in
new market segments, such as for example, taxi services and food delivery services, allowing for the use of
credit and debit cards in all these new market segments.
To increase the capture of transactions monitored by card issuers due to the change in the pattern of
consumption of the relevant cardholder, we developed and implemented a technological solution to verify and
confirm data of cardholders directly in the POS electronic capture device, which reduces the approval time of
the transaction from 10 minutes to a few seconds.
Capture of Transactions Via Cellular Telephones
On June 13, 2007, we launched Foneshop for the payment of purchases by means of any cellular telephone
that receives messages of the SMS type in Brazil. With this technology, the cellular telephone works as an
electronic wallet, since it is possible for the holder to have several credit cards from different card issuers under
only one cellular telephone number. The holder decides which card to use at the moment of the transaction.
Foneshop has several advantages, such as speed, convenience and security in transactions, without the need for
the physical presence use of the credit card and without additional costs to merchants and cardholders.
Foneshop allows for an increased use of MasterCard and Diners Club branded credit cards in the network of
affiliated merchants of Redecard and also allows for expansion in new business segments, such as
transportation services (i.e., taxis), delivery services, door-to-door sales, among others.
Contingency Plan
Our information processing platforms allow our electronic capture network to have high capacity and to have
automatic parallel backup in two data centers, one in downtown São Paulo, and the other in the neighborhood of
Santo Amaro, in the southern part of the city of São Paulo. We maintain our own network of 83 points for
electronic capture, which we call points of presence. These points of presence are spread throughout Brazil so that
our electronic capture network is available 24 hours a day, every day of the year, providing us the ability to
monitor transactions and to have a low level of dependence on telephone companies. In the case of other company
systems that are unrelated to the capture network, data replication from one to another data center takes place in
real time, and if there is a problem, our second data center may be activated within twelve hours. In addition, we
can access our data server through external servers to perform operating and administrative activities, and have the
ability to operate outside our premises, with 80 employees, within 72 hours.
Suppliers
Our principal suppliers provide services related to transaction data processing, telephone assistance to
merchants, electronic capture equipment maintenance and other services.
Data processing services and call center services are provided to us by Orbitall and Atento, respectively. If
our agreements with these providers terminate, the costs associated with obtaining other providers and
reestablishing the services would be relatively high. Additionally, manufacturers of POS electronic equipment
also provide services to us. Because this type of equipment involves specific technology, the provision of
equipment maintenance services depend on these manufacturers, who include, among others, Ingenico do
Brasil Ltda., Lipman do Brasil, Hypercom do Brasil Indústria e Comércio Ltda., Netset – SP Tecnologia e
Serviços em Teleinformática Ltda., Verifone do Brasil Ltda. and Speedpak Encomendas Expressas Ltda.
In addition, we entered into a services agreement with Embratel – Empresa Brasileira de Telecomunicações
S.A. for telephone and data-processing services.
For more information on our agreements with Orbitall, Atento and the suppliers of POS electronic
equipment, see "—Material Contracts."
Marketing
We invested R$42.2 million in marketing in the year ended December 31, 2006, which represented an
average annual increase of 26.9% since 2002. We invest principally in partnerships with merchants, which
represented 48.0% of our marketing investments in 2006, and in merchant locations' signaling, which
represented 35.0% of our marketing investments in 2006. We also invest in campaigns for specific events,
festivals and celebrations, in addition to advertisement in selected travel destinations. Our marketing activities
follow the rules and practices adopted by MasterCard International.
Competition
We believe that our main competition comes from other means of payment, such as cash, checks and
electronic cash transfers.
Within the credit and debit card industry in Brazil, we are currently the only, but not exclusive, merchant
acquirers and payment processor of credit and debit cards for MasterCard and Diners Club. There are some
merchant acquirers and payment processing companies that have already been authorized by MasterCard to
work in the Brazilian market. To date, these companies have not begun affiliating merchants to accept
MasterCard and Diners Club credit and debit card transactions.
We have increased our market share amongst other merchant acquirers and payment processor operating in
Brazil, having obtained in 2006 34.0% of the financial volume of credit and debit card transactions carried out
in the Brazilian market, compared to a market share of 32.9% in 2005. The Brazilian Means of Payment
Company (Companhia Brasileira de Meios de Pagamento), known as Visanet, a merchant acquirers and
payment processor for the Visa brand in Brazil, and the American Express system, which is a card brand, as
well as a card issuer and a merchant acquirers and payment processor, are our main competitors. Hiper Card,
which is a company controlled by Unibanco, one of our controlling shareholders, operates in the merchant
acquisition business and in the issuance of credit cards with its own brand, is also one of our competitors.
Seasonality
Seasonality in our industry reflects the retail calendar, among other factors. At certain times of the year, such as
at the Christmas selling season, our revenue increases because of the increase in retail consumption, among other
factors. The chart below shows our quarterly revenues for the years ended December 31, 2004, 2005 and 2006:
36%
33% 34%
24% 23% 24%

21% 22% 20% 21% 22% 21%
2004 2005 2006
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Human Resources
Adequate human resources planning and management are essential to our success. The objective of our
human resources management strategy is to contribute toward making us the preferred employer in our
industry. Our human resources managers develop and execute standardized recruitment and training procedures
and processes.
The table below sets forth our employees and their respective areas for the periods indicated:
Work area 2004 2005 2006

Technical and sales (assistants)...................................................... 357 469 479
Specialized technical personnel, ....................................................
Account executives and managers ................................................. 200 226 224
Operational personnel .................................................................... 163 147 151
Total .............................................................................................. 720 842 854
Approximately 79.0% of our employees work at our headquarters and 21.0% work at branches. The
average age of our employees is 35, and women make up 50.4% of our workforce.
Compensation and Benefits Policy
We offer our employees the following benefits: (1) health insurance; (2) mental health counseling; (3) life
insurance; (4) daycare center; (5) meal vouchers; (6) transportation vouchers, and (7) private pension plan, among
others. Certain employees also have a company car, complete medical checkup, and additional health insurance.
We have a variable remuneration system for our employees in the sales area that assures these employees
variable compensation tied to our results and to individual targets, seeking to recognize and compensate
individual productivity and motivate standards of excellence in job performance.
Since 2001, we have offered all of our employees the opportunity to participate in a profit sharing program
in accordance with Brazilian legislation. Payments under this program are made each year in February.
Pursuant to our program, our employees are expected to meet certain goals. Actual sharing in our profits is
contingent on our ascertaining profits before taxes projected and approval by our board of directors. Under our
profit sharing program, we distributed profits totaling to R$9.2 million, R$12.9 million and R$ 15.6 million in
the years ended December 31, 2004, 2005 and 2006, respectively.
Unions
None of our employees is a protected member of the Union of Employees of Independent Sales Agents and
of Consulting, Expertise, Information, Research and Accounting Firms of the State of São Paulo, with which
our employees are affiliated. We believe we have a good relationship with the employees' unions and with our
employees. We have never experienced a strike or work stoppage. Each year the industry union and our
workers' union negotiate salaries and the terms and conditions of collective bargaining agreements.
Stock Option Plan
Our by-laws include a provision that we may, within the limit of our authorized share capital, grant stock
options to our senior management members and employees, as well as to individuals providing services to us, or
the senior management members and employees of our subsidiaries and affiliates. When issuing shares upon the
exercise of stock options, we are not required to grant preemptive rights for the purchase of these shares by our
shareholders. On June 18, 2007, the shareholders present at the special shareholders' meeting approved the
hiring of a specialized company to study a stock option plan of acquisition or subscription of Redecard shares,
addressed to our directors, executive officers and employees, as well as individuals who provide services to us
and to directors, executive officers and employees of other entities that are directly or indirectly controlled by
us. This plan will be implemented in the course of the years, and will be granted in the proportion of up to 0.5%
of maximum dilution of Redecard shares, limited to our authorized capital stock. The terms and conditions of
the stock option plan have not yet been defined, and when defined, they will be subject to the approval of our
shareholders at a general shareholders' meeting. After approval, the beneficiaries, the grant of the plan, the
number of shares that each of the beneficiaries will have the right to subscribe for, as well as the price of
exercise of the stock option will be submitted to the approval of our board of directors. The price of exercise of
the stock option that may be granted has not yet been defined and it may be established at a price below the
without any consideration. According to Article 171, Paragraph 3, of Brazilian Corporate Law, shareholders
will not have rights of first refusal in the exercise of the stock option plan. As of the date of this offering
memorandum, stock option plans have not been approved by our shareholders at a general shareholders'
meeting or by our board of directors, nor any stock option has been granted. The issuance of shares upon the
exercise of the stock option according to the terms of a plan that will be implemented would result in the
dilution of our shareholders.
Training
We directly invested approximately R$1.2 million, R$1.3 million and R$2.6 million in professional
training programs in 2004, 2005 and 2006, respectively. We develop institutional training programs aimed at
communicating our values and goals to our employees.
Fixed Assets
We own all of our assets and equipment that we believe are essential to our operations. Currently, our fixed
assets consist of (1) POS electronic capture equipment; (2) capture network equipment; (3) information
technology equipment; (4) data-processing systems – software; and (5) other assets that are necessary to give
support to our operations, such as installations, furniture and instruments, vehicles, among others. In the
three-month period ended March 31, 2007, we owned 800,736 POS electronic capture devices, which
represented 60.8% of the number of transactions electronically captured by us.
We do not own real estate properties. Our offices are installed in properties that are rented, including our
head offices in the city of Sao Paulo. The duration of the lease agreements is on average 60 months, except for
the lease agreement related to our head offices, which is for a period of 120 months.
Intellectual Property
We hold the following trademarks, which are either registered or the subject of applications for registration
with the Brazilian Patent and Trademark Office (Instituto Nacional de Propriedade Industiral), or INPI, and
include work marks, logo or a mixture of both: "Redecard," "Click-Card," "Credi-Click," "Safenet Redecard,"
"Komerci," "Electronic Referral Redecard," "Radar de Transações Redecard," "Redecard Debit Alert", "Vitrine
Redecard" and "Foneshop." We do not hold any patents, nor do we hold other trademarks or licenses, the absence
of which could have a material adverse effect on our operations. We also own the domain name "redecard.com.br."
Insurance
We have insurance for all of our facilities and equipment and consider the coverage amounts to be adequate
for a company of our size and sufficient to cover the intrinsic risks of our operations. In the years ended
December 31, 2004, 2005 and 2006, our expenses with insurance payments amounted to R$0.4 million,
R$0.3 million and R$0.2 million, respectively.
Material Contracts
Agreements with MasterCard International
On November 15, 1996, we executed with MasterCard International a license agreement for non-exclusive
use of the MasterCard brand in connection with our activities as a merchant acquirer and payment processor.
The agreement was entered into for an indefinite term and we are required to observe the MasterCard affiliation
standards, rules and policies in the affiliation of merchants, which include rules related to the exposure of the
brand at merchant locations, title over trademarks and other rights.
On October 24, 2002, we executed with MasterCard International a trademark license agreement for non-exclusive
use of the Redeshop trademark, which MasterCard International had previously acquired from Credicard.
On March 29, 2004, we entered into a services agreement with MasterCard Brasil Soluções de Pagamento
Ltda., which were previously rendered and collected by MasterCard International, which are described in the
"MasterCard Consolidated Billing System Manual."
On April 27, 2005, we entered into a license agreement with MasterCard International, pursuant to which
MasterCard International granted to us, on a non-exclusive basis, the right to use the trademarks of MasterCard
brand, including MasterCard Maestro and other logos of the MasterCard brand.
All of the licenses granted to us by MasterCard International have been granted on a non-exclusive basis and
MasterCard International has the right to grant licenses for the use of its trademarks to other acquirers in Brazil.
Because we entered into these agreements with MasterCard International, we are subject to its bylaws,
rules, regulations and manuals, which are incorporated by reference in the agreements for use of trademarks of
the MasterCard brand. The relationship between us and the MasterCard brand is based on equal market
conditions (arm's length basis).
Mastercard International, according to the card member license agreement, has the right to terminate this
agreement, revoking the license in the following cases: (1) if we cease to be a card member of Mastercard
International, (2) if we fail to reasonably comply with one or more of the established standards for use of the
trademarks or with any obligations imposed in the agreement, or (3) if we discontinue the use of the trademarks
in connection with our merchant acquiring and payment processing businesses for a period of one year. If any of
the mentioned event happens as a result of our failure, Mastercard International may give us a written notice and
a term of 90 days after this notice to cure the failure. The agreement will be terminated after 90 days, if we do
not cure the failure. In addition, Mastercard International may terminate this agreement if we are unable, by
virtue of statutes, regulations or other requirements imposed by the Brazilian government to comply with any of
the standards for use of the trademarks or other obligations set out in the agreement.
In accordance to its bylaws, rules, regulations and manuals, MasterCard International has the right, and in some
cases at its sole discretion, to revoke the license agreement entered into with us and/or impose certain conditions for the
continuity of the license agreement under certain circumstances. The agreements we entered into with MasterCard
International are governed by New York law. In particular, according to its rules, Mastercard International may
temporarily, at its sole discretion (1) revoke our membership and/or one or more of our licenses, which may lead to the
termination of the card member license agreement, as explained above, or (2) amend or vary our rights and/or
obligations, under special circumstances, such as: (a) if our activities or financial situation puts MasterCard International
and/or its members at risk for monetary liability, and/or (b) if our activities jeopardize the goodwill and value of the
Mastercard International's brand. In addition, according to the rules, we must advise MasterCard International of any
change of control or assignment of our portfolio of affiliated merchants. The failure to advise MasterCard International
of this change or assignment may result in termination of the card member license agreement. MasterCard International
may, temporarily, at its sole discretion, (1) revoke our membership and/or one or more of our licenses, which may lead
to the termination of the card member license agreement, as explained above, or (2) amend or vary our rights and/or
obligations, or terminate our membership, if there is a (a) transfer or an attempt to transfer control to another entity, (b)
merger into or consolidation with another entity, (c) substantial sale of our assets or our merchant acquirer and payment
processor portfolio, (d) change in control or ownership, having been taken by a government or a governmental
regulatory authority; or (e) transfer or assignment or an attempt to transfer or assign the membership.
Moreover, according to its rules, Mastercard International will develop and, on a an on going basis, will
apply criteria to evaluate our financial soundness and ability to comply with the rules. From time to time,
Mastercard International may condition continuity of membership on compliance with special conditions, such
as additional guarantees. For further information, see "Related Party Transactions – Letters of Credit in Favor of
MasterCard International."
As of December 31, 2006, the total amount paid by us as a result of the agreements discussed above was
R$94.6 million. Our financial obligations under these agreements are guaranteed by Brazilian banks, in the
amount of R$1.1 billion, in favor of MasterCard International.
Affiliation and Adhesion Agreements to the Redecard System
The standard affiliation and adhesion agreement for merchants to the Redecard system is an agreement
pursuant to which we affiliate merchants to accept debit and credit cards from MasterCard International and
Diners Club brands as a means of payment for goods and services. The agreement also establishes the prices and
payment schedule, POS equipment to be furnished for the electronic capture of transactions. In addition, it
states the amounts to be paid as rent for the equipment and describes the rules and procedures of MasterCard
International and Diners Club that we and merchants must follow. This agreement makes new products and
services available for these merchants and it sets forth the merchant discount rate to be paid by the merchant.
These agreements have a indefinite term of duration.
Agreements for Maintenance of POS Electronic Capture Equipment
We enter into agreements for maintenance of POS electronic capture equipment with manufacturers of this
equipment. Maintenance comprises the replacement of spare parts to ensure the safe operation of the
equipment. As a result of the technical features of each equipment, each manufacturer has exclusivity over the
maintenance of the equipments supplied to us by them.
There is an additional agreement entered into with a call center company that is the first contact for
merchants who try to solve functioning problems in POS electronic capture equipment owned by us. In the
event it is not possible to solve the problem by means of the call center, the manufacturer is contacted to provide
maintenance services on site. These services are not exclusive and may be contracted from other specialized
companies. The procurement process involves a bid opened to all interested companies.
These maintenance agreements include the description and the prices for the following services: (1)
applications load on site or at the laboratory; (2) telephone consultants for maintenance and adjustments of the
equipment; (3) maintenance services on site or at the laboratory; (4) presence in fairs and events; (5) 24 hour
technical services; and (6) structure to service the contingency plan. These agreements enable us to assure the
proper operation of the equipment during their useful lives.
The maintenance service providers are the manufacturers of the POS electronic capture equipment, such as
Verifone, Ingenico, Lipman, Dionica and Hypercom. Cmagnani is the call center company that we hired to
solve functioning problems in the POS electronic capture equipment and be the first contact to assist merchants
in maintenance services. These agreements have a two-year term, which allows for periodic reviews and
renegotiation of prices.
The agreements for maintenance of POS electronic capture equipment have a termination clause that allows for
termination upon a 60-day prior notice. Furthermore, the agreement entered into with Cmagnani may be terminated
upon a 90-day prior notice. There is no contractual penalty for the early termination of these agreements.
The termination of agreements entered into with manufacturers of POS electronic capture equipment may
subject us to the suspension of maintenance services by that manufacturer for a indefinite term, as a result of our
being dependant upon the replacement of spare parts, which is an exclusivity of each manufacturer.
For the year ended December 31, 2006, the amount paid for these services was R$115.4 million.
Service Agreement with Orbitall
On June 30, 2006, retroactively to January 1, 2006, we entered into a service agreement with Orbitall, a
related party controlled by Itaú Holding, which also controls Itaucard, our controlling shareholder, for Orbitall
to provide technology services to us related to (1) data processing, (2) provision of hardware and software
infrastructure and equipment maintenance for our head quarter offices and branch offices, and (3) support,
management, operation and administration of data processing platforms, among other services.
Payments are made on a monthly basis to the supplier and invoices are issued based on the following metrics:
(a) mainframe platform (high processing capacity): services are charged based on the number of MIPs (million of
information processed), either for equipment used on a daily basis, or for equipment that is kept as contingency;
(b) RISC platform (average processing capacity): for the processing systems in the RISC equipment, charges are
paid based on a fixed price for each machine that is used by Redecard; (c) networking (communication network):
consists of services rendered for managing communication and connectivity bands, as well as services contracted
with telecommunication operators, which have fixed prices for each service; (d) supply services: services rendered
for the issuance, reception and commercial analysis of public bidding processes for general purchase, which are
executed upon request by Redecard managers, as a way of keeping functions segregated and independence in the
purchase processes of Redecard. A fixed price charged on a monthly basis irrespective of the number of public
bidding processes that were executed; and (e) additional services: services rendered upon Redecard request that
consist of simulation and tests in operating systems, in addition to customization, implementation and update of
systems, as well as additional processes that cause changes in Orbitall operations. The prices are negotiated
according to the hours spent in the execution of the services.
The services we contracted have levels of services and prices corresponding to market practice. The last
revision of prices was carried out at the end of 2005, with the support of a consulting company specilized in
information technology. The agreement will be in effect through December 31, 2008 and may be terminated after
the 24th month from the date it entered into effect, without the imposition of contractual penalties, upon a 180-day
prior notice between the parties.
Call Center Agreement with Atento
On February 15, 2007, we entered into an agreement with Atento for the provision of electronic and assisted
call center services, including electronic telephone assistance to affiliated merchants and telemarketing services
for the affiliation of new merchants. The Atento call centers answer over 2,200 calls per month, which include
manually authorized transactions, receipt of requests for prepayment of receivables and provision of technical
support to the POS electronic capture equipment, among others. The agreement may be terminated by any of the
parties after the 19th month fom the date of execution and only upon 120-day prior notice. Until the 19th month, the
termination will take place mainly in the event of insolvency or bankruptcy of any of the parties, of default under
the agreement by us or non-compliance by Atento of any of the levels of services described in the agreement. As of
December 31, 2006, our expenditures for services provided by Atento were R$34.4 million.
Redecard currently has 700 call center positions and approximately 1,200 operators. Services are divided
into four basic functions: (a) authorization center: personalized assistance is rendered by means of equipment
with hearable reply (Unidade de Resposta Audível – URA) or personnal assistance. Prices are different for each
type of assistance; (b) telemarketing: the assistance may be: (1) upon personnal assistance for services of
registering merchant locations and assistance for the installation of equipment for electronic capture of
transactions, and (2) by means of equipment with URA system as a predominant form to receive request of
prepayment of receivables of sales from merchants. In these cases, there are also different prices for each
service; (c) assistance: may also be automated assistance by means of equipment with the URA system or
assisted, usually related to orders of material supplies for the use of equipment for the electronic capture of
transactions, cancelling sales, requests of equipment and capacitation for other Redecard products, analysis of
captured and processed transactions, requests of banking reports and other documents that evidence captured
transactions, change in passwords, among others. The price is charged per each call answered and it is different
if the assistance is automated or personnal; (d) technical support: is the assistance directed to merchant locations
acquired with the objective of solving on line problems related to the equipment for electronic capture of
transactions. However, in case the solution is not feasible by telephone, the operator will schedule a visit by
a technician by means of the assistance system. The price charged is for average time of assistance.
Legal and Administrative Proceedings
We are a party to legal and administrative proceedings in the civil, tax and labor areas that result from the
normal course of our business.
Our policy concerning contingency provisions is to provision for 100.0% of the tax and labor contingencies.
Contingencies related to civil cases are provisioned based on the evolution of the lawsuits and considering our
internal and external counsel's opinion. We make provisions for civil lawsuits where the loss is considered probable.
We believe that no individual pending court or administrative case would materially and adversely affect our
financial condition or results of operations, if the outcome of any of such cases were to be unfavorable to us.
Tax Proceedings
As of March 31, 2007, we were party to approximately 12 legal proceedings and one administrative
proceedings of tax nature, which involved contingency amounts of approximately R$128.5 million. As of the
same date, the consolidated amount of provisions related to these proceedings was R$102.5 million.
Social Contribution Tax
Currently, we are disputing in a legal proceeding the deductibility of the social contribution tax for
determination of our taxable income, in the amount of R$41.8 million, where our prospects for loss are probable,
in the opinion of our legal counsel, for which reason we made a provision in the amount of R$41.8 million.
Income and Social Contribution Taxes
Currently, we are disputing amounts considered as due by the Federal Revenue Service (Secretaria da Receita
Federal) related to income and social contribution taxes because we deducted expenses related to losses arising from
fraud in the calculation of income tax and social contribution tax, which deduction was not recognized by the Federal
Revenue Service. The Council of Tax Payers of the Treasury Ministry (Conselho dos Contribuintes do Ministerio da
Fazenda) ruled in our favor. However, the Federal Revenue Service appealed against this decision to the Appeal
Chamber (Câmara de Recursos), and no final decision has been yet issued. The amount involved in this dispute is of
R$26.0 million. Based on our internal counsel's opinion, the chance of loss in this proceeding is remote.
Service Tax
Currently, we are disputing at judicial and administrative levels, the levy by some municipalities of service tax
on the rent of POS electronic capture equipment. The amount involved in these proceedings is of approximately
R$44.6 million. Based on our external counsel's opinion, the chance of loss in these proceedings is possible.
PIS and COFINS
In 2001, we obtained a preliminary injunction related to the period of February 1999 and subsequent years to
suspend the levy of PIS and COFINS according to Law No. 9,718/99 on revenues that are not part of the definition of
operating results, such as financial revenue, including monetary adjustments and interest revenues. In April 2002, the
judicial decision that was partially in our favor was published, so that once declared the inconstitutionality of
Paragraph 1 of Article 3 of Law No. 9,718/99, we could collect PIS and COFINS according to the definition of
operating results set forth in Complementary Law No. 70/91, however, at the rate of 3.0%. The Federal government
appealed against this decision. In February 2007, an unfavorable decision to the Federal government was published,
confirming the decision that considered inconstitutional the increase in the PIS and COFINS calculation base. The
Brazilian Federal Supreme Court (Supremo Tribunal Federal) has already decided that the PIS and COFINS,
according to Law No. 9,718/99 may only be levied on revenues arising from sales of goods and/or services of
Redecard. Because revenues resulting from exchange variation were the object of request for clarification by the
Brazilian Federal Supreme Court, we decided to keep the provision on these revenues, taking into account the
principles of accounting records of legal obligations which evaluation of risk of loss is considered as possible based
on our external counsel's opinion. As of March 31, 2007, the amount provisioned was R$5.4 million.
In March 2004, we filed a writ of mandamus requesting that the fiscal authority does not levy PIS and
COFINS, based on the "non-cumulative" method at the rates of 1.65% and 7.6%, respectively, according to
Laws No. 10,637/02 and Law No. 10,833/03. We started to make court deposits of the amounts calculated on a
monthly basis. In July 2004, the decision that ruled that our request was undue was published. Therefore, we
reverted the conversion of court deposits in favor of the Federal government. The amount of the provision is
R$6.4 million, exactly the same as the amount of the court deposit.
Contribution of the Intervention in the Economic Domain (Contribuição da Intervenção no Domínio

Econômico – CIDE)
In July 2004, the decision that ruled against us was published regarding our request to suspend the levy of
CIDE payment, created by Law No. 10,168/2000, amended by Law No. 10,332/2001. In July 2004, the appeal
was filed and since then we began to make court deposits of amounts due regarding this contribution. In
September 2006, we requested the waiver of the appeal and converted the court deposits in favor of the Federal
government. As of December 31, 2007, the amounts provisioned were R$3.7 million, exactly the same as the
amount of court deposit.
Civil and Regulatory Cases
As of March 31, 2007, we were a party to 821 civil cases, 266 of which are a result of claims filed by
merchants who object to our retention of credit after we suspect fraudulent activity and delayed the prepayment
of receivables to those merchants and 222 chargeback claims. The estimated contingency amount of those
lawsuits is R$21.9 million. We have provisioned R$6.4 million in connection with civil cases where our
prospects for loss have been evaluated as probable by our internal and external counsel.
In addition, the Federal Public Prosecution Service initiated a preliminary injunction claim in preparation
for a legal proceeding related to formation of cartel against all merchant acquirer companies with respect to
setting merchant discount rates and rent of POS electronic equipment. However, to date, we have not made
provisions for this legal proceeding because we consider the risk loss as remote based on recent decisions of the
Administrative Board of Economic Defense (Conselho Administrativo de Defesa Economica), or CADE in two
administrative proceedings initiated against merchant acquirer companies, which ruled that there was no
formation of cartel with respect to setting merchant discount rates and rent of POS electronic capture equipment
charged to affiliated merchants.
Labor Claims
As of March 31, 2007, we were a defendant in 129 labor claims, of which 86 were brought by our former
employees, in addition to cases related to former employees of outsourced service providers. The total amount
of the contingency is R$7.4 million. A substantial part of these cases involve indemnity claims on account of
alleged repetitive strain injuries and claims for salary equalization. Based on the opinion of our internal counsel
and on the calculation carried out by an accounting expert hired by us, our total estimated losses in these claims
is R$7.4 million for which we have made provisions.
OUR MANAGEMENT
Board of Directors
Our board of directors is a collective decision-making corporate body, which is responsible for defining our
general business policies and overall strategic guidelines, including our long-term strategies. The duties of the
board of directors also include, among other things, supervising management.
Consistent with the rules applying to the Novo Mercado listing segment of the BOVESPA, to which we
have adhered, our by-laws set forth that our board of directors is composed of a minimum of five and a
maximum of ten directors. The actual number of members of our board of directors will be defined by a
majority vote at a meeting of our shareholders. Our directors are elected for unified two-year terms, reelection
being permitted, and may be removed at any time pursuant to a decision of our shareholders' meeting.
According to the terms of our bylaws, the maximum age for the member of the board of directors to be elected
is 65 years, provided that our general shareholders' meeting may deliberate for the extension of this limit.
According to Brazilian Corporate Law, holders of an interest in our shares in the aggregate representing a
minimum of five percent of our voting stock may request that cumulative voting be adapted at shareholders'
meetings held to elect our directors. If this is not the case, our directors are elected by a majority vote of the
holders of our common shares that attend the meeting in person or represented by proxy. Shareholders or groups
of shareholders wishing to submit director nominations should do so by giving notice to us as early as five days
prior to the date of the shareholders' meeting. In addition, under the Brazilian Corporate Law holders of an
interest in our shares in the aggregate representing a minimum of 15.0% of our voting stock may elect one
effective member of our board of directors and his/her alternate pursuant to a separate voting process. The
collegiate body of the CVM, by majority of votes, on November 8, 2005 adopted the position that in the event
this percentage is not reached, shareholders holding 10.0% of our capital stock may together appoint a member
of the board of directors and respective alternate.
According to Novo Mercado regulations, our directors are required, prior to taking office, to sign an
instrument of adherence to the rules and regulations of the Novo Mercado and of the Market Arbitration
Chamber established by the Bovespa, as well as adherence to the provisions of our agreement for participation
in the Novo Mercado.
Our board of directors is currently composed of a total of seven members elected at the special
shareholders' meeting held on April 25, 2006 and May 28, 2007. Their term of office should extend to the date
of the shareholders' meeting to be held to analyze and judge our financial statements as of and for the year ended
December 31, 2009. The table below shows the names, age, titles and date of election of the members of our
board of directors:
First elected Last elected

Name Age Title to our board in to our board in
Hélio de Mendonça Lima 62 Chairman 2001 2007
Joaquim Francisco de Castro Neto 63 Vice-chairman 2006 2007
Gilberto Caldart 48 Director 1996 2007
Hector Nevarez 52 Director 2005 2007
Cláudio Rudge Ortenblad 53 Director 2005 2007
Márcio de Andrade Schettini 43 Director 2005 2007
Horacio Lafer Piva 50 Independent director 2007 2007
According to Brazilian Corporate Law, each of our directors must be a shareholder, although there is no
requirement as to a minimum number of shares.
According to Novo Mercado regulations, a minimum of 20.0% of the members of our board of directors
should be independent, with no ties to us or our controlling shareholder.
Should this percentage result in a fractional number, our board of directors may proceed to round it (i) up, if
the fraction is equal to or higher than 0.5; or (ii) down, if lower than 0.5. Therefore, if our board of directors
comprises six members, at least one member must be an independent director. The minutes of the shareholders'
meeting that elects the independent director must identify this member of our board of directors as such.
Currently, Mr. Horacio Lafer Piva is our independent director.
Decisions of our board of directors are generally taken by a majority vote of the directors attending a board
meeting. In addition, under the Brazilian Corporate Law, our directors are prohibited from voting in meetings of
our shareholders and from taking part in company transactions or operations in which they may have a conflict
of interest with us.
For a description of the agreements or other material undertakings between our directors and us, see
"Related Party Transaction."
Board of Executive Officers
Our executive officers are our legal representatives, and are principally responsible for our day-to-day
management and for implementing the policies and general guidelines set by our board of directors.
According to Brazilian Corporate Law, all our executive officers must be residents of Brazil and may or
may not be our shareholders. In addition, a maximum of one-third of our directors may also serve as our
executive officers. According to the terms of our bylaws, the maximum age for the executive officer to be
elected is 60 years, provided that our board of directors may deliberate for the extension of this limit.
Our executive officers are elected at a meeting of our board of directors for two-year terms, reelection
being permitted. According to our by-laws, our officers may be removed at any time by a decision of our
board of directors.
In addition, according to our by-laws, our board of executive officers is composed of a minimum of three
and a maximum of eight members. There are currently seven executive officers in office. Their term of office
should extend to the date of the board meeting after the shareholders' meeting to be held to analyze and judge
our financial statements as of and for the year ended December 31, 2007.
Moreover, according to the Novo Mercado regulation, prior to taking office our executive officers are
required to sign an instrument of adherence to the rules and regulations of the Novo Mercado and the Market
Arbitration Chamber established by the BOVESPA, as well as adherence to the provisions of our agreement for
participation in the Novo Mercado.
The table below shows the names, age, titles and year of election of the members of our board of
executive officers.
Year in which
started
working at
Name Age Title Redecard First elected in Last elected in
Anastácio Vasconcelos Ramos 55 Chief executive officer 1974(1) 1996 2006
Edson Luiz dos Santos 50 Chief financial officer, in charge of 2000 2000 2006
risk and controls and investor
relations' officer
Marcos Negreiros Vicente 41 Chief commercial officer 2006 2006 2006
Fábio Pinto Palmeira 56 Chief operating officer 1999 1999 2006
Alessandro Tavares Raposo 36 Chief technology officer 1995(1) 2005 2006
Irélio Pedro Frigo 58 Chief human resources officer 1971(1) 1998 2006
Ronaldo Cerqueira Varela 47 Chief marketing and product officer 2007 2007 2007
(1) Taking into account the year in which the executive officer started working for Credicard S.A.
Biographical Descriptions
Below is brief biographical description of the members of our board of directors and board of executive officers:
Directors
Hélio de Mendonça Lima has been an executive officer of Banco Itaucard S.A. since 2002. From 1997 to
2001, he was chief executive officer of American Express, chief executive officer of Prever Seguros e
Previdência from 1992 to 1997, chief executive officer of Credicard from 1982 to 1986, of Citibank N/A from
1972 to 1986 and of Citibank Florida from 1990 to 1992. He has been a member of our board of directors since
2001. Mr. Lima graduated in mechanical engineering from Pontifícia Universidade Católica – PUC of Rio de
Janeiro and has a master's degree in business administration from Michigan State University.
Joaquim Francisco de Castro Neto joined Unibanco as an executive officer of Finasul, where he held
various positions prior to being elected a member of the Unibanco conglomerate. He was a member of the board
of directors of Banco Fininvest S.A., chairman of the board of Dibens, chief executive officer of Unibanco
Distribuidora de Títulos e Valores Mobiliários S.A., in addition to holding executive offices within the group.
He is currently a director of Unibanco and Visa International Inc. in Latin America. He has been a member of
our board of directors since 2004. Mr. Castro graduated in business administration from Fundação Getúlio
Vargas and has an associate degree in sales administration, marketing and product development from IMEDE
in Lausanne.
Gilberto Caldart is an executive officer of the Global Consumer Group of Citibank in Brazil, having joined
Citibank in 1982, where he performed various jobs prior to being elected a member of the board of executive
officers. He has been a member of our board of directors since 2005. Mr. Caldart graduated in business
administration from Universidade Federal do Rio Grande do Sul and has a master's degree in business
administration from Duke University.
Hector Nevarez has been the chief executive officer of Banco Citicard S.A. since May 2006. Previously, he
was the Regional Credit Card Officer for Latin America, for which he was appointed in 2002. He has been a
member of our board of directors since 2006 and a member of our board since 2007. Mr. Nevarez graduated in
marketing from Universidad de Puerto Rico, has an MBA in marketing and finance from Universidad de
Puerto Rico and in business administration from the INSEAD.
Cláudio Rudge Ortenblad has been with Itaucard since 2000, when he was appointed Senior Managing
Officer. He has been a member of our board of directors since 2005 and a member of our board since 2007. He
graduated in economics from Universidade de São Paulo and has a postgraduate degree in finance and
economic engineering from Universidade de São Paulo.
Márcio de Andrade Schettini worked for several companies and financial institutions prior to joining the
Unibanco group in 1997, where he has been chief executive officer of Unicard, Fininvest and other companies of
the group. He was elected deputy chief executive officer of Unibanco in 2004 and has been a member of our board
of directors since 2005 and a member of our board since 2007. Mr. Schettini graduated in electrical engineering
and has a master's degree in administration from Pontifícia Universidade Católica in Rio de Janeiro.
Horacio Lafer Piva has been a member of the board of directors of Klabin S.A. since 1997, Atmofera
Gestão e Higienização de Têxteis since 2006 and Tarpon Investment Group Ltd. since May 2007. He has
participated in the advisory councils of Brasilpar Serviços Financeiros, Spread Teleinformática and Banco
Privado Português since 2005. He has been the chairman of the board of directors of Associação Brasileira de
Papel e Celulose, the Brazilian pulp and paper association, or Bracelpa, since 2006, Semco Group since 2005,
DNA Brasil Institute since 2006 and the Associação de Assistência à Criança Deficiente, association for
assistance to handicapped children, or AACD since March 2007. He was president of Federação e Centro das
Indústrias do Estado de São Paulo, the federation and center of the industries of the state of São Paulo, or
FIESP/CIESP, of Serviço Social da Indústria, the social service for the industry, or SESI, Serviço Nacional de
Aprendizagem Industrial, the Brazilian industrial apprenticeship service, or SENAI, from 1998 to 2004, Serviço
Brasileiro de Apoio às Micro e Pequenas Empresas, the Brazilian micro and small business support service, or
SEBRAE, from 1998 to 2000 and of the economic policy council of the Confederação Nacional da Indústria,
the Brazilian industry confederation, or CNI, until 2004. Mr. Piva is also a member of the board of the following
entities: Ethos Institute, Antonio Prudente Foundation, Fundação de Amparo à Pesquisa do Estado de São Paulo,
the research foundation of the state of São Paulo, or FAPESP, Orquestra Sinfônica do Estado de São Paulo, the São
Paulo official orchestra, or OSESP, Conselho de Desenvolvimento Econômico e Social, the economic and social
development council, or CDES, and Associação Brasileira de Distrofia Muscular, the Brazilian association of
muscular dystrophy, or ABIM. He has been the independent member of our board of directors since 2007. He
graduated in economics and has a postgraduate degree from the business school of Fundação Getúlio Vargas.
Executive Officers
Anastácio Vasconcelos Ramos was a sales agent, sales executive, branch manager, regional manager and
commercial vice president of Credicard, where he has worked for more than 23 years. Prior to joining our
company he worked in the bankcard departments of the Andrade Arnaud and Hales banks. He was an executive
officer of the Brazilian Association of Credit Card and Service Companies. He was our chief commercial
officer for more than eight years, and was elected our chief executive officer in 2005. Mr. Ramos graduated in
business management with concentration in marketing.
Edson Luiz dos Santos began his career working in finance, as a financial analyst at Phillip Morris, where
he later worked as cost manager, planning manager, controller and treasurer. He is a former chief financial
officer of Durametalic, of SEA Containers and DHL, and also a deputy chief executive officer and chief
financial officer of Crown Cork. He is currently an executive officer of the Brazilian Association of Credit Card
and Service Companies. Since 2000 has been our chief financial officer, in charge of risk and controls and
investor relations' officer. Mr. Santos has a postgraduate degree in business administration from Michigan State
University, where he also attended an executive development program. He also attended the Advanced
Management Program of Fundação Dom Cabral and the INSEAD.
Marcos Negreiros Vicente has worked as marketing manager, commercial manager and sales manager of
different international manufacturers of consumption products and durable goods. He was also an executive officer at
Reckitt Benckiser, Multibrás, Procter & Gamble (for twelve years) and Accenture. He was elected our chief
commercial officer in 2006. Mr. Vicente graduated in production engineering from Universidade de São Paulo.
Fábio Pinto Palmeira graduated in economics and worked for 17 years for Chase Manhattan Bank, as well as
for Banco Nacional and Banco Bozano Simonsen, as manager of credit and risk. He joined our company nine years
ago as executive officer in charge of risk management and since December 2005 has been our chief operating officer.
Alessandro Tavares Raposo worked in the technology departments of Credicard and Citibank. He joined
our company in 1997, was our systems manager, manager of system architecture, logistics, technology
infrastructure, telecommunications and research & development. Since December 2005 has been our chief
technology officer. Mr. Raposo graduated in information technology and attended a management program at
the Kellogg School of Management.
Irélio Pedro Frigo graduated in business administration and was formerly a human resources and services
manager of Banco Crefisul and of Banco Bamerindus. He is our chief human resources officer since 1996.
Ronaldo Cerqueira Varela was an executive officer of marketing, technology and products in companies
such as Promom, Booz Allen & Hamilton, Northern Telecom and Union Carbide. Until 2007, he was the
regional executive officer of new business for Latin America of Telefonica. He has been our chief marketing
and product officer since 2007. He graduated from the Business School of Pontifícia Universidade Católica of
Salvador and has an MBA degree from Kenan Business School of the University of North Carolina.
Share Ownership
The table below indicates the number of shares issued by us, held by our directors as of the date of this
preliminary offering memorandum, as well as the percentage of our capital stock and total outstanding shares
they represent. As of the date of this offering memorandum, our executive officers do not hold shares of
Redecard. Except for Mr. Castro Neto, who owns one share of Redecard, the other members of our board of
directors hold shares issued by Redecard by means of usufruct of shares owned by our controlling shareholders.
Directors/Officers Number of shares Percentage (%)
Joaquim Francisco de Castro Neto.......................................... 1 0.0001%
Hélio de Mendonça Lima........................................................ 1 0.0001%
Claudio Rudge Ortenblad........................................................ 1 0.0001%
Gilberto Caldart ...................................................................... 1 0.0001%
Hector Nevarez ....................................................................... 1 0.0001%
Marcio de Andrade Schettini................................................... 1 0.0001%
Horacio Lafer Piva ................................................................. 1 0.0001%
Compensation
Pursuant to Brazilian Corporate Law, our shareholders are responsible for establishing, at a shareholders'
meeting, the annual aggregate amount of the compensation we pay to the members of our senior management.
According to our bylaws, our general shareholders' meeting is responsible for establishing the annual global
compensation of our directors and executive officers, and our board of directors is responsible for allocating this
amount among our directors and executive officers.
In the year ended December 31, 2006, the compensation we paid to the members of our board of directors
and board of executive officers totaled R$5.2 million, of which approximately R$2.2 million were related to
compensation and R$3.0 million were in profit sharing.
For the year ended December 31, 2007, our general shareholders' meeting held on April 27, 2007 established
the compensation of our directors and executive officers was approved in the amount of up to R$15.0 million.
In addition, since 2001, we have offered a profit sharing program to all our employees according to the
federal legislation which payment is made in the month of February of each year. This program has targets to be
reached by us and is subject to the attainment of income before income tax projected and approved by our board
of directors. We distributed R$9.2 million, R$12.9 million and R$15.6 million in profit sharing with respect to
the years ended December 31, 2004, 2005 and 2006, respectively.
Stock Option Plan
Our by-laws include a provision that we may, within the limit of our authorized share capital, grant stock
options to our senior management members and employees, as well as to individuals providing services to us, or
the senior management members and employees of our subsidiaries and affiliates. When issuing shares upon the
exercise of stock options, we are not required to grant preemptive rights for the purchase of these shares by our
shareholders. On June 18, 2007, the shareholders present at the special shareholders' meeting approved the
hiring of a specialized company to study a stock option plan of acquisition or subscription of Redecard shares,
addressed to our directors, executive officers and employees, as well as individuals who provide services to us
and to directors, executive officers and employees of other entities that are directly or indirectly controlled by
us. This plan will be implemented in the course of the years, and will be granted in the proportion of up to 0.5%
of maximum dilution of Redecard shares, limited to our authorized capital stock. The terms and conditions of
the stock option plan have not yet been defined, and when defined, they will be subject to the approval of our
shareholders at a general shareholders' meeting. After approval, the beneficiaries, the grant of the plan, the
number of shares that each of the beneficiaries will have the right to subscribe for, as well as the price of
exercise of the stock option will be submitted to the approval of our board of directors. The price of exercise of
the stock option that may be granted has not yet been defined and it may be established at a price below the
without any consideration. According to Article 171, Paragraph 3, of Brazilian Corporate Law, shareholders
will not have rights of first refusal in the exercise of the stock option plan. As of the date of this offering
memorandum, stock option plans have not been approved by our shareholders at a general shareholders'
meeting or by our board of directors, nor any stock option has been granted. The issuance of shares upon the
exercise of the stock option according to the terms of a plan that will be implemented would result in the
dilution of our shareholders.
Family Relationships Among Any of Our Directors or Executive Officers and Among Our Directors or
Executive Officers and the Controlling Shareholders
There is no family relationship among our directors and executive officers or among them and our
controlling shareholders.
Material Agreements or Obligations Among Our Directors and Executive Officers and Us
There is no material agreement of obligations among our directors and executive officers and us.
PRINCIPAL AND SELLING SHAREHOLDERS
Our capital stock is composed solely by common shares.
The table below sets forth information relating to the ownership of our common shares by each holder of
five percent or more of our capital stock, as well as by our directors and officers and the selling and controlling
shareholders as of the date of this offering memorandum and following the closing of this offering, without
giving effect to the exercise of the over-allotment option:
Before the offering After the offering(1)

Shareholders Shares (%) Shares (%)
Citibank............................................................................... 209,999,998 31.9 168,242,674 25.0
Itaucard ............................................................................... 209,999,998 31.9 163,242,674 24.3
Unibanco............................................................................. 350 0.0 350 0.0
UPS(2) ................................................................................ 82,178,949 12.5 35,421,625 5.3
Dibens(2) ............................................................................ 127,820,698 19.4 127,820,698 19.0
Senior management members(3)......................................... 7 0.0 7 0.0
Other ................................................................................... 27,415,150 4.2 178,242,677 26.5
Total ................................................................................... 657,415,150 100 672,970,705 100.0
(1) Assuming no exercise of the over-allotment option.

(2) Legal entities from the same financial conglomerate of Unibanco.
(3) Except for Mr. Castro Neto, who owns one share of Redecard, the other members of our board of directors hold shares
issued by the Company by means of usufruct of shares owned by the controlling shareholders.
The selling shareholders are the following:
Citibank
Banco Citibank S.A., a financial institution registered with the National Corporate Taxpayers Register of
the Ministry of Finance under CNPJ/MF No. 33.479.023/0001-80. As of the date of this offering memorandum,
Citibank holds an interest in our common shares representing approximately 31.9% of our capital stock.
Citibank is a participant in the Citigroup financial conglomerate and offers a wide range of financial products
and services, including banking services, consumer credit, insurance, investments and stock brokerage.
Citibank operates in over 100 countries worldwide and its customers comprise over 200 million bank accounts.
Citigroup has been established in Brazil since 1915, the year when Citibank first opened a branch in the city of
Rio de Janeiro. Citigroup currently holds a portfolio comprising over 300 thousand account holders, R$30.8
billion in total assets, has net assets amounting to R$3.2 billion and over seven thousand employees and has its
shares listed on the NYSE.
Itaucard
Banco Itaucard S.A, a financial institution registered with the National Corporate Taxpayers Register of the
Ministry of Finance under CNPJ/MF No. 17.192.451/0001-70. As of the date of this offering memorandum,
Itaucard holds an interest in our common shares representing approximately 31.9% of our capital stock.
Itaucard is a multi-service bank controlled by Itaú Holding. As of December 31, 2006, Itaú Holding had
consolidated assets amounting to R$ 209.6 billion and net assets of R$23.5 billion. Itaú Holding began
operating in 1945 and currently provides banking and other services to individual and corporate customers,
government entities, institutional investors and other customers. Its corporate purpose includes underwriting,
custody services, stock brokerage, credit cards, purchasing pools, insurance, capitalization and pension funds,
as well as financing, including vehicle financing. Itaú Holding is a publicly held corporation listed on the stock
exchanged of São Paulo, New York and Buenos Aires.
Unibanco Participacões Societárias S.A. and Unibanco – União de Banco Brasileiros S.A.
Unibanco Participações Societárias S.A., a company registered with the National Corporate Taxpayers
Register of the Ministry of Finance under CNPJ/MF No. 04.662.287/0001-76, is a selling shareholder in this
offering. As of the date of this preliminary offering memorandum, UPS holds an interest in our common shares
representing approximately 12.5% of our capital stock. UPS is a company controlled directly or indirectly by
Unibanco, which holds an interest of approximately 90% of the voting capital, and has DBR Investments
Co. Limited. This is a non-financial company that is part of the Deutsche Bank group, as a minority shareholder
with an interest of approximately 10% of the voting capital and approximately 49% of the voting capital of UPS.
Unibanco, founded in 1924, is the oldest private financial institution operating throughout Brazil. Unibanco
currently provides banking and other services to a diversified portfolio of customers, including individual and
corporate customers in the following segments, retail banking, wholesale banking, insurance, pension funds and
asset management. Unibanco is a publicly held corporation listed on the BOVESPA since 1968. In 1997,
Unibanco became the first Brazilian bank whose units were listed on the New York Stock Exchange.
Shareholders' Agreement
On June 18, 2007, our controlling shareholders who held on the execution date shares representing
approximately 96.0% of our capital stock entered into a shareholders' agreement. The shareholders' agreement
regulates the guidelines of the relationship among the shareholders before and after this offering, including
voting rules and provisions related to our management and sale of shares of our capital stock.
According to the terms of the shareholders' agreement, the deliberations at general shareholders' meetings and
at meetings of our board of directors depend on the affirmative vote of the shareholders who entered into the
shareholders' agreement. To this end, previous meetings may be held in which the shareholders who entered into
the shareholders' agreement will decide how to cast the vote. The shareholders' agreement also provides that for
the composition of our board of directors, the shareholders who entered into the shareholders' agreement should
always indicate the same number of members. The shareholders' agreement sets forth rules for the sale of shares of
the shareholders who entered into the shareholders' agreement, taking into account the grant of the right of first
refusal in the sale of these shares. By means of this mechanism, all shareholders who entered into the shareholders'
agreement (and future third parties who acquire shares) will maintain shares representing at least 50.0% of our
capital stock. The shares of each shareholder who entered into the shareholders’ agreement that exceed 17.0% of
our share capital may be object of private sale to third parties or public sale on the stock exchange or
over-the-counter market, and a faster procedure will be applied for the right of first refusal of the other
shareholders who entered into the shareholders’ agreement, provided that this sale be carried out in an organized
fashion to avoid an adverse effect on the price of our shares on the stock exchange.
Any transfer of shares subject to the shareholders’ agreement may only be carried out to a qualified investor,
which is defined under Brazilian law as the individual or legal entity of good reputation with economic-financial
capacity compatible with the size, nature and objectives of Redecard and who is also acceptable to the other
shareholders who entered into the shareholders’ agreement. Except for the exceding shares, there is a restriction
for the partial sale of our shares held by shareholders who entered into the shareholders’ agreement. Any sale of
our shares that are subject to the shareholders’ agreement shall include all shares held by the shareholder who
entered into the shareholders’ agreement. The restrictions to the transfers of shares set forth in the shareholders’
agreement are not applicable to the transfers carried out to controlling companies of, or companies controlled by,
or under common control of, the shareholders who entered into the shareholders’ agreement.The shares that are
acquired by third parties will only remain subject to the agreement upon previous and express approval of the
shareholders who entered into the shareholders' agreement. The term of the shareholders’ agreement is eight
years from the execution date and it will be automatically renewed for successive periods of 10 years in case
there is no express six-month prior written notice to the contrary by any of the shareholders who entered into the
agreement. Any disputes or controversies arising out of the shareholders’ agreement shall be subject to arbitral
court according to the terms of the International Chamber of Commerce.
RELATED PARTY TRANSACTIONS
The Brazilian underwriters, either directly or through their affiliates, are our controlling shareholders.
Unibanco, jointly with UPS and Dibens, Citi, through its affiliate Citibank, and Itaucard, which belongs to
Banco Itaú BBA's financial conglomerate, each holds 31.9% of our common shares and are the selling
shareholders in connection with the offering of our common shares.
Unibanco and the entities belonging to Banco Itaú BBA's conglomerate render certain banking services and
sell banking products to us. Citibank's conglomerate renders consulting and investment banking services to us.
We can, in the future, hire Unibanco, Banco Itaú BBA and Citi, as well as other entities belonging to the same
financial conglomerate, to assist us with investing, placement of securities or other transactions in our regular
course of business. Additionally, Banco Itaú S.A. is the financial institution hired by us to render bookkeeping
services, Citibank N.A. is the depositary in connection with the GDSs, and Citibank Distribuidora de Títulos e
Valores Mobiliários S.A. is the custodian of the shares underlying our GDSs.
In the ordinary course of our business we maintain certain arms' length transactions with related parties, all
of which observe ordinary market standards and practices, which are briefly discussed below.
As of March 31, 2007, our transactions with related parties were transactions with respect to accounts
receivable from card issuers, which are also our controlling shareholders, as well as expenses for services
provided by Orbitall.
Accounts receivable from issuers R$ million

Citibank.............................................................................................................................. 1,860.8
Itaucard.......................................................................................................................... 3,187.7
Unibanco ....................................................................................................................... 853.8
Expenses with service received
Orbitall(1)...................................................................................................................... 11.1
(1) Orbitall is controlled by Itaú Holding, which controls Itaucard, our controlling shareholder.
Our accounts receivable from issuers refer to payment owed by card issuers to us concerning the amount of
transactions carried out with credit and debit cards branded MasterCard and Diners Club, which we
subsequently pass on to affiliated merchants.
We entered into a services agreement with Orbitall for the provision of technology, office automation and
financial management services.
We have also entered into agreements with (1) our shareholder MasterCard International, in connection
with trademark licensing and rules for merchant affiliations to accept credit and debit cards as a means of
payment for goods and services, among other things.
For a more detailed description of the agreements entered into between us and Orbitall or us and
MasterCard International, see "Business⎯Material Contracts."
Services Agreements of Assurance of Banking Domicile
We entered into services agreements of assurance of banking domicile with Citibank, Itaucard and
Unibanco for an undetermined period of time. The object of these agreements is to assure to Citibank, Itaucard
and Unibanco the banking domicile of affiliated merchants who may carry out financial operations with them.
By assuring the banking domicile to Citibank, Itaucard and Unibanco, we assure that credits arising from credit
and debit card transactions be deposited in the accounts of Citibank, Itaucard and Unibanco. In case of
termination of these services agreements, we will continue to be obligated to make deposits in the relevant
accounts until the end of the term of authorization for the assurance of the banking domicile given by the
relevant merchant. During the period of the assurance of the banking domicile, we commit ourselves not to
make prepayments of receivables from credit card transactions to merchants.
Letters of Credit in Favor of MasterCard International.
We entered into letters of credit with Brazilian banks that are not part of the financial conglomerates of the
controlling shareholders. The letters of credit are in favor of MasterCard International to guarantee all our obligations
arising out of the license agreement and the settlement of the transactions with merchants acquired by us. The
letters of credit will expire on March 12, 2008 and they have to be renewed every year for as long as we are a
merchant acquirer and payment processor of MasterCard International. As of March 31, 2007, the total amount
of the letters of credit was R$1.1 billion.
GDRs Deposit Agreement with Citibank, N.A.
On June 6, 2007, we filed with the CVM for its approval of our Rule 144A GDR and Regulation S GDR
programs two agreements entered into with Citibank N.A. for the deposit of our common shares and the issuance
of the corresponding number of GDSs, which are, the Regulation S Deposit Agreement and the Rule 144A
Deposit Agreement. According to these agreements, Citibank, N.A. will act as the depositary for the issuance of
GDSs and it will be responsible for forwarding all amounts to the holders of GDSs. Citibank N.A. is a company
incorporated according to the laws of the United States of America and it is part of the Citigroup finance group,
which is also the economic group of the our controlling shareholder Citibank. The Rule 144A deposit agreement
and the Regulation S deposit agreement will be amended and restated to be dated on or about July 17, 2007.
Custodian Services Agreement
On April 19, 2007, we executed an agreement with the Banco Itaú S.A. and the Itaú Corretora de Valores
S.A. for the custody of our common shares. According to this agreement, Banco Itaú S.A. will be the custodian
of our common shares and the issuer of our shares certificates. This agreement has a indefinite term and it may
be terminated by any of the parties with a 90-days prior notice. The Banco Itaú S.A. and the Itaú Corretora de
Valores S.A. are part of the same economic group of our controlling shareholder Itaucard.
DESCRIPTION OF OUR SHARE CAPITAL
The discussion below is a summary of certain significant provisions of our bylaws, Brazilian Corporate
Law and the rules and regulations of the CVM and the Novo Mercado, of our management, periodic and
occasional reporting, as well as of other corporate aspects applying to us. This discussion does not purport to
be complete and is qualified by reference to some provisions of our bylaws, the Brazilian Corporate Law and
the regulations of the CVM and of the Novo Mercado listing segment of the BOVESPA.
General
We are currently a publicly held corporation (sociedade por ações de capital fechado) incorporated under
the laws of Brazil. On April 27, 2007, we applied for our registration with the CVM as a publicly held
corporation, and the registration was granted by the CVM on July 11, 2007.
Share Capital
As of the date of this offering memorandum, our capital stock was R$473,551,217.67, all of which has been
fully paid in and divided into 672,970,705 registered common shares, without par value. Pursuant to our
bylaws, our board of directors may increase our capital stock, without amending our bylaws, up to a total of
1,750,000,000 common shares. Our shareholders must approve in a shareholders' meeting any capital increase
that exceeds our authorized capital. According to the agreement we have executed with the BOVESPA to list
our shares on the Novo Mercado segment of BOVESPA, we may not issue non-voting shares, shares with
restricted voting rights or participation certificates (partes beneficiárias).
Treasury Shares
We do not hold treasury shares.
History of Our Share Capital
The table below sets forth the evolution of our capital stock since our incorporation:
Date Meeting Original Capital Stock Final Capital Stock
09.02.1996 Meeting of Incorporation – R$1,800,000.00
11.28.1996 Extraordinary Shareholders' Meeting R$ 1,800,000.00 R$12,107,500.00
05.09.1997 Meeting of the Board of Directors R$ 12,107,500.00 R$13,728,916.66
04.30.1999 General Shareholders' Meeting R$13,728,916.66 R$16,475,000.00
06.30.1999 Extraordinary Shareholders' Meeting R$16,179,533.30(1) R$18,759,576.59
07.11.2007 Meeting of the Board of Directors R$53,551,232.67 R$473,551,217.67
(1) A cancellation of a capital stock increase in the amount of R$295,466.70 was approved.
On June 15, 2007, the shareholders present at our general shareholders' meeting approved a stock split at a
ratio of one common share to 350 common shares. Before the stock split, our share capital was divided in
1,878,329 common shares and after the stock split it has been divided in 657,415,150 common shares.
Trading on the BOVESPA
Our common shares will be traded on the Novo Mercado segment of the BOVESPA, a not-for-profit entity
owned by its member brokers. Trading on such exchange is carried out by member brokers.
On May 25, 2007, we applied for our registration as a publicly held corporation with the BOVESPA and listing
of our shares on the Novo Mercado segment. The common shares will start trading on the Novo Mercado segment of
the BOVESPA on the first business day after the date of this offering memorandum under the code "RDCD3"
pursuant to the Novo Mercado Participation Agreement entered into on June 18, 2007.
Pursuant to the Novo Mercado Participation Agreement, we will have a three-year term from the date of
publication of the announcement of of the commencement of the offering to reach the minimum free float of
25.0% of shares outstanding, as required by Novo Mercado regulations. During this period, however, we will
commit ourselves to keep a minimum percentage of free float of 16.0%.
The CVM and the BOVESPA have discretionary authority to suspend trading in shares of a particular
issuer under certain circumstances.
The trading in securities listed on the BOVESPA, including in the Novo Mercado, Nível 1 and Nível 2
special listing segments, may be affected by trading taking place on the non-organized over-the-counter market.
The settlement of transactions involving the sale of shares on the BOVESPA takes place within three
business days after the trading date. The delivery and the payment of the common shares are made through the
facility of CBLC, which is managed by the BOVESPA. The CBLC is the clearing house for the transactions
carried out on the BOVESPA, handling multilateral settlement of both financial obligations and transactions
involving securities. According to the regulations of the CBLC, financial settlement is carried out through the
Central Bank's Reserve Transfer System. Clearing in turn takes place in the CBLC custody system. Both
clearing and settlement are final and irreversible.
Restrictions on Foreign Investments
No restrictions apply to individuals or entities domiciled abroad holding our shares. However, the right to
convert dividend payments and the proceeds from the sale of shares into foreign currency, and to remit these amounts
abroad, is subject to foreign exchange restrictions and to the Brazilian legislation on foreign investments, which
among other formalities, requires foreign investments to be electronically registered with the Central Bank.
Foreign investors may register their investments with the Central Bank, as a direct foreign investment,
pursuant to Law 4,131/62, or with the CVM, as a foreign portfolio investment, pursuant to CMN Resolution
2,689 and CVM Instruction 325. Direct foreign investors may sell their shares either in private transactions, on
the stock exchange or over-the-counter market, but are generally subject to a less favorable tax treatment than
foreign portfolio investors.
CMN Resolution 2,689 provides that, with certain exceptions, such as in the case of purchases of shares in
public offerings, foreign portfolio investors may only purchase and sell shares on the stock exchange or organized
over-the-counter market, and are generally granted a more favorable tax treatment than direct foreign investors.
Corporate Purpose
As defined in our bylaws, our corporate purpose consists of: (1) coordinate payments with merchants, by means of
the capture, transmission, processing and settlement of credit and debit card transactions, as well as the maintenance of
those amounts in the system, (2) provision of the credentials of merchants providing services and suppliers of goods that
can be paid by credit or debit cards; (3) provision of electronic terminals to facilitate the capture, transmission and
processing of card transactions; (4) representation of national and international franchises by means of payments;
(5) holding interest in other partnerships; and (6) developing other activities that may be of interest to us.
Rights of Common Shares
Each of our common shares entitles its holder to:
• one vote at our annual or special shareholders' meetings;

• right to mandatory dividends during each fiscal year, not lower than 40.0% of net income for each
year, adjusted according to the terms of Article 202 of Brazilian Corporate Law, and additional
dividends that may be distributed based on deliberation of our shareholders at a shareholders' meeting,
provided that new shareholders will be entitled to dividends from the third quarter of 2007 onwards,
since (1) we have already declared and paid dividends related to the first quarter of 2007 in April 2007;
and (2) we will declare and pay dividends related to the second quarter of 2007 before the completion
of the offering;
• right to participate in our other profit distributions and exercise all intrinsic rights pertaining to our
common shares, as may be declared by us, beginning on the date of settlement of this offering;
• tag-along rights, in the event of the disposition of our control in one or a series of successive transactions,
under the same terms and conditions extended to our controlling and selling shareholder;
• right to dispose of common shares, in the case of acquisition by any shareholder of 26.0% of more of our
capital stock, in a public tender offer to be carried out by the acquiring shareholder at a price not lower
than 1.5 times of the higher value of (1) 100.0% of the average unit trading of shares issued by the
Company during a 90-day period before the public tender offer, weighted by the trading volume at the
stock exchange in which there is a higher trading volume of shares issued by the Company; or (2)
100.0% of the highest value paid by the acquiring shareholder for shares of the Company in any type of
trading in the period of twelve months before the date in which the public tender offer; or (3) the fair
value calculated in the valuation report; and
• all rights and benefits afforded to our shares under the Novo Mercado regulation, our bylaws and the
Brazilian Corporate Law.
As long as we are listed on the Novo Mercado, we may only issue common shares. In addition, if we decide
to delist from the Novo Mercado, our controlling shareholder must conduct a public offering to acquire shares
from the other shareholders. See "⎯Delisting from the Novo Mercado."
Shareholders' Meetings
At properly called and convened shareholders' meetings, shareholders are authorized to make decisions
relating to our corporate purpose and to pass such resolutions as they deem to be in our interest. Shareholders at
the annual shareholders' meeting have the exclusive power to approve our financial statements and to determine
the allocation of our net income and the payment of dividends with respect to the fiscal year ended immediately
prior to the shareholders' meeting. The election of the members of our board of directors typically takes place at
the annual shareholders' meeting, although this may also occur at a special shareholders' meeting. Members of
our fiscal council, if such council is installed at the request of a sufficient number of shareholders, may be
elected either at the annual or the special shareholders' meeting.
A special shareholders' meeting may be held at any time, including concurrently with the annual shareholders'
meeting. The following actions, among others, may be taken exclusively at a shareholders' meeting:
• amendment of our bylaws;

• election and dismissal of the members of our board of directors;
• determination of the aggregate compensation of the board of directors, board of executive officers, and
fiscal council, if installed;
• approval of share split;
• approval of a stock option plan;
• approval of management accounts and our financial statements;
• approval of the allocation of net income and distributions of profits and payment of dividends, as well
as creating profit reserves, except for mandatory reserves;
• delisting from the Novo Mercado segment of the BOVESPA, or going private process;
• retaining, from a list of institutions identified by our board of directors, of a specialized firm to prepare
a valuation report with respect to the value of our shares in the event of any public offering as set forth
in our by-laws or the Novo Mercado regulation;
• authorization of the issuance of convertible or secured debentures;
• suspension of a shareholder's rights in the event of noncompliance with Brazilian Corporate Law or
our bylaws;
• approval of the appraisal of assets offered by a shareholder in consideration for the subscription of
shares of our capital stock;
• approval of our transformation into a limited liability company (sociedade limitada) or into any other
corporate form provided in the Brazilian Corporate Law;
• approval of our consolidation, merger or spin off;
• authorization to petition for our bankruptcy or request our judicial reorganization and/or authorization
to petition for bankruptcy of our controlled companies or request judicial reorganization of our
controlled companies; and
• approval of our dissolution or liquidation, and appointment or dismissal of the respective liquidators
and the fiscal council that should operate during the liquidation, as well as approval of the report
prepared by the liquidator describing our acts, transactions and final accounts.
According to the Brazilian Corporate Law, a company's bylaws, or actions taken at a shareholders' meeting
may not deprive a shareholder of the following rights:
• the right to participate in profit distributions;

• the right to participate equally and ratably in any remaining residual assets in the event of our
liquidation;
• preemptive rights in the event of subscription of shares, convertible debentures and subscription
warrants, except in some specific circumstances foreseen in the Brazilian Corporate Law and
described in "⎯Preemptive Rights;" and
• the right to withdraw from the company in the cases specified in the Brazilian Corporate Law, as
described in "⎯Withdrawal and Redemption Rights."
Quorum
Brazilian Corporate Law generally provides that a quorum for a shareholders' meeting consists of
shareholders representing at least 25.0% of a company's issued and outstanding voting capital stock on the first
call and, if that quorum is not reached, any percentage of our voting capital stock on the second call.
As a general rule, the affirmative vote of shareholders representing at least the majority of our issued and
outstanding common shares present at a shareholders' meeting in person, or represented by a proxy, is required
to approve any proposed action, with abstentions not taken into account. However, the affirmative vote of
shareholders representing at least 50.0% of our issued and outstanding voting capital is required to:
• reduce the mandatory dividend for distribution to our shareholders;

• change our corporate purpose;
• approve our consolidation or merger with another company;
• approve our spin-off;
• approve our participation in a corporate group;
• apply for termination of our liquidation;
• approve our dissolution; and
• approve the merger of our shares into another company.
Notice of a Shareholders' Meeting
Brazilian Corporate Law requires that a notice of a shareholders' meeting be published on three different
dates in the Federal Official Gazette and another widely circulated newspaper in the state in which our
registered office is located, which in our case include the Diário Oficial do Estado de São Paulo, which is the
official newspaper of the government of the State of São Paulo, and the DCI – Diário Comércio, Indústria &
Serviços. The first notice must be published no later than 15 days before the date of the meeting on the first call,
and no later than eight days before the date of the meeting on the second call. In certain circumstances, the CVM
may also require that the first notice be published not later than 30 days prior to the meeting.
Location of our Shareholders' Meetings
Our shareholders' meetings are held at our headquarters in São Paulo. Brazilian Corporate Law allows our
shareholders to hold meetings outside our headquarters in the event of force majeure, provided that the
meetings are held in the city of São Paulo and the relevant notice contains a clear indication of the place where
the shareholders' meeting will take place.
Who May Call a Shareholders' Meeting
Our board of directors may call shareholders' meetings, although they may also be called by the following:
• any shareholder, if our directors fail to call a shareholders' meeting within 60 days after the date they
were required to do so under applicable laws and our by-laws;
• shareholders holding at least 5.0% of our capital stock, if our directors fail to call a meeting within
eight days after receipt of a justified request to call the meeting by those shareholders indicating the
proposed agenda;
• shareholders holding at least 5.0% of our shares if our directors fail to call a meeting within eight days
after receipt of a request to call the meeting for the creation of the fiscal council; and
• our fiscal council, if one is active and if our board of directors fails to call an annual shareholders'
meeting within one calendar month after the date it was required to do so under applicable law. The
fiscal council, if active, may also call a special shareholders' meeting if it believes that there are
important or urgent matters to be addressed.
Conditions of Admission
Shareholders attending a shareholders' meeting must prove their status as shareholders and present proof
that they hold title to the shares they intend to vote.
A shareholder may be represented at a shareholders' meeting by a proxy appointed less than a year before
the meeting, which proxy should be our shareholder, our corporation officer, a lawyer or a financial institution.
An investment fund must be represented by its investment fund officer.
Fiscal Council
Under Brazilian Corporate Law, the Conselho Fiscal, or fiscal council, must be a corporate body
independent of our management and our independent auditors. The primary responsibilities of a fiscal council
include monitoring management activities, reviewing the company's financial statements, and reporting its
findings to the company's shareholders.
The fiscal council is not permanent but may be installed at the request of shareholders, such as described
below. The fiscal council, if installed, is composed of three members and their respective alternates. Under
Brazilian Corporate Law, when it is not permanent, the fiscal council may be installed at the request of
shareholders representing at least 10.0% of the outstanding common shares, with a term of office extending
through the first annual shareholders' meeting held after its installment and election of its members. In addition,
minority shareholders representing a minimum of 10.0% of the outstanding common shares are entitled to elect
one fiscal council member and his alternate by a separate vote.
The fiscal council may not include members of our board of directors, our board of executive officers,
employees of a subsidiary or a company from our economic group, or be a spouse or relatives of our managers.
In addition, Brazilian Corporate Law requires fiscal council members to receive as compensation an amount
equal to at least 10.0% of the average annual amount paid to the company's executive officers, which excludes
benefits and other allowances or profit-sharing arrangements
All elected members of our fiscal council are required to sign an instrument of adherence to the rules of the Novo
Mercado prior to taking office. This document also requires them to adhere to our agreement for participation in the
Novo Mercado listing segment and the regulations of the Market Arbitration Chamber of the BOVESPA.
Audit Committee
As part of the corporate governance practices we adopt, in addition to those expressly required by the Novo
Mercado regulation, we maintain an internal audit committee, which is also in charge of risk and finance
management. Our audit committee, under implementation phase which is not contemplated in our bylaws, is
responsible for assisting our board of directors in decisions involving our internal and independent audits and also
matters related to financial processes and controls, and to risk management, and seeks to ensure the consistency of
our financial policies, strategic guidelines and business risk profile. It is comprised of the minimum of three and
the maximum of seven members, whose terms of office are of one year, reelection being permitted.
Withdrawal and Redemption Rights
Withdrawal
Any of our shareholders who disagree with certain decisions taken in a shareholders' meeting have the right
to withdraw and receive the net worth of their shares.
Pursuant to the Brazilian Corporate Law, the right of withdrawal may be exercised under the following
circumstances:
• our spin-off (in the circumstances described below);

• a reduction of our mandatory dividend to be paid to shareholders;
• a change of our corporate form or purpose;
• our merger into or consolidation with another company (in the circumstances described below); and
• our participation in a corporate group (as defined in the Brazilian Corporate Law);
As long as we are listed on the Novo Mercado, we may not issue preferred shares or participation
certificates, and in the event of a going private process or delisting from the Novo Mercado, a tender offer for
the purchase of our outstanding shares would have to be carried out.
Brazilian Corporate Law further provides that our spin-off will only give rise to the right of withdrawal if it
results in:
• a change of our corporate purpose, except to the extent that the principal business purpose of the entity
into which the spun-off assets and liabilities were transferred is consistent with our corporate purpose;
• a reduction of the mandatory dividend to be paid to shareholders; or
• our participation in a group of companies (as defined in the Brazilian Corporate Law).
In case of our merger into or consolidation with another company, where we are not the surviving
company, or participation in a centralized group of companies (as defined in the Brazilian Corporate Law), our
shareholders will not be entitled to withdraw rights if our shares: (a) are liquid, meaning they are part of the
BOVESPA Index or some other traded stock exchange index, as defined by the CVM, and (b) are widely held,
such that the controlling shareholder or companies it controls hold less than 50.0% of our common shares.
The right of withdrawal expires 30 days after publication of the minutes of the relevant shareholders'
meeting. Additionally, we are entitled to reconsider (by a majority vote of shareholders attending a meeting
called by our board of directors) any decision giving rise to withdrawal rights within 10 days after the expiration
of those rights, if the redemption of shares of dissenting shareholders would jeopardize our financial stability.
If shareholders exercise withdrawal rights, they are entitled to receive the net worth of their shares, based
on the last balance sheet approved by the shareholders. If the resolution giving rise to the withdrawal rights is
made later than 60 days after the date of the last approved balance sheet, the shareholder may demand that his or
her or its common shares be valued according to a new balance sheet dated no more than 60 days before the
resolution date. In this case, we must immediately pay 80.0% of the equity value of the common shares,
according to the most recent balance sheet approved by our shareholders, and the balance must be paid within
120 days after the date of the resolution of the shareholders' meeting.
Redemption
Pursuant to the Brazilian Corporate Law, our shares may be redeemed if our shareholders decide to do so at
a special shareholders' meeting.
Registration of Our Common Shares
Our common shares are held in book-entry form with Banco Itaú S.A. The transfer of common shares is
made through an entry, made by Banco Itaú S.A, in its accounting systems, debited from the disposing
shareholder's account and credited to the buyer's account, pursuant to a written order of the disposing
shareholder or a judicial order or authorization.
Preemptive Rights
Except as described below, our shareholders have a general preemptive right to subscribe for common
shares in any capital increase according to the proportion of their interest in our Company at the time of the
capital increase, except however in the event of issues of stock options, or of exercise of stock options by
shareholders, or of conversions of debentures into shares. While our shareholders also have preemptive rights to
subscribe for convertible debentures and subscription warrants, no preemptive rights apply to actual
conversions of debentures, common share acquisitions resulting from the exercise of subscription warrants and
offerings of call options and their exercise. In accordance with Brazilian law, a period of at least 30 days from
the publication of notice of issuance of shares, convertible debentures or warrants is granted for the exercise of
preemptive rights, which rights may be transferred or disposed of for value.
Restrictions on Actions Outside the Scope of Our Corporate Purpose
In addition, our bylaws prohibit us from granting any financing or offering guarantees of any kind to third
parties in connection with any transactions or business outside the scope of our corporate purposes.
Restrictions on Trading of Our Securities by Our Controlling Shareholders, Directors and Officers
Our direct or indirect controlling shareholders, and our directors, officers and members of our fiscal
council, if active, all of whom are considered insiders under the Securities Market Law and CVM Instruction
No. 358, are prohibited from trading in our securities or securities backed by or linked to our securities,
including, as follows:
• before the public disclosure of any material act or fact with respect to our business;
• whenever there is an intention to merge us into another company or to carry out our merger, total or
partial spin-off, consolidation, transformation or corporate restructuring;
• during the 15-day period before the disclosure of our quarterly (ITR) and annual financial statements
(IAN and DFP), as required by CVM; or
• with respect only to our controlling shareholders, directors and officers, in the event of acquisition or
sale of our shares by us or the acquisition or sale of our shares by any of our controlled or affiliates or
any other company under common control with us.
Restrictions on Transactions of Interest to Related Parties
Our bylaws require approval by our board of directors for any transaction or series of related transactions entered
into between us and our controlling shareholders, any individual or spouse or close family members of any individual
holding control of our controlling shareholders, or any company in which any of our controlling shareholders may
hold an equity interest directly or indirectly, including through a spouse or close family members.
Under the Brazilian Corporate Law, a director (and an officer) must not:
• perform any charitable act at our expense, except for such reasonable charitable acts for the benefit of
employees or of the community in which we participate, upon approval by the board of directors or the
executive officers;
• by virtue of the director's or officer's position, receive any type of direct or indirect personal advantage
from third parties without authorization in our bylaws or from a shareholders' meeting; and
• take part in any corporate transaction in which the director or officer has an interest that conflicts with
our interest, or in the decisions made by other directors or officers on the matter.
Disclosure of Transactions within Our Conglomerate and with Other Related Parties
Under the Novo Mercado regulation, we are required to send to the BOVESPA and disclose to the market
information on any and all transactions or series of successive transactions, whether or not for the same or
related purposes, that within a period of one year equal or exceed R$0.2 million, or the equivalent of or more
than 1.0% the value of our net equity, whichever is greater, which is or are entered into between us and any of
our subsidiaries or affiliates, or our controlling shareholders, or their subsidiaries and affiliates, or any of our
directors, individually or in a group of persons or entities sharing similar interests.
Disclosed information on these transactions should identify the purpose of the transactions, duration, value
and conditions of termination, as well as the possible influence on our management or course of business. For
more information see "Related Party Transactions."
Purchases of Our Own Shares by Us
Our bylaws authorize our board of directors to approve the acquisition of our own shares or issue stock
options. The decision to acquire our shares and maintain them as treasury stock or cancel the common shares
may not, among other things:
• result in a reduction of our capital stock;
• require the use of funds in excess of our retained earnings and reserves (other than the legal reserve,
unrealized profit reserve, revaluation reserve and special mandatory dividend reserves) recorded in our
most recent financial statements;
• directly or indirectly create, through action or omission, any artificial demand, share offering or price
conditions, or involve unfair practices; or
• be used to purchase unpaid shares or shares held by our controlling shareholder.
Any acquisition of our shares by us must be made on a stock exchange, unless the shares are traded on the
over-the-counter market, and may not be made pursuant to private transactions unless prior approval for such
acquisition is obtained from the CVM. We also may purchase our own shares for the purpose of going private.
Moreover, we may acquire or issue put or call options related to our shares.
Disclosure of Trading of Our shares by Us, Our Controlling Shareholders, Directors, Officers and Fiscal
Council Members
Pursuant to CVM rules, our directors and officers, members of our fiscal council, if active, as well as members of
our audit committee or any other technical or advisory committee created under our bylaws, are required to disclose to
us, the CVM and BOVESPA the number and type of securities issued by us, or our publicly held subsidiaries, held by
them or by persons related to them, as well as any alteration in their respective interests in the twelve preceding months.
In the case of individuals, they should include information as to securities held by a spouse, companion or dependent for
income tax purposes, and by companies directly or indirectly controlled by these persons. The information on these
transactions, including as to number of securities, price and date of purchase, should be provided to the CVM and the
BOVESPA within ten days from the end of the month in which trading take place.
Additionally, the Novo Mercado regulation requires our controlling shareholders to provide the same
information in relation to securities issued by us, including derivatives and to disclose their plans for future
trading. Information on trading of our securities should include:
• name and identification of the acquirer;

• number, kind, class and characteristics of the securities, including identification of the issuer; and
• form (private transaction, trading on the stock exchange, etc.), price and date of purchase.
Pursuant to CVM Instruction 358 dated January 3, 2002, if our controlling shareholders, or shareholders
which have elected our directors and fiscal council members either individually or in a group of persons or
entities sharing similar interests, should directly or indirectly increase or reduce their interest in our capital
stock by more than five percent, such persons or entities must disclose to us, the CVM and BOVESPA the
following information:
• the name and identification of the person providing the information;

• the number, kind and class and other characteristics of the shares, warrants, subscription rights, call
options, and convertible debentures, if an interest is already held by their acquirer or any related
person;
• form of acquisition (private transaction, trading on the stock exchange, etc.);
• the reasons and purpose of the transaction;
• information regarding any agreement regulating the exercise of voting rights or the purchase and sale
of our securities; and
• average trading price of securities of the same characteristics issued by us, which were acquired on the
stock exchange in the preceding 90-day period.
Arbitration
We, our shareholders, our directors and officers, and the members of our fiscal council, if active, should
submit to arbitration any dispute relating to the application, legality, effectiveness, interpretation, violation and
effects of violation of the provisions in the Agreement for Participation in the Novo Mercado, and to the Novo
Mercado regulations, the Arbitration Regulation instituted by the BOVESPA, the provisions of the Brazilian
Corporate Law, the rules of the CMN and the Central Bank, the regulations of the CVM and BOVESPA and
other rules generally applying to the Brazilian capital market. Any such dispute should be settled by arbitration
carried out before the Market Arbitration Chamber of the BOVESPA, under its rules.
Going Private Process
We may become a private company if we or our controlling shareholders conduct a public tender offer for
the acquisition of all of our outstanding shares in accordance with the rules and regulations of the Brazilian
Corporate Law, the CVM and the Novo Mercado which, among other things, require that the offering price be
the fair value of our shares, as defined pursuant to a valuation report, and that holders of common shares
representing more than two thirds of the outstanding common shares should have agreed to the delisting or
accepted the offer; provided, however, that for such purposes outstanding shares shall mean shares the holders
of which shall have enrolled to participate in the offer.
The valuation report must be prepared by a specialized and independent firm of recognized experience,
chosen at a shareholders' meeting from a list of three institutions presented by our board of directors, pursuant to
a decision of shareholders representing a majority of the outstanding shares held by holders attending the
meeting, not including blank votes. This shareholders' meeting will be convened upon attendance by holders of
a minimum of 20.0% of our outstanding shares on the first call, or any number of shareholders, in the second
call. All the expenses and costs incurred in connection with the preparation of the valuation report must be paid
for by the controlling shareholders and/or us, as offerors.
Shareholders holding at least 10.0% of our outstanding shares may require our management to call a special
shareholders' meeting to determine whether to perform another valuation using the same or a different valuation
method. This request must be made within 15 days following the disclosure of the price to be paid for the shares in
the public offering. The shareholders that make such request, as well as those voting in its favor, must reimburse us
for any costs involved in preparing the new valuation, if the new valuation price is not higher than the original
valuation price. If the new valuation price is higher than the original valuation price, the public offering must either
be cancelled or carried out at the higher price, and this decision must also be disclosed to the market.
Delisting from the Novo Mercado
We may at any time delist our shares from the Novo Mercado, provided that shareholders representing the
majority of our shares approve the action and that we give at least 30 days written notice to BOVESPA. Our delisting
from the Novo Mercado would not result in the loss of our registration as a public company with BOVESPA.
If the shareholders' meeting decides to delist in order for our shares to be tradable outside the Novo Mercado, or as
a result of a corporate reorganization in which the surviving company is not listed on the Novo Mercado, our controlling
shareholder or group of controlling shareholders should conduct a public offering to purchase our outstanding shares. In
any such event, the offering price per share should be no less than the fair value of our shares, as determined in a
valuation report prepared by a specialized and independent firm of recognized experience, chosen at a shareholders'
meeting from a list of three institutions presented by our board of directors, pursuant to a decision of shareholders
representing the absolute majority of the votes of holders of our outstanding shares, not including blank votes. This
shareholders' meeting will be convened upon attendance by holders of a minimum of 20.0% of our outstanding shares
on the first call, or any number of shareholders, in the second call. All the expenses and costs incurred in connection
with the preparation of the valuation report must be paid by the controlling shareholders and/or us, as offerors.
According to the Novo Mercado listing regulations, in the event of a transfer of our control within 12
months following our delisting from the Novo Mercado, the acquirer of control and the seller of control must
offer to purchase the shares of all other holders of our shares for the same price, terms and conditions offered to
the seller of control, as adjusted for inflation.
If our shares are delisted from the Novo Mercado, we will not be permitted to have shares listed on the
Novo Mercado for a period of two years following the delisting date, unless there is a change in our control
following this delisting.
Mechanisms for Protection of Free Float
Our bylaws contain provisions intended to avoid the concentration of shares issued by us in the hands of a small
number of investors, thus favoring free float. One such provision requires any person acquiring or becoming the holder
of shares issued by us, or other rights in our shares (including beneficial owner rights under a share usufruct or a trust),
as long as the shares comprise a total interest of 26.0% or more of our total shares, is required within 30 days following
this event to conduct or register a tender offer to purchase all our outstanding shares, pursuant to the provisions of the
Brazilian Corporate Law, the regulations of the CVM and BOVESPA and our by-laws. This requirement is not
applicable to shareholders that on the date of the publication of the announcement of commencement of this offering
already hold 26.0% or more of our total shares, or their future successors, including our controlling shareholders and
their shareholders, if they acquire a direct interest in us pursuant to future corporate restructuring transactions, and other
investors that become our shareholders pursuant to certain transactions specified in our bylaws.
The tender offer must be directed to all our shareholders, completed at an auction carried out at the
BOVESPA, launched for an offering price determined as discussed below, and paid on demand, in Brazilian
currency, against purchase at the auction. The offering price per share in this case may not be lower than the
greater of 150% of the fair value of the shares, as determined pursuant to a valuation report; 150% of the issue
price of our shares in any capital increase implemented through a primary distribution, if one has taken place in
the period of 12 months preceding the date on which the tender offer becomes mandatory; 150% of the average
trading price of our shares, during the period of 90 days preceding the date of the offering, weighted by the
trading volume on the stock exchange at which the largest volume of our shares is traded; and 150% of the
highest price paid by the acquirer of our shares in any trading or transaction taking place in the period of 12
months preceding the date on which the tender offer becomes mandatory.
The obligation to conduct a tender offer will not apply to persons acquiring more than 26.0% of our total
shares as a result of legal succession, on condition that the successor must sell the excess shares within 30 days
following the succession; a merger of another company into ours, a merger of the shares of another company
into ours; and a subscription for our shares in a single primary issue approved by a shareholders' meeting held in
connection with a capital increase proposal submitted by our board, provided the issue price of our shares is
based on fair value, as determined in a valuation report prepared by a specialist firm of recognized experience in
the valuation of publicly-held companies.
The calculation of 15% of our total shares will not compute involuntary increases in the percentage interest that
result from the cancellation of treasury shares or a capital reduction implemented through share cancellation.
If the CVM regulations applying to the tender offer to be conducted in any such event require the adoption of
a specific calculation criterion to establish the offering price per share, which results in a higher price than
determined as indicated above, then the higher price determined in accordance with the CVM regulations prevails.
Pursuant to the applicable regulations, the requirement for a tender offer to be completed in any such event
is not exclusive of another offering being carried out concurrently by either a shareholder or ourselves, as the
case may be.
If our shareholders' meeting passes a resolution to change our bylaws to limit the rights of our shareholders
to have their shares purchased in a public offering, or to exclude this mechanism, shareholders that vote in favor
of such amendment to, or deletion from, the bylaws are required to conduct a tender offer pursuant to the rules
discussed above.
The provisions of our bylaws related to the obligation to carry out a public tender offer are not applicable to
shareholders that as of the date of settlement of this offering hold 20.0% or more of our total shares outstanding
and acquire new shares of Redecard, directly or indirectly, in public or private transactions.
Change of Control
According to the Novo Mercado listing regulation, the sale of control over our company, in one transaction or in
a series of successive transactions should contemplate an obligation by the acquirer of control to conduct a tender
offer for the acquisition of all other outstanding shares on the same terms and conditions offered for disposition of
control so as to assure equal treatment among all of our shareholders. For such purposes, the selling controlling
shareholders and the acquirer shall inform the CVM and BOVESPA of the price and other conditions of such sale.
A tender offer is also required:
• when there is a significant assignment of share subscription rights or rights in other securities
convertible into our shares, which results in the transfer of our control;
• in case of an indirect transfer of our control, through a transfer of control over our controlling
shareholders; and
• in case a shareholder acquires our control pursuant to a private transaction for purchase of our shares.
In this event, the acquiring shareholder must conduct a tender offer for the acquisition of all our
outstanding shares on the same terms and conditions offered for disposition of control and must also
reimburse the counterparties from whom it has acquired our shares on the stock exchange in the
six-month period preceding the transaction that resulted in a change in control. The reimbursement
amount corresponds to the positive difference between the price paid to the seller of control and the
adjusted price paid in transactions carried out on the stock exchange during this six-month period.
The buyer, if applicable, should take all necessary measures to reconstitute the minimum 25.0% free float
within six months of the acquisition.
The controlling shareholder may not transfer the shares to the purchaser of our control, and we shall not
register the transfer of such shares, if the buyer fails to execute an instrument of adherence to the Novo Mercado
regulation and the Rules of the Market Arbitration Chamber established by the BOVESPA. Moreover, we will
not register any shareholders' agreement that regulates the exercise of control rights until the signatories thereto
execute the Terms of Consent of the Novo Mercado regulations and the Rules of the Market Arbitration
Chamber established by the BOVESPA.
Tender Offers to Purchase Our Shares
Pursuant to our bylaws, if more than one of the requirements to conduct a tender offer is satisfied at the
same time, as discussed above under "⎯Change of Control," we or our shareholders may decide to conduct one
single tender offer, provided it is possible to follow the procedures required for both tender offers and, provided
further, that there is no prejudice to the beneficiaries of the offering and that authorization is obtained from the
CVM, when legally required.
Suspension of Rights of Acquiring Shareholders for Violation of Our Bylaws
If an acquiring shareholder fails to comply with the provisions of our bylaws concerning the tender offer
requirements applying as a result of a change in our control or of a purchase of shares representing 15.0% or
more of our capital stock, the rights of such acquiring shareholder will be suspended pursuant to a deliberation
taken at a meeting of our shareholders. If this were to occur, we would be required to call the shareholders'
meeting and the acquiring shareholder would not be entitled to vote at such meeting.
Disclosure Requirements
As a publicly held company, we are subject to the reporting requirements established by the Brazilian
Corporate Law and the CVM regulations. Furthermore, because our common shares will be listed on the Novo
Mercado, we must follow the disclosure requirements contained in the Novo Mercado listing regulations.
Periodic and Occasional Disclosure of Information
As a publicly-held company, we are subject to the reporting requirements established by the Securities
Market Law requiring that we provide periodic information to the CVM and the BOVESPA, which include
standardized financial statements, the annual and quarterly information, quarterly management reports and
independent audit reports. In addition we are required to file all shareholders' agreements, call notices and
copies of minutes of shareholders' meetings with the CVM.
Furthermore, in addition to the requirements of the corporate legislation and CVM regulations, we must
also observe the following disclosure requirements:
• within six months following the listing of our shares on the Novo Mercado, we must disclose our financial
statements prepared at the end of each quarter (except the last quarter) and at the end of each year, including
a cash flow statement, which should indicate, at a minimum, the changes in our cash and cash equivalents,
divided into operational, finance and investment cash flows for the relevant quarter or year;
• beginning with the disclosure of our financial statements for the second year following the listing of our
shares on the Novo Mercado, and no later than four months following the end of the year, we should
disclose our consolidated financial statements prepared in accordance with the U.S. GAAP or
International Financing Reporting Standards, or IFRS, in Brazilian reais or US dollars, translated into
English, together with the management report, the accompanying notes, including information on the net
income and shareholders' equity calculated at the end of the year, prepared in accordance with Brazilian
GAAP, as well as management's proposal for allocation of net income, and the independent auditors'
report; or disclose, in the English language, the full financial statements, management report and
accompanying notes, prepared in accordance with Brazilian GAAP, together with an additional note
explaining the reconciliation of the year-end results and shareholders' equity calculated in accordance
with Brazilian GAAP and U.S. GAAP or IFRS, as the case may be, which must include the principal
differences between the adopted accounting principles, and also the independent auditors' report; and
• within 15 days after the term established by Brazilian law for disclosure of our quarterly information,
we must: disclose our full quarterly information translated into the English language; or disclose our
consolidated financial statements prepared in accordance with U.S. GAAP or IFRS, accompanied by
the independent auditors' opinion or special review report.
Quarterly and Annual Information
In addition to the information required pursuant to applicable legislation and regulation, a company with
shares listed on the Novo Mercado listing segment of the BOVESPA, such as ours, must disclose the following
information together with our quarterly and annual information:
• a consolidated balance sheet, a consolidated statement of results and the accompanying letter to
shareholders, if the company is obligated to disclose consolidated financial statements at year-ends,
within the six months following the authorization to be listed under the Novo Mercado segment;
• any direct or indirect ownership interest in excess of five percent of our capital stock, looking through
to any ultimate individual beneficial owner;
• the aggregate number and characteristics of the securities held directly or indirectly by our controlling
shareholders, directors, officers and fiscal council members, if this is active;
• changes in the number of securities held by our controlling shareholders, directors, officers and fiscal
council members, if this is active, within the immediately preceding 12 months;
• include a cash flow statement in the accompanying notes;
• the number of shares in free float and their respective percentage vis-à-vis the total number of shares
issued by us; and
• the information relating to the third, fourth and sixth items above must also be included in the section
"Additional Information Deemed Relevant by the Company" of the quarterly report and in our Annual
Information, or IAN. In addition, we should confirm that we have undertaken and are bound to submit
to arbitration by the market arbitration chamber of the BOVESPA in the event of disputes.
Disclosure of Trading in Our Shares by Us, Our Controlling Shareholders, and Directors, Officers and
Fiscal Council Members
Our management and members of our fiscal council, if active or of any technical or advising body created under
our bylaws are required to disclose to us, to the CVM and to the BOVESPA the number, type and form of trading of
securities issued by us, our subsidiaries and our controlling shareholders that are held by them or by persons closely
related to them, and any changes in their respective ownership positions. The information regarding the acquisition of
such securities (amount and characteristics of the securities, form, price and date of trade) must be provided to us
within 10 days following the end of the month in which they were traded. In addition, the regulations of the Novo
Mercado require our controlling shareholders, our directors, officers and members of our fiscal council, if active, to
disclose the abovementioned information to the BOVESPA, including information regarding derivatives.
According to CVM Instruction 358, if any direct or indirect controlling shareholder or any shareholder
electing members of our board of directors increases or decreases participation in our capital stock by more than
5.0%, such person or entity must disclose to the CVM and to the BOVESPA the following information: name
and identification of the person acquiring the shares; reason of the participation and quantity aimed; the number,
kind and class and other characteristics of the shares, warrants, subscription rights, call options, and convertible
debentures if an interest is already held by their acquirer or any related person; and information regarding any
agreement regulating the exercise of voting rights or the purchase and sale of securities issued by us.
Disclosure of Material Developments
Pursuant to the Securities Market Law, we are required to inform the CVM and the BOVESPA of any
material developments relating our company and our business. We should also publish notices to disclose such
information to the market. A material development consists of an event with the potential to affect the price of
our securities, the decision of investors to buy, sell, or keep such securities, or their decision to exercise any of
the rights inherent in such securities.
In exceptional circumstances, we may submit to the CVM a request for confidential treatment of certain
material developments when our controlling shareholders or officers believe that disclosure would place our
legitimate interest at risk.
Public Meeting with Analysts
The Novo Mercado regulation stipulates that at least once a year we and our directors and officers should
hold a public meeting with analysts and any other interested parties to disclose information concerning our
economic/financial condition, our projects and prospects.
Annual Calendar of Events
The Novo Mercado regulations further requires that we and our directors and officers send to the
BOVESPA and disclose to the market, by the end of January of each year at the latest, an annual calendar
informing our scheduled corporate events, and include information about us, these events, and the date and time
when they should take place, in addition to the publication and remittance to the BOVESPA of any documents
to be discussed at such events. Subsequent changes to this calendar should also be promptly disclosed to the
BOVESPA and the market.
DESCRIPTION OF GLOBAL DEPOSITARY SHARES
Citibank, N.A. has agreed to act as the depositary for the Global Depositary Shares, or "GDS." Citibank's
depositary offices are located at 388 Greenwich Street, New York, New York 10013. Rule 144A and Regulation S
Global Depositary Shares are referred to as "Rule 144A GDSs" and "Regulation S GDSs," respectively. In this
summary we intend to use the term "GDSs" to refer to the Rule 144A GDSs and to the Regulation S GDSs. Unless
we otherwise state, you should assume that the term "GDSs" encompasses both Rule 144A GDSs and Regulation
S GDSs. GDSs are represented by certificates that are commonly known as "Global Depositary Receipts" or
"GDRs." The GDSs we are selling in the United States are referred to and will be issued as Rule 144A GDS and
the GDSs we are selling outside the United States are referred to and will be issued as the Regulation S GDSs.
GDSs represent ownership interests in securities that are on deposit with the depositary.
The depositary has appointed a custodian to safekeep the securities on deposit. In this case, the custodian is
Citibank DTVM S.A., having its principal office at Avenida Paulista 1.111, São Paulo, SP 01311-920.
We have appointed Citibank as depositary pursuant to two separate amended and restated deposit
agreements, one for the Rule 144A GDSs, the "Rule 144A deposit agreement," and one for the Regulation S
GDSs, the "Regulation S deposit agreement" to be dated on or about July 17, 2007. A copy of the deposit
agreements may be obtained from the depositary. This is a summary description of the material terms of the
GDSs and of your material rights as an owner of GDSs. Please remember that summaries by their nature lack
the precision of the information summarized and that the rights and obligations of an owner of GDSs will be
determined by reference to the terms of the applicable deposit agreement and not by this summary. We urge you
to review the deposit agreements in their entirety.
Each GDS represents the right to receive two common shares, on deposit with the custodian. A GDS will
also represent the right to receive any other property received by the depositary or the custodian on behalf of the
owner of the GDS but that has not been distributed to the owners of GDSs because of legal restrictions or
practical considerations.
If you become an owner of GDSs, you will become a party to the applicable deposit agreement and
therefore will be bound to its terms and to the terms of the GDR that represents your GDSs. The deposit
agreement and the GDR specify our rights and obligations as well as your rights and obligations as owner of
GDSs and those of the depositary. As a GDS owner you appoint the depositary to act on your behalf for the
common shares represented by your GDSs, either upon (1) your specific instructions when we call a meeting of
shareholders, distribute an elective dividend or make a rights offering, or (2) the specific terms of the deposit
agreement to receive any dividends we distribute in Reais or common shares and to convert the Reais received.
The deposit agreement is governed by New York law. However, our obligations to the holders of common
shares will continue to be governed by Brazilian laws, which may be different from the laws in the United
States. In addition, we note that the laws and regulations of Brazil may restrict the deposit and withdrawal of the
common shares into or from the depositary receipts facility.
In addition, applicable laws and regulations may require you to satisfy reporting requirements and obtain
regulatory approvals in certain circumstances. You are solely responsible for complying with such reporting
requirements and obtaining such approvals. Neither the depositary, the custodian, us or any of their or our
respective agents or affiliates shall be required to take any actions whatsoever on behalf of you to satisfy such
reporting requirements or obtain such regulatory approvals under applicable laws and regulations.
Presently, you may hold your GDSs only through a brokerage or safekeeping account. As such, you must
rely on the procedures of your broker or bank to assert your rights as GDS owner. Please consult with your
broker or bank to determine what those procedures are. When we refer to "you," we assume the reader owns
GDSs and will own GDSs at the relevant time. When we refer to a "holder" we assume the person owns GDSs
and such person's agent (i.e., broker, custodian, bank, trust company) is the holder of the applicable GDR.
Distinctions between "Rule 144A GDSs" and "Regulation S GDSs"
The Rule 144A GDSs and the Regulation S GDSs are similar in many ways but are different primarily on
account of the requirements of the U.S. securities laws. The Rule 144A GDSs are "restricted securities" under
the U.S. securities laws and as such are subject to limitations on their issuance, transfer and cancellation. The
Regulation S GDSs are not per se "restricted securities" under the U.S. securities laws, but we have imposed
certain contractual restrictions on the Regulation S GDSs in an effort to prevent the transfer of Regulation S
GDSs in violation of the U.S. securities laws. These restrictions we impose on the Regulation S GDSs will be in
place for a period of 40 days after we close the last offering of the Regulation S GDSs described in this offering
memorandum, including any exercise of the over-allotment option. We will refer to this 40-day period as the
"restricted period."
The differences between the Regulation S GDSs and the Rule 144A GDSs and the restrictions imposed on
the Rule 144 A GDSs and the Regulations S GDSs cover primarily the following:
• The venue for trading the GDSs:

- the Regulation S GDSs may be traded only outside the United States; and
- the Rule 144A GDSs may only be traded in PORTAL among "Qualified Institutional Buyers" (as
defined in Rule 144A).
• The persons who may own and trade the GDSs:
- only "Qualified Institutional Buyers" (as defined in Rule 144A) and persons other than "U.S.
persons" (as defined in Regulation S) may own and trade Rule 144A GDSs;
- upon the expiration of the "restricted period," any person may own and trade Regulation S GDSs;
and
- during the "restricted period," only persons other than U.S. persons (as defined in Regulation S)
may own and trade the Regulation S GDSs and only outside the United States.
• The persons who may create additional GDSs:
- only persons other than "U.S. persons" (as defined in Regulation S) may deposit common shares
to receive Regulation S GDSs; and
- only "Qualified Institutional Buyers" (as defined in Rule 144A) and persons other than "U.S.
persons" may deposit common shares to receive Rule 144A GDSs.
• The persons to whom you may transfer the GDSs, upon sale or otherwise:
- you may transfer Rule 144A GDSs only to "Qualified Institutional Buyers" (as defined in Rule
144A) or to persons other than "U.S. persons" (as defined in Regulation S); and
- during the "restricted period," you may transfer the Regulation S GDSs only in transactions
off-shore the United States (in compliance with Regulation S) and to persons other than "U.S.
persons" (as defined in Regulation S) or to "Qualified Institutional Buyers" (as defined in Rule
144A) but in this latter case only after "converting" the Regulation S GDSs into Rule 144A GDSs.
• The restrictions on the transfers and withdrawal of the common shares represented by the GDSs.
- Please refer to "Legends" below.
• The eligibility to book-entry transfer.
- Please refer to "Settlement and Safekeeping" below.
These distinctions and the requirements of the U.S. securities laws may require us and the depositary to
treat the Regulation S GDSs and the Rule 144A GDSs differently at any time in the future. There can be no
guarantee that holders of Rule 144A GDSs will receive the same entitlements as holders of Regulation S GDSs
and vice versa.
Settlement and Safekeeping
Rule 144A GDSs
The depositary has made arrangements with The Depository Trust Company ("DTC") to act as securities
depository for the Rule 144A GDSs. All Rule 144A GDSs issued in this offering will be registered in the name
of Cede & Co. (DTC's nominee). One Master Rule 144A GDR will represent all Rule 144A GDSs issued to and
registered in the name of Cede & Co. Transfers of ownership interests in Rule 144A GDSs are to be
accomplished by entries made on the books of DTC and of the participants in DTC acting on behalf of Rule
144A GDS owners. Owners of Rule 144A GDSs will not receive certificates representing their ownership
interests in the Rule 144A GDSs, except in the event that a successor securities depository can not be appointed.
DTC may discontinue providing its services as securities depository with respect to the Rule 144A GDSs at
any time by giving reasonable notice to depositary. Under such circumstances, in the event that a successor
securities depository can not be appointed, Rule 144A GDRs will be printed and delivered to the applicable
Rule 144A GDS owners.
Regulation S GDSs
We and the depositary have made arrangements with DTC, Euroclear ("Euroclear") and Clearstream,
Luxembourg ("Clearstream") to act as securities depositories for the Regulation S GDSs. All Regulation S
GDSs issued in this offering will be registered in the name of Cede & Co. (DTC's nominee). One Master
Regulation S GDR will represent all Regulation S GDS issued to and registered in the name of Cede & Co.
Euroclear and Clearstream will hold the Regulation S GDSs on behalf of their participants through their
respective depositories, which are participants in DTC (any such participant of Euroclear, Clearstream or DTC,
a "Participant"), and, during the restricted period, transfers will be permitted only within Euroclear and
Clearstream in accordance with usual rules and operating procedures of the relevant system. Transfers of
ownership interests in Regulation S GDSs are to be accomplished by entries made on the books of Euroclear,
Clearstream and DTC and of participants in Euroclear, Clearstream and DTC, acting in each case on behalf of
Regulation S GDS owners. Owners of Regulation S GDSs will not receive certificates representing their
ownership interests in the Regulation S GDSs, except in the event that use of the DTC book-entry system for the
Regulation S GDSs is discontinued.
DTC may discontinue providing its services as securities depository with respect to the Regulation S GDSs
at any time by giving reasonable notice to the depositary. Under such circumstances, in the event that a
successor securities depository can not be appointed, Regulation S GDRs will be printed and delivered to the
applicable Regulation S GDS owners.
If at any time Euroclear, Clearstream or DTC, as the case may be, cease to make its respective book-entry
settlement systems available for the Regulation S GDSs, the Company and the Depositary will attempt to make
other arrangements for book-entry settlement. If alternative book-entry settlement arrangements cannot be
made, the Depositary will make available Regulation S GDSs in physical certificated form.
Transfer Restrictions
The GDSs may be resold, pledged or otherwise transferred only in compliance with the U.S. securities laws
and are subject to the following restrictions:
Restrictions Upon the Transfer of
Rule 144A GDSs Regulation S GDSs
The Rule 144A GDSs may be resold, pledged or During the "restricted period", Regulations S GDSs
otherwise transferred only: may be resold, pledged or otherwise transferred only:
(i) outside the U.S. to a person other than a U.S. (i) outside the U.S. to a person other than a U.S.
person (as defined in Regulation S under the person (as defined in Regulation S under the
Securities Act) in accordance with Securities Act) in accordance with
Regulation S; Regulation S;
(ii) to a "Qualified Institutional Buyer" (as (ii) to a "Qualified Institutional Buyer" (as
defined in Rule 144A) in a transaction defined in Rule 144A) in a transaction
meeting the requirements of Rule 144A; meeting the requirements of Rule 144A;
(iii) pursuant to Rule 144 under the U.S. (iii) pursuant to Rule 144 under the U.S.
Securities Act of 1933, if available; or Securities Act of 1933, if available; or
(iv) pursuant to an effective registration statement (iv) pursuant to an effective registration statement
under the U.S. Securities Act of 1933. under the U.S. Securities Act of 1933.
If the Regulation S GDSs are transferred to a

"Qualified Institutional Buyer" in a transaction
meeting the requirements of Rule 144A, the transfer
is required to convert the Regulation S GDSs into
Rule 144A GDSs and make delivery of the Rule 144A
GDSs to the transferee.
After the "restricted period," the Regulation S

GDSs shall be freely transferable.
Restrictions Upon Deposit of Common Shares
Common shares will be accepted for deposit only Common shares will be accepted for deposit
if delivered by, or on behalf of, a person that is: under the Regulation S deposit agreement only if
delivered by, or on behalf of, a person that is:
(a) not Redecard or an affiliate of Redecard or a
person acting on behalf of Redecard or an (a) not Redecard or an affiliate of Redecard or a
affiliate of Redecard; and person acting on behalf of Redecard or an
affiliate of Redecard; and
(b) is (i) a "Qualified Institutional Buyer" (as
defined in Rule 144A), or (ii) a person other (b) is a person other than a "U.S. Person" (as
than a "U.S. Person" (as defined in defined in Regulation S).
Regulation S).
Restrictions Upon the Withdrawal of Common Shares
Common shares may be withdrawn from the During the "restricted period" common shares
Rule 144A deposit agreement only by: may be withdrawn under the Regulation S deposit
agreement only by:
(i) a person other than a "U.S. Person" (as
defined in Regulation S) who will be the (i) a person other than a "U.S. Person" (as
beneficial owner of the common shares defined in Regulation S) who will be the
upon withdrawal; beneficial owner of the common shares
upon withdrawal or who has sold the
(ii) a "Qualified Institutional Buyer" (as common shares to a person other than a
defined in Rule 144A) who: U.S. Person or to a "Qualified Institutional
(x) has sold the Rule 144A GDSs to Buyer" (as defined in Rule 144A) in which
another "Qualified Institutional Buyer" case delivery will be made in the form of
(as defined in Rule 144A) in a Rule 144A GDSs; or
transaction meeting the requirements (ii) a "Qualified Institutional Buyer" (as
of Rule 144A, or to a person other than defined in Rule 144A) who will cause the
a "U.S. Person" (as defined in Regulation S GDSs to be exchanged for
Regulation S) in accordance with Rule 144A GDSs:
Regulation S; or
(y) will be the beneficial owner of the After the "restricted period" common shares
common shares and agrees to observe may be withdrawn, by any person and are freely
the transfer restrictions applicable to transferable.
Rule 144A GDSs in respect of the
common shares so withdrawn.
Dividends and Distributions
As a holder, you generally have the right to receive the distributions we make on the securities deposited
with the custodian. Your receipt of these distributions may be limited, however, by practical considerations and
legal limitations. Holders will receive such distributions under the terms of the deposit agreements in proportion
to the number of GDSs held as of a specified record date.
Distributions of Cash
Whenever we make a cash distribution for the securities on deposit with the custodian, we will deposit the
funds with the custodian. Upon receipt of confirmation from the custodian of the receipt of the requisite funds,
the depositary will arrange for the funds to be converted into U.S. dollars and for the distribution of the U.S.
dollars to the holders, subject to Brazilian laws and regulations.
The conversion into U.S. dollars will take place only if, in the judgment of the depositary it is practicable
and if the U.S. dollars are transferable to the United States. The amounts distributed to holders will be net of the
fees, expenses, taxes and governmental charges payable by holders under the terms of the deposit agreements.
The depositary will apply the same method for distributing the proceeds of the sale of any property (such as
undistributed rights) held by the custodian in respect of securities on deposit.
The distribution of cash will be made net of the fees, expenses, taxes and governmental charges payable by
holders under the terms of the deposit agreements.
Distributions of Common Shares
Whenever we make a free distribution of common shares for the securities on deposit with the custodian, we
will deposit the applicable number of common shares with the custodian. Upon receipt of notice of such deposit
from the custodian, the depositary will either distribute to holders new GDSs representing the common shares
deposited or modify the GDS-to- common shares ratio, in which case each GDS you hold will represent rights and
interests in the additional common shares so deposited. Only whole new GDSs will be distributed. Fractional
entitlements will be sold and the proceeds of such sale will be distributed as in the case of a cash distribution.
The distribution of new GDSs or the modification of the GDS-to- common shares ratio upon a distribution
of common shares will be made net of the fees, expenses, taxes and governmental charges payable by holders
under the terms of the deposit agreements. In order to pay such taxes or governmental charges, the depositary
may sell all or a portion of the new common shares so distributed.
No such distribution of new GDSs will be made if it would violate U.S. law (i.e., the U.S. securities laws)
or if it is not operationally practicable. If the depositary does not distribute new GDSs as described above, it will
sell the common shares received in accordance with the terms of the applicable deposit agreement and will
distribute the proceeds of the sale as in the case of a distribution of cash.
Distributions of Rights
Whenever we intend to distribute rights to purchase additional common shares, we will give prior notice to
the depositary and we will assist the depositary in determining whether it is lawful and reasonably practicable to
distribute rights to purchase additional GDSs to holders.
The depositary will establish procedures to distribute rights to purchase additional GDSs to holders and to
enable such holders to exercise such rights if it is lawful and reasonably practicable to make the rights available
to holders of GDSs, and if we provide all of the documentation contemplated in the applicable deposit
agreement (such as opinions to address the lawfulness of the transaction). You may have to pay fees, expenses,
taxes and other governmental charges to subscribe for the new GDSs upon the exercise of your rights. The
depositary is not obligated to establish procedures to facilitate the distribution and exercise by holders of rights
to purchase new common shares other than in the form of GDSs.
The depositary will not distribute the rights to you if:
• We do not timely request that the rights be distributed to you or we request that the rights not be
distributed to you; or
• We fail to deliver satisfactory documents to the depositary; or
• It is not reasonably practicable to distribute the rights.
The depositary will sell the rights that are not exercised or not distributed if such sale is lawful and
reasonably practicable. The proceeds of such sale will be distributed to holders as in the case of a cash
distribution. If the depositary is unable to sell the rights, it will allow the rights to lapse.
Elective Distributions
Whenever we intend to distribute a dividend payable at the election of shareholders either in cash or in
additional common shares, we will give prior notice thereof to the depositary and will indicate whether we wish
the elective distribution to be made available to you. In such case, we will assist the depositary in determining
whether such distribution is lawful and reasonably practicable.
The depositary will make the election available to you only if it is lawful and reasonably practicable and if
we have provided all of the documentation contemplated in the deposit agreement. In such case, the depositary
will establish procedures to enable you to elect to receive either cash or additional GDSs, in each case as
described in the deposit agreements.
If the election is not made available to you, you will receive either cash or additional GDSs, depending on
what a shareholder in Brazil would receive upon failing to make an election, as more fully described in the
corresponding deposit agreement.
Other Distributions
Whenever we intend to distribute property other than cash, common shares or rights to purchase additional
common shares, we will notify the depositary in advance and will indicate whether we wish such distribution to
be made to you. If so, we will assist the depositary in determining whether such distribution to holders is lawful
and reasonably practicable.
If it is reasonably practicable to distribute such property to you and if we provide all of the documentation
contemplated in the deposit agreements, the depositary will distribute the property to the holders in a manner it
deems practicable.
The distribution will be made net of fees, expenses, taxes and governmental charges payable by holders
under the terms of the deposit agreement. In order to pay such taxes and governmental charges, the depositary
may sell all or a portion of the property received.
The depositary will not distribute the property to you and will sell the property if:
• We do not request that the property be distributed to you or if we ask that the property not be
distributed to you;
• We do not deliver satisfactory documents to the depositary; or
• The depositary determines that all or a portion of the distribution to you is not reasonably practicable.
The proceeds of such a sale will be distributed to holders as in the case of a cash distribution.
Redemption
Whenever we decide to redeem any of the securities on deposit with the custodian, we will give prior notice
thereof to the depositary. If it is practicable and if we provide all of the documentation contemplated in the
deposit agreements, the depositary will distribute notice of the redemption to the holders.
The Custodian will be instructed to surrender the common shares being redeemed against payment of the
applicable redemption price. The depositary will convert the redemption funds received into U.S. dollars upon
the terms of the deposit agreements and will establish procedures to enable holders to receive the net proceeds
from the redemption upon surrender of their GDSs to the depositary. You may have to pay fees, expenses, taxes
and other governmental charges upon the redemption of your GDSs. If less than all GDSs are being redeemed,
the GDSs to be retired will be selected by lot or on a pro rata basis, as the depositary may determine.
Changes Affecting Common Shares
The common shares held on deposit for your GDSs are subject to change from time to time. For example,
there may be a change in nominal or par value, a split-up, cancellation, consolidation or reclassification of such
common shares or a recapitalization, reorganization, merger, consolidation or sale of assets.
If any such change were to occur, your GDSs would, to the extent permitted by law, represent the right to
receive the property received or exchanged in respect of the common shares held on deposit. The depositary
may in such circumstances deliver new GDSs to you or call for the exchange of your existing GDSs for new
GDSs. If the depositary may not lawfully distribute such property to you, the depositary may, with our approval,
sell such property and distribute the net proceeds to you as in the case of a cash distribution.
Issuance of GDSs Upon Deposit of Common Shares
Subject to limitations set forth in the deposit agreements and the GDRs, the depositary may create GDSs on
your behalf if you or your broker deposit common shares with the custodian. The depositary will deliver these
GDSs to the person you indicate only after you pay any applicable issuance fees and any charges and taxes
payable for the transfer of the common shares to the custodian and you provide the applicable deposit
certification. Your ability to deposit common shares and receive GDSs may be limited by U.S. and Brazilian
legal considerations applicable at the time of deposit.
The Depositary will refuse to accept common shares for deposit whenever it is notified in writing that such
deposit would result in any violation of applicable laws, including ownership restrictions under Brazilian laws.
The Depositary will also refuse to accept certain common shares for deposit under the Rule 144A deposit
agreement if notified in writing that the common shares are listed an a U.S. securities exchange or quoted on a
U.S. automated inter-dealer quotation system, unless accompanied by evidence satisfactory to the Depositary
that any common shares presented for deposit are eligible for resale pursuant to Rule 144A.
The issuance of GDSs may be delayed until the depositary or the custodian receives confirmation that all
required approvals have been given and that the common shares have been duly transferred to the custodian.
The depositary will only issue GDSs in whole numbers.
When you make a deposit of common shares, you will be responsible for transferring good and valid title to
the depositary. As such, you will be deemed to represent and warrant that:
• The common shares are duly authorized, validly issued, fully paid, non-assessable and legally
obtained;
• All preemptive (and similar) rights, if any, with respect to such common shares have been validly
waived or exercised;
• You are duly authorized to deposit the common shares;
• The common shares presented for deposit are free and clear of any lien, encumbrance, security interest,
charge, mortgage or adverse claim and, in the case of a deposit of common shares under the Regulation
S deposit agreement, are not, and the Regulation S GDSs issuable upon such deposit will not be,
"restricted securities" (as defined in the corresponding deposit agreement); and
• The common shares presented for deposit have not been stripped of any rights or entitlements.
If any of the representations or warranties are incorrect in any way, we and the depositary may, at your cost
and expense, take any and all actions necessary to correct the consequences of the misrepresentations.
When you deposit common shares to receive Rule 144A GDSs, you will be required to provide the depositary
with a deposit certification stating, inter alia, and that:
• you acknowledge that the common shares and the Rule 144A GDSs have not been and will not be
registered under the U.S. Securities Act of 1933 or with any securities regulatory authority in any state
or other jurisdiction in the United States;
• you are not our "affiliate" of and you are not acting on behalf of us or one of our "affiliates;"
• you certify that you are, or are acting on behalf of, (i) a "Qualified Institutional Buyer" (as defined in
Rule 144A), or (ii) a person other than a U.S. Person (as defined in Regulation S); and
• you agree, as the owner of the Rule 144A GDSs, to offer, sell, pledge and otherwise transfer the Rule
144A GDSs or the common shares represented by the Rule 144A GDSs in accordance with the
applicable U.S. state securities laws and only:
(a) to a "Qualified Institutional Buyer" (as defined in Rule 144A) in a transaction meeting the
requirements of Rule 144A;
(b) outside the United States to a person other than a "U.S. Person" (as defined in Regulation S) in
accordance with Regulation S;
(c) in accordance with Rule 144 under the U.S. Securities Act of 1933, if available; or
(d) pursuant to an effective registration statement under the U.S. Securities Act of 1933.
A copy of the form of deposit certification for Rule 144A GDSs is attached to the Rule 144A deposit
agreement and may be obtained from the depositary upon request.
When you deposit common shares to receive Regulation S GDSs, you will be required to provide the
depositary with a deposit certification stating, inter alia, that:
• you acknowledge that the common shares and the Regulation S GDSs have not been and will not be
registered under the U.S. Securities Act of 1933 or with any securities regulatory authority in any state
or other jurisdiction in the United States;
• you are not our "affiliate" and you are not acting on behalf of us or one of our "affiliates;"
• you certify that you are, or are acting on behalf of, a person other than a U.S. Person (as defined in
Regulation S), located outside the U.S. and acquired the Shares outside the U.S.; and
• you agree, as the owner of the Regulation S GDSs, to offer, sell, pledge and otherwise transfer the
Regulation S GDSs or the common shares represented by the Regulation S GDSs in accordance with
the applicable U.S. state securities laws and during the "restricted period" only:
(a) to a "Qualified Institutional Buyer" (as defined in Rule 144A) in a transaction meeting the
requirements of Rule 144A, in which case you are required to "convert" the Regulation S GDSs
into Rule 144A GDSs prior to making delivery to the transferee;
(b) outside the United States to a person other than a "U.S. Person" (as defined in Regulation S) in
accordance with Regulation S;
(c) in accordance with Rule 144 under the U.S. Securities Act of 1933, if available; or
(d) pursuant to an effective registration statement under the U.S. Securities Act of 1933.
A copy of the form of deposit certification for Reg S GDSs is attached to the Regulation S deposit
agreement and may be obtained from the depositary upon request.
Withdrawal of Common Shares Upon Cancellation of GDSs
Subject always to the withdrawal of deposited property being permitted under Brazilian laws and regulations,
as a holder, you will be entitled to present your GDSs to the depositary for cancellation and then receive the
corresponding number of underlying common shares at the custodian's offices. Your ability to withdraw the
common shares may be limited by U.S. and Brazilian law considerations applicable at the time of withdrawal.
Subject always to the withdrawal of deposited property being permitted under Brazilian laws and
regulations, you may also request that the common shares represented by your GDSs be sold on your behalf.
The depositary may require that you deliver your request for sale in writing. Any sale of our common shares
will be conducted according to applicable Brazilian law through a securities company in Brazil on the
applicable Brazilian Stock Exchange or in other manner as is permitted under applicable Brazilian law. Any
sale will be at your risk and expense. You may also be required to enter into a separate agreement to cover the
terms of the sale of our common shares.
Upon receipt of any proceeds from any sale, subject to any restrictions imposed by Brazilian law and
regulations, the depositary shall convert the proceeds into U.S. dollars and distribute the proceeds to you, net of
any fees, expenses, taxes or governmental charges (including, without limitation, any Brazilian and U.S. taxes)
incurred in connection with the sale. Sales of our common shares may be subject to Brazilian taxation on capital
gains and will be subject to a securities transaction tax in Brazil. For tax consequences under Brazilian law, see
"Taxation of Our Common Shares and Global Depositary Shares—Brazilian Tax Considerations."
In order to withdraw or instruct the sale of the common shares represented by your GDSs, you will be
required to pay to the depositary the fees for cancellation of GDSs and any charges and taxes payable upon the
transfer of the common shares being withdrawn and you will be required to provide to the depositary the
applicable withdrawal certification. You assume the risk for delivery of all funds and securities upon
withdrawal. Once canceled, the GDSs will not have any rights under the corresponding deposit agreement.
If you hold a GDR registered in your name, the depositary may ask you to provide proof of identity and
genuineness of any signature and such other documents as the depositary may deem appropriate before it will
cancel your GDSs. The withdrawal of the common shares represented by your GDSs may be delayed until the
depositary receives satisfactory evidence of compliance with all applicable laws and regulations. Please keep in
mind that the depositary will only accept GDSs for cancellation that represent a whole number of securities on
deposit.
When you request the withdrawal of the common shares represented by your Rule 144A GDSs, you will be
required to provide the depositary with a withdrawal certification stating, inter alia, that:
• you acknowledge that the common shares represented by your Rule 144A GDSs have not been and
will not be registered under the U.S. Securities Act of 1933 or with any securities regulatory authority
in any state or other jurisdiction in the United States; and
• you certify that:
(X) you are, or are acting on behalf of, a "Qualified Institutional Buyer" (as defined in Rule 144A)
who is the beneficial owner of the Rule 144A GDSs presented for cancellation, and
(A) either
(i) you have sold or agreed to sell the common shares to a person other than a "U.S. Person"
(as defined in Regulation S) in accordance with Regulation S, or
(ii) you have sold or agreed to sell the common shares to a "Qualified Institutional Buyer"
(as defined in Rule 144A) in a transaction meeting the requirements of Rule 144A, or
(iii) you (or the person on whose behalf you are acting) will be the beneficial owner of the
common shares upon withdrawal and you (or the person on whose behalf you are acting) will
sell the common shares only
(a) to another Qualified Institutional Buyer (as defined in Rule 144A) in a transaction
meeting the requirements of Rule 144A, or
(b) to a person other than a "U.S. Person" (as defined in Regulation S) in accordance with
Regulation S, or
(c) in accordance with Rule 144 (if available), or
(d) pursuant to an effective registration statement under the U.S. Securities Act of 1933; and
(B) you (or the person on whose behalf you are acting) will not deposit the common shares in any
depositary receipts facility that is not a "restricted" depositary receipts facility; or
(Y) you are a person other than a "U.S. Person" (as defined in Regulation S) and you acquired or
agreed to acquire the common shares outside the United States and will be the beneficial owner of
the common shares upon withdrawal.
When you request the withdrawal of the common shares represented by your Regulation S GDSs at any time
during the "restricted period", you will be required to provide the depositary with a withdrawal certification
stating, inter alia, that:
• you acknowledge that the common shares represented by your Regulation S GDSs have not been and
will not be registered under the U.S. Securities Act of 1933 or with any securities regulatory authority
in any state or other jurisdiction in the United States; and
• you certify that:
(X) you are, or are acting on behalf of, a person other than a "U.S. Person" (as defined in Regulation S)
who is, located outside the U.S. and acquired the Shares outside the U.S. and is the beneficial
owner of the Regulation S GDSs presented for cancellation; and
(A) either
(i) you have sold or agreed to sell the common shares to a person other than a "U.S. Person" (as
defined in Regulation S) in accordance with Regulation S, or
(ii) you have sold or agreed to sell the common shares to a "Qualified Institutional Buyer" (as
defined in Rule 144A) in a transaction meeting the requirements of Rule 144A, and will make
delivery thereof in the form of Rule 144A GDSs, or
(iii) you (or the person on whose behalf you are acting) will be the beneficial owner of the
common shares upon withdrawal and you (or the person on whose behalf you are acting) will
at any time during the "restricted period" sell the common shares only:
(a) to a Qualified Institutional Buyer (as defined in Rule 144A) in a transaction meeting the
requirements of Rule 144A, or
(b) to a person other than a "U.S. Person" (as defined in Regulation S) in accordance with
Regulation S, or
(Y) you are a "Qualified Institutional Buyer" (as defined in Rule 144A, you have agreed to acquire the
Regulation S GDSs in a transaction made in reliance on Rule 144A and you will take all action
necessary to cause the common shares to be withdrawn and deposited under the Rule 144A
deposit agreement for the purpose of receiving Rule 144A GDSs.
Voting Rights
As a holder, you generally have the right under the deposit agreement to instruct the depositary to exercise the
voting rights for the common shares represented by your GDSs. The voting rights of holders of common shares are
described in this offering memorandum under the Section entitled "Description of Our Share Capital".
At our request, the depositary will distribute to you any notice of shareholders' meeting received from us
together with information explaining how to instruct the depositary to exercise the voting rights of the securities
represented by GDSs.
If the depositary timely receives voting instructions from a holder of GDSs, it will endeavor to vote the
securities represented by the holder's GDSs in accordance with such voting instructions.
Please note that the ability of the depositary to carry out voting instructions may be limited by practical and
legal limitations and the terms of the securities on deposit. We cannot assure you that you will receive voting
materials in time to enable you to return voting instructions to the depositary in a timely manner. Securities for
which no voting instructions have been received will not be voted.
Fees and Charges
As a GDS holder, you will be required to pay the following service fees to the depositary:
Service Fees
• Issuance of GDSs Up to 5¢ per GDS issued
• Cancellation of GDSs Up to 5¢ per GDS canceled
• Distribution of cash dividends or other cash Up to 5¢ per GDS held
distributions
• Distribution of GDSs pursuant to stock Up to 5¢ per GDS held
dividends, free stock distributions or exercise
of rights.
• Distribution of securities other than GDSs or Up to 5¢ per GDS held
rights to purchase additional GDSs
• Depositary Services Fee Up to 5¢ per GDS held on the applicable record
date established by the Depositary
• Transfer of GDRs $1.50 per certificate presented for transfer
As a GDS holder you will also be responsible to pay certain fees and expenses incurred by the depositary and
certain taxes and governmental charges such as:
• Fees for the transfer and registration of common shares charged by the registrar and transfer agent for
the common shares in Brazil (i.e., upon deposit and withdrawal of common shares);
• Expenses incurred for converting foreign currency into U.S. dollars;
• Expenses for cable, telex and fax transmissions and for delivery of securities;
• Taxes and duties upon the transfer of securities (i.e., when common shares are deposited or withdrawn
from deposit); and
• Fees and expenses incurred in connection with the delivery or servicing of common shares on deposit.
We have agreed to pay certain other charges and expenses of the depositary. Note that the fees and charges
you may be required to pay may vary over time and may be changed by us and by the depositary. You will
receive prior notice of such changes. In addition, the depositary may reimburse us for certain expenses incurred
by us in respect of the GDR program established pursuant to the deposit agreements upon such terms and
conditions as we and the depositary may agree from time to time.
Amendments and Termination
We may agree with the depositary to modify the deposit agreements at any time without your consent. We
undertake to give holders 30 days' prior notice of any modifications that would materially prejudice any of their
substantial rights under the deposit agreements. We will not consider to be materially prejudicial to your
substantial rights any modifications or supplements that are reasonably necessary for the GDSs to be registered
under the Securities Act, in each case without imposing or increasing the fees and charges you are required to
pay. In addition, we may not be able to provide you with prior notice of any modifications or supplements that
are required to accommodate compliance with applicable provisions of law.
You will be bound by the modifications to the deposit agreements if you continue to hold your GDSs after
the modifications to the applicable deposit agreements become effective. In no event shall any amendment or
supplement impair the right of the Holder to surrender a GDS and receive therefor the deposited securities
represented thereby, except in order to comply with mandatory provisions of applicable law.
We have the right to direct the depositary to terminate the deposit agreements. Similarly, the depositary
may in certain circumstances on its own initiative terminate the deposit agreements. In either case, the
depositary must give notice to the holders at least 30 days before termination.
After termination, the depositary will continue to collect distributions received (but will not distribute any such
property until you request the cancellation of your GDSs) and may sell the securities held on deposit. After the sale, the
depositary will hold the proceeds from such sale and any other funds then held for the holders of GDSs in a non-interest
bearing account. At that point, the depositary will have no further obligations to holders other than to account for the
funds then held for the holders of GDSs still outstanding (after deduction of applicable fees, taxes and expenses).
Books of Depositary
The depositary will maintain GDS holder records at its depositary office. You may inspect such records at
such office during regular business hours but solely for the purpose of communicating with other holders in the
interest of business matters relating to the GDSs and the deposit agreements.
The depositary will maintain in New York facilities to record and process the issuance, cancellation,
combination, split-up and transfer of GDRs. These facilities may be closed from time to time, to the extent not
prohibited by law.
Limitations on Obligations and Liabilities
The deposit agreements limit our obligations and the depositary's obligations to you. Please note the following:
• We and the depositary are obligated only to take the actions specifically stated in the deposit
agreements without negligence or bad faith;
• The depositary disclaims any liability for any failure to carry out voting instructions, for any manner in
which a vote is cast or for the effect of any vote, provided it acts in good faith and in accordance with
the terms of the deposit agreements;
• The depositary disclaims any liability for any failure to determine the lawfulness or practicality of any
action, for the content of any document forwarded to you on our behalf or for the accuracy of any
translation of such a document, for the investment risks associated with investing in common shares, for
the validity or worth of the common shares, for any tax consequences that result from the ownership of
GDSs, for the credit-worthiness of any third party, for allowing any rights to lapse under the terms of the
deposit agreements, for the timeliness of any of our notices or for our failure to give notice;
• We and the depositary will not be obligated to perform any act that is inconsistent with the terms of the
deposit agreements;
• We and the depositary disclaim any liability if we are prevented or forbidden from acting on account of
any law or regulation, any provision of our Articles of Incorporation, any provision of any securities on
deposit or by reason of any act of God or war or other circumstances beyond our control;
• We and the depositary disclaim any liability by reason of any exercise of, or failure to exercise, any
discretion provided for the deposit agreements or in our Articles of Association or in any provisions of
securities on deposit;
• We and the depositary further disclaim any liability for any action or inaction in reliance on the advice
or information received from legal counsel, accountants, any person presenting common shares for
deposit, any holder of GDSs or authorized representatives thereof, or any other person believed by
either of us in good faith to be competent to give such advice or information;
• We and the depositary also disclaim liability for the inability by a holder to benefit from any
distribution, offering, right or other benefit which is made available to holders of common shares but is
not, under the terms of the deposit agreements, made available to you;
• We and the depositary may rely without any liability upon any written notice, request or other
document believed to be genuine and to have been signed or presented by the proper parties; and
• We and the depositary also disclaim any liability for consequential or punitive damages for any breach
of the terms of the applicable deposit agreements.
Pre-Release Transactions
The depositary may, in certain circumstances, issue GDSs before receiving a deposit of common shares or
release common shares before receiving GDSs for cancellation. These transactions are commonly referred to as
"pre-release transactions." The deposit agreements limit the aggregate size of pre-release transactions and
imposes a number of conditions on such transactions (i.e., the need to receive collateral, the type of collateral
required, the representations required from brokers, etc.). The depositary may retain the compensation received
from the pre-release transactions.
Taxes
You will be responsible for the taxes and other governmental charges payable on the GDSs and the
securities represented by the GDSs. We, the depositary and the custodian may deduct from any distribution the
taxes and governmental charges payable by holders and may sell any and all property on deposit to pay the taxes
and governmental charges payable by holders. You will be liable for any deficiency if the sale proceeds do not
cover the taxes that are due.
The depositary may refuse to issue GDSs, to deliver, transfer, split and combine GDRs or to release
securities on deposit until all taxes and charges are paid by the applicable holder. The depositary and the
custodian may take reasonable administrative actions to obtain tax refunds and reduced tax withholding for any
distributions on your behalf. However, you may be required to provide to the depositary and to the custodian
proof of taxpayer status and residence and such other information as the depositary and the custodian may
require to fulfill legal obligations. You are required to indemnify us, the depositary and the custodian for any
claims with respect to taxes based on any tax benefit obtained for you.
Foreign Currency Conversion
The depositary will arrange for the conversion of all foreign currency received into U.S. dollars if such
conversion is practicable, and it will distribute the U.S. dollars in accordance with the terms of the deposit
agreements. You may have to pay fees and expenses incurred in converting foreign currency, such as fees and
expenses incurred in complying with currency exchange controls and other governmental requirements.
If the conversion of foreign currency is not practicable or lawful, or if any required approvals are denied or
not obtainable at a reasonable cost or within a reasonable period, the depositary may take the following actions
in its discretion:
• Convert the foreign currency to the extent practicable and lawful and distribute the U.S. dollars to the
holders for whom the conversion and distribution is lawful and practicable;
• Distribute the foreign currency to holders for whom the distribution is lawful and practicable; and
• Hold the foreign currency (without liability for interest) for the applicable holders.
Legends
The Rule 144A GDR(s) issued to represent the Rule 144A GDSs offered for sale herein shall contain, and all
owners of Rule 144A GDSs shall be bound by the terms of, the following legend:
NEITHER THIS RULE 144A GDR, NOR THE RULE 144A GDSs EVIDENCED HEREBY, NOR THE
SHARES REPRESENTED THEREBY HAVE BEEN OR WILL BE REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR WITH ANY SECURITIES
REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES.
THE OFFER, SALE, PLEDGE OR OTHER TRANSFER OF EACH OF THIS RULE 144A GDR, THE RULE
144A GDSs EVIDENCED HEREBY AND THE SHARES REPRESENTED THEREBY IS SUBJECT TO
CERTAIN CONDITIONS AND RESTRICTIONS. THE HOLDERS AND THE BENEFICIAL OWNERS
HEREOF, BY PURCHASING OR OTHERWISE ACQUIRING THIS RULE 144A GDR AND THE RULE
144A GDSs EVIDENCED HEREBY, ACKNOWLEDGE THAT SUCH RULE 144A GDR, THE RULE 144A
GDSs EVIDENCED HEREBY AND THE SHARES REPRESENTED THEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT AND AGREE FOR THE BENEFIT OF THE COMPANY
AND THE DEPOSITARY THAT THIS RULE 144A GDR, THE RULE 144A GDSs EVIDENCED HEREBY
AND THE SHARES REPRESENTED THEREBY MAY BE REOFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND
APPLICABLE LAWS OF THE STATES, TERRITORIES AND POSSESSIONS OF THE UNITED STATES
GOVERNING THE OFFER AND SALE OF SECURITIES AND ONLY (1) OUTSIDE THE UNITED
STATES TO A PERSON OTHER THAN A U.S. PERSON (AS SUCH TERMS ARE DEFINED IN
REGULATION S UNDER THE SECURITIES ACT) IN ACCORDANCE WITH RULE 903 OR 904 OF
REGULATION S UNDER THE SECURITIES ACT, (2) TO A PERSON WHOM THE HOLDER AND THE
BENEFICIAL OWNER REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN
THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (3) PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT PROVIDED
BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (4) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT.
THE BENEFICIAL OWNER OF SHARES RECEIVED UPON CANCELLATION OF ANY RULE

144A GDS MAY NOT DEPOSIT OR CAUSE TO BE DEPOSITED SUCH SHARES INTO ANY
DEPOSITARY RECEIPT FACILITY ESTABLISHED OR MAINTAINED BY A DEPOSITARY, OTHER
THAN A RULE 144A RESTRICTED DEPOSITARY RECEIPT FACILITY, SO LONG AS SUCH SHARES
ARE "RESTRICTED SECURITIES" WITHIN THE MEANING OF RULE 144(a)(3) UNDER THE
SECURITIES ACT. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE
EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT FOR RESALE OF THE
SHARES OR THE RULE 144A GDSs.
EACH HOLDER AND BENEFICIAL OWNER, BY ITS ACCEPTANCE OF THIS RULE 144A GDR
OR A BENEFICIAL INTEREST IN THE RULE 144A GDSs EVIDENCED HEREBY, AS THE CASE MAY
BE, REPRESENTS THAT IT UNDERSTANDS AND AGREES TO THE FOREGOING RESTRICTIONS.
The Regulation S GDR(s) issued to represent the Regulation S GDSs offered for sale herein shall contain,
and all owners of Regulation S GDSs shall be bound by the terms of, the following legend:
NEITHER THIS REGULATION S GDR, NOR THE REGULATION S GDSs EVIDENCED HEREBY,
NOR THE SHARES REPRESENTED THEREBY HAVE BEEN OR WILL BE REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR WITH ANY
SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE
UNITED STATES. THE OFFER, SALE, PLEDGE OR OTHER TRANSFER OF THIS REGULATION S
GDR, THE REGULATION S GDSs EVIDENCED HEREBY AND THE SHARES REPRESENTED
THEREBY EACH IS SUBJECT TO CERTAIN CONDITIONS AND RESTRICTIONS. THE HOLDERS
AND THE BENEFICIAL OWNERS HEREOF, BY PURCHASING OR OTHERWISE ACQUIRING THIS
REGULATION S GDR AND THE REGULATION S GDSs EVIDENCED HEREBY, ACKNOWLEDGE
THAT SUCH REGULATION S GDR, THE REGULATION S GDSs EVIDENCED HEREBY AND THE
SHARES REPRESENTED THEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
AND AGREE FOR THE BENEFIT OF THE COMPANY AND THE DEPOSITARY THAT THIS
REGULATION S GDR, THE REGULATION S GDSs EVIDENCED HEREBY AND THE SHARES
REPRESENTED THEREBY MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE LAWS OF
THE STATES, TERRITORIES AND POSSESSIONS OF THE UNITED STATES GOVERNING THE
OFFER AND SALE OF SECURITIES AND, PRIOR TO THE EXPIRATION OF THE RESTRICTED
PERIOD (DEFINED AS 40 DAYS AFTER THE LATER OF (I) THE COMMENCEMENT OF THE
OFFERINGS OF (A) REGULATION S GDSs OUTSIDE THE UNITED STATES IN RELIANCE ON
REGULATION S AND ANY OTHER APPLICABLE LAW IN TRANSACTIONS EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT, (B) RULE 144A GDSs IN THE UNITED STATES TO
QUALIFIED INSTITUTIONAL BUYERS AND (C) SHARES IN BRAZIL IN RELIANCE ON
REGULATION S AND (II) THE CLOSING DATE WITH RESPECT TO THE REGULATION S GDRs)
ONLY (1) OUTSIDE THE UNITED STATES TO A PERSON OTHER THAN A U.S. PERSON (AS SUCH
TERMS ARE DEFINED IN REGULATION S UNDER THE SECURITIES ACT) IN ACCORDANCE WITH
RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (2) TO A PERSON WHOM
THE HOLDER AND THE BENEFICIAL OWNER REASONABLY BELIEVE IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (3)
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (4)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT;
PROVIDED THAT IN CONNECTION WITH ANY TRANSFER UNDER (2) ABOVE, THE TRANSFEROR
SHALL, PRIOR TO THE SETTLEMENT OF SUCH SALE, WITHDRAW THE SHARES IN
ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE REGULATION S DEPOSIT
AGREEMENT AND INSTRUCT THAT SUCH SHARES BE DELIVERED TO THE CUSTODIAN UNDER
THE RULE 144A DEPOSIT AGREEMENT FOR ISSUANCE, IN ACCORDANCE WITH THE TERMS
AND CONDITIONS THEREOF, OF RULE 144A GDSs TO OR FOR THE ACCOUNT OF SUCH
QUALIFIED INSTITUTIONAL BUYER.
UPON THE EXPIRATION OF THE RESTRICTED PERIOD, THIS REGULATION S GDR, THE
REGULATION S GDSs EVIDENCED HEREBY AND THE SHARES SHALL NO LONGER BE SUBJECT
TO THE RESTRICTIONS ON TRANSFER PROVIDED IN THIS LEGEND, PROVIDED THAT AT THE
TIME OF SUCH EXPIRATION THE OFFER AND SALE OF THE REGULATION S GDSs EVIDENCED
HEREBY AND THE SHARES REPRESENTED THEREBY BY THE HOLDER THEREOF IN THE
UNITED STATES WOULD NOT BE RESTRICTED UNDER THE SECURITIES LAWS OF THE UNITED
STATES OR ANY STATE, TERRITORY OR POSSESSION OF THE UNITED STATES.
EACH HOLDER AND BENEFICIAL OWNER, BY ITS ACCEPTANCE OF THIS REGULATION S

GDR OR A BENEFICIAL INTEREST IN THE REGULATION S GDSs EVIDENCED HEREBY, AS THE
CASE MAY BE, AT ANY TIME DURING THE RESTRICTED PERIOD, REPRESENTS THAT IT
UNDERSTANDS AND AGREES TO THE FOREGOING RESTRICTIONS.
TAXATION OF OUR COMMON SHARES AND GLOBAL DEPOSITARY SHARES
The following summary contains a description of certain Brazilian and U.S. federal income tax consequences of
the acquisition, ownership and disposition of common shares or GDSs, but it does not purport to be a comprehensive
description of all the tax considerations that may be relevant to a decision to purchase common shares or GDSs. The
summary is based upon the tax laws of Brazil and regulations thereunder and on the tax laws of the United States and
regulations thereunder as in effect on the date hereof, which are subject to change. Prospective purchasers of
common shares or GDSs should consult their own tax advisors as to the tax consequences of the acquisition,
ownership and disposition of common shares or GDSs.
Although there is at present no income tax treaty between Brazil and the United States, the tax authorities of
the two countries have had discussions that may culminate in such a treaty. No assurance can be given,
however, as to whether or when a treaty will enter into force or how it will affect the U.S. Holders (as defined
below) of common shares or GDSs. Prospective holders of common shares or GDSs should consult their own
tax advisors as to the tax consequences of the acquisition, ownership and disposition of common shares or
GDSs in their particular circumstances.
Brazilian Tax Considerations
The following discussion summarizes the principal Brazilian tax consequences of the acquisition,
ownership and disposition of common shares or GDSs by a holder that is not domiciled in Brazil for purposes of
Brazilian taxation ("Non-Resident holder"). This discussion is based on Brazilian law as currently in effect. Any
change in that law may change the consequences described below.
The tax consequences described below do not take into account the effects of any tax treaties or reciprocity
of tax treatment entered into by Brazil and other countries. Nevertheless, please note that Brazil has not entered
into any tax treaty with the United States. The discussion also does not address any tax consequences under the
tax laws of any state or locality of Brazil. The description below is not intended to constitute a complete analysis
of all tax consequences relating to the acquisition, exchange, ownership and disposition of common shares or
GDSs. Prospective purchasers of common shares or GDSs are advised to consult their own tax advisors with
respect to an investment in our common shares or GDSs in light of their particular investment circumstances.
Income Tax
Dividends. Dividends paid by a Brazilian corporation, such as our company, including stock dividends and
other dividends paid to a Non-Resident holder of common shares or GDSs, are currently not subject to
withholding income tax in Brazil, as far as such amounts are related to profits generated after January 1, 1996.
Dividends paid from profits generated before January 1, 1996 may be subject to Brazilian withholding income
tax at varying rates, according to the tax legislation applicable to each corresponding year.
Interest on Shareholders' Equity. Law No. 9,249, dated December 26, 1995, as amended, permits a
Brazilian corporation, such as our company, to make distributions to shareholders of interest on shareholders'
equity as an alternative to making dividend distributions. These distributions may be paid in cash. For tax
purposes, this interest is limited to the daily pro rata variation of the TJLP, as determined by the Central Bank
from time to time, and may not exceed the greater of:
• 50.0% of net income (after the deduction of the provisions for social contribution tax on net income but
before taking into account the provision for income tax and the interest on shareholders' equity) for the
period in respect of which the payment is made; and
• 50.0% of the sum of retained profits and profit reserves as of the date of the beginning of the period in
respect of which the payment is made.
Payments of interest to a Non-Resident holder may be deducted for Brazilian corporate income tax as far as
the limits described above are observed. Such payments are subject to withholding income tax at the rate of 15.0%,
or 25.0% if the Non-Resident holder is domiciled in a tax haven—that is, a country or location that does not
impose income tax or where the maximum income tax rate is lower than 20.0% or where the local legislation
imposes restrictions on disclosing the shareholding composition or the ownership of the investment ("Tax Haven
Resident"). These payments may be included, at their net value, as part of any mandatory dividend. To the extent
payment of interest on shareholders' equity is so included, the corporation is required to distribute to shareholders
an additional amount to ensure that the net amount received by them, after payment of the applicable withholding
income tax, plus the amount of declared dividends is at least equal to the mandatory dividend.
Gains
According to Law No. 10,833, the disposition or sale of assets located in Brazil by a Non-Resident holder,
whether to another non-Brazilian resident or to a Brazilian resident, may be subject to capital gain taxes in Brazil.
With respect to the disposition of the common shares, as they are assets located in Brazil, the Non-Resident
holder may be subject to income tax on the gains assessed, following the rules described below, regardless of
whether the disposition is conducted in Brazil or with a Brazilian resident.
With respect to the GDSs, although the matter is not free from doubt, arguably the gains realized by a
Non-Resident holder on the disposition of GDSs to another Non-Resident holder are not taxed in Brazil, based
on the argument that GDSs would not constitute assets located in Brazil for purposes of Law No. 10,833.
However, we cannot assure you of how Brazilian courts would interpret the definition of assets located in Brazil
in connection with the taxation of gains realized by a Non-Resident holder on the disposition of GDSs to
another Non-Resident holder. As a result, gains on a disposition of GDSs by a Non-Resident holder to Brazilian
residents, or even to Non-Resident holders, in the event that courts determine that GDSs would constitute assets
located in Brazil, may be subject to income tax in Brazil according to the rules applicable to a disposition of
common shares.
As a general rule, gains realized as a result of a disposition or sale transaction of common shares or GDSs
are the positive difference between the amount in reais realized on the sale or exchange of the security and its
acquisition cost measured in Brazilian reais (without correction for inflation).
Under Brazilian law, however, income tax rules on such gains can vary, depending on the domicile of the
Non-Resident holder, the type of registration of the investment by the Non-Resident holder with the Central Bank
and how the disposition is carried out, as described below. There are grounds, however, to sustain that the acquisition
cost should be determined based on the amount in foreign currency registered with the Brazilian Central Bank, in
case the investment in the security has been subject to registration with the Brazilian Central Bank.
Capital gains assessed by Non-Resident holders on a disposition of common shares carried out on the Brazilian
stock exchange (which includes the transactions carried out on the organized over-the-counter market) are:
• exempt from income tax when assessed by a Non-Resident holder that (1) has registered its investment
in Brazil with the Central Bank under rules of Resolution No. 2,689/01 ("2,689 Holder") and (2) is not
a Tax Haven Resident; or
• subject to income tax at a rate of 15.0% in any other case, including a case of gains assessed by a
Non-Resident holder that is not a 2,689 Holder, or is a Tax Haven Resident. In these cases, a
withholding income tax of 0.005% of the sale value will be applicable and can be later offset with the
eventual income tax due on the capital gain.
Any other gains assessed on a disposition of the common shares that is not carried out on a Brazilian stock
exchange are subject to income tax at the rate of 15.0%, except for Tax Haven Residents which, in this case, are
subject to income tax at the rate of 25.0%. If these gains are related to transactions conducted on the Brazilian
non-organized over-the-counter market with intermediation, the withholding income tax of 0.005% shall also
be applicable and can be offset against the eventual income tax due on the capital gain.
In the case of a redemption of common shares or GDSs or a capital reduction by a Brazilian corporation,
such as our company, the positive difference between the amount received by the non-resident and the
acquisition cost of the common shares or GDSs redeemed in reais is treated as capital gain derived from the sale
or exchange of shares not carried out on a Brazilian stock exchange market and is therefore subject to income
tax at the rate of 15.0%, or 25.0%, as the case may be.
Any exercise of preemptive rights relating to the common shares or GDSs will not be subject to Brazilian
income tax. Gains realized by a Non-Resident holder on the disposition of preemptive rights in Brazil will be
subject to Brazilian income tax according to the same rules applicable to the sale or disposition of common shares.
As a Non-Resident holder of GDSs, you may cancel your GDSs and exchange them for common shares and
no income tax may be levied on such exchange, as long as the appropriate rules are complied with in connection
with the registration of the investment with the Central Bank.
Although there are grounds to sustain otherwise, the deposit of common shares by Non-Resident holders in
exchange for GDSs may be subject to Brazilian income tax if the acquisition cost of the common shares is lower
than (a) the average price per common share on a Brazilian stock exchange on which the greatest number of
such common shares were sold on the day of deposit; or (b) if no common shares were sold on that day, the
average price on a Brazilian stock exchange on which the greatest number of common shares were sold in the 15
trading sessions immediately preceding such deposit. The difference between the acquisition cost and the
average price of the common shares will be considered to be a capital gain subject to income tax at a rate of
15.0% or 25.0%, as the case may be.
There can be no assurance that the current favorable treatment of 2,689 Holders will continue in the future.
Tax on Foreign Exchange and Financial Transactions
Foreign Exchange Transactions. Brazilian law imposes a Tax on Foreign Exchange Transactions, or
"IOF/Exchange Tax," on the conversion of reais into foreign currency and on the conversion of foreign
currency into reais. Although the current applicable rate for almost all foreign currency exchange transactions is
zero, the Ministry of Finance is permitted to increase the rate at any time up to 25.0% on the foreign exchange
transaction amount. However, any increase in rates is only authorized to apply to future transactions.
Tax on Transactions Involving Bonds and Securities. Brazilian law imposes a Tax on Transactions
Involving Bonds and Securities, or "IOF/Bonds Tax," due on transactions involving bonds and securities,
including those carried out on a Brazilian stock exchange. The rate of IOF/Bonds Tax applicable to transactions
involving common shares is currently zero, although the Minister of Finance is permitted to increase such rate at
any time up to 1.5% of the transaction amount per day, but only in respect of future transactions.
Provisional Contribution on Financial Transactions (CPMF tax)
As a general rule, transactions carried out in Brazil that result in the transfer of reais from an account
maintained with a Brazilian financial institution are subject to the CPMF tax, at the rate of 0.38%. Therefore,
transactions carried out by the depositary or by a holder of common shares which involve the transfer of
Brazilian currency through Brazilian financial institutions could be subject to the CPMF tax.
Currently, funds transferred for the acquisition of shares on the Brazilian stock exchange and the remittance
abroad of the proceeds earned from the disposition of shares in Brazil are exempt from the CPMF tax. In
addition, according to Law No. 11,312, the CPMF tax rate is reduced to zero on withdrawals from bank
accounts used to buy common shares in a public offering whenever the public offering is registered with the
CVM and the issuer is listed on a Brazilian stock exchange.
The CPMF tax will be in effect until December 31, 2007. However, it may be extended. When applicable,
the CPMF tax must be withheld from the amounts transferred from such account and must be collected in favor
of the Brazilian government by the financial institution that carries out the relevant financial transaction.
Other Brazilian Taxes
There are no Brazilian inheritance, gift or succession taxes applicable to the ownership, transfer or
disposition of common shares or GDSs, except for gift and inheritance taxes imposed by some Brazilian states
on gifts or bequests by individuals or entities not domiciled or residing in Brazil to individuals or entities
domiciled or residing within such states. There are no Brazilian stamp, issue, registration or similar taxes or
duties payable by holders of common shares or GDSs.
Certain U.S. Federal Income Tax Consequences
To ensure compliance with Internal Revenue Service Circular 230, you are hereby notified that any
discussion of tax matters set forth in this offering memorandum was written in connection with the
promotion or marketing, within the meaning of Internal Revenue Service Circular 230, of the
transactions or matters addressed herein and was not intended or written to be used, and cannot be used,
by any prospective investor for the purpose of avoiding tax-related penalties under federal, state or local
tax law. Each prospective investor should seek advice based on its particular circumstances from an
independent tax advisor.
The following summary describes certain U.S. federal income tax consequences of the acquisition,
ownership and disposition of our common shares or GDSs as of the date hereof. Except where noted, this
discussion deals only with U.S. Holders (as defined below) that hold our common shares or GDSs as capital
assets for U.S. federal income tax purposes (generally, property held for investment). This summary does not
represent a detailed description of the U.S. federal income tax consequences applicable to you if you are subject
to special treatment under the U.S. federal income tax laws, including if you are:
• a dealer in securities or currencies;

• a financial institution;
• a regulated investment company;
• a real estate investment trust;
• an insurance company;
• a grantor trust;
• a tax-exempt organization;
• a person that received our common shares or GDSs as compensation for the performance of services;
• a person holding our common shares or GDSs as part of a hedging, integrated or conversion
transaction, a constructive sale or a straddle;
• a trader in securities that has elected the mark-to-market method of accounting for your securities;
• a person liable for alternative minimum tax;
• a person who owns 10.0% or more, by voting power or value, of our stock;
• a partnership or other pass-through entity for U.S. federal income tax purposes; or
• a person whose "functional currency" is not the U.S. dollar.
The discussion below is based upon the provisions of the Internal Revenue Code of 1986, as amended, or
the Code, and regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities
may be repealed, revoked or modified so as to result in U.S. federal income tax consequences different from
those discussed below, possibly with retroactive effect. In addition, this summary is based, in part, upon
representations made by the depositary to us and assumes that the deposit agreements, and all other related
agreements, will be performed in accordance with their terms.
This summary does not contain a detailed description of all the U.S. federal income tax consequences to
you in light of your particular circumstances and does not address the effects of any state, local or non-U.S. tax
laws. Moreover, it does not address the U.S. federal estate and gift or alternative minimum tax consequences of
the acquisition, ownership and disposition of our common shares or GDSs.
If you are considering the purchase, ownership or disposition of our common shares or GDSs, you
should consult your own tax advisors concerning the U.S. federal income tax consequences to you in light of
your particular situation as well as any consequences arising under the laws of any other taxing jurisdiction.
As used herein, "U.S. Holder" means a beneficial holder of our common shares or GDSs that is for U.S.
federal income tax purposes:
• an individual citizen or resident of the United States;

• a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or
organized in or under the laws of the United States, any state thereof or the District of Columbia;
• an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
• a trust if it is subject to the primary supervision of a court within the United States and one or more
U.S. persons have the authority to control all substantial decisions of the trust; or has a valid election in
effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
A "Non-U.S. Holder is a beneficial owner, other than a partnership or an entity treated as a partnership for
the U.S. federal income tax purposes, of our common shares or GDSs that is not a U.S. Holder.
If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) holds our
common shares or GDSs, the tax treatment of a partner in such partnership will generally depend on the status
of the partner and the activities of the partnership. If you are a partner of a partnership holding our common
shares or GDSs, you should consult your tax advisors.
GDSs
If you hold GDSs, for U.S. federal income tax purposes, you generally will be treated as the owner of the
underlying common shares that are represented by such GDSs. Accordingly, deposits or withdrawals of
common shares for GDSs will not be subject to U.S. federal income tax.
The United States Treasury Department has expressed concern that depositaries for Global Depositary
receipts, or other intermediaries between the holders of shares of an issuer and the issuer, may be taking actions
that are inconsistent with the claiming of United States foreign tax credits by U.S. holders of such receipts or
shares. Accordingly, the analysis regarding the availability of a United States foreign tax credit for Brazilian
taxes and sourcing rules described below could be affected by future actions that may be taken by the United
States Treasury Department.
Taxation of Dividends
Subject to the discussion below under "⎯Passive Foreign Investment Company," the gross amount of any
distributions on our common shares or GDSs (including amounts withheld to reflect Brazilian withholding
taxes and distributions of interest on shareholders' equity, as described above under "—Brazilian Tax
Considerations") will be taxable as dividends to the extent paid out of our current or accumulated earnings and
profits, as determined under U.S. federal income tax principles. Such dividends will be includable in your gross
income as ordinary income on the day actually or constructively received by you.
Distributions in excess of our current and accumulated earnings and profits will be treated first as a
non-taxable return of capital reducing such U.S. Holder's adjusted tax basis in our common shares or GDSs, and
thereafter as either long-term or short-term capital gain depending upon whether the U.S. Holder held our
common shares or GDSs for more than one year. Because we do not expect to keep earnings and profits in
accordance with U.S. federal income tax principles, U.S. Holders should expect that a distribution will
generally be treated as a dividend for U.S. federal income tax purposes. Distributions of additional common
shares or GDSs to U.S. holders that are part of a pro rata distribution to all our shareholders generally will not be
subject to U.S. federal income tax. As used below, the term "dividend" means a distribution that constitutes a
dividend for U.S. federal income tax purposes.
Such dividends will not be eligible for the dividends received deduction allowed to corporations. Under
current law, dividends received before January 1, 2011 by non-corporate U.S. investors on shares (or GDSs
underlying such shares) of certain foreign corporations will be subject to U.S. federal income tax at lower rates
than other types of ordinary income if certain conditions are met. However, because our common shares and
GDSs are not readily tradable on an established securities market in the United States and there is no income tax
treaty between Brazil and the United States, we currently do not expect that those conditions will be met. Thus,
we do not expect that dividends we pay will be entitled to such reduced rates.
If you are a U.S. Holder, the amount of any dividend paid in reais to you will equal the U.S. dollar value of
the reais received calculated by reference to the exchange rate in effect on the date the dividend is actually or
constructively received by you, which in the case of GDSs is the date it is received by the depositary, regardless
of whether the reais are converted into U.S. dollars. If the reais received as dividend are converted into U.S.
dollars on the date of receipt, you generally should not be required to recognize foreign currency gain or loss
with respect to such dividend. If the reais received as a dividend are not converted into U.S. dollars on the date
of receipt, you will have a tax basis in the reais equal to their U.S. dollar value on the date of receipt. Any gain
or loss realized on a subsequent conversion or other disposition of the reais will be treated as U.S. source
ordinary income or loss. The amount of any distribution of property other than cash will be the fair market value
of such property on the date of distribution.
Subject to certain complex conditions and limitations, Brazilian withholding taxes on dividends may be
treated as foreign taxes eligible for credit against your U.S. federal income tax liability. For taxable years
beginning after December 31, 2006, such dividends will constitute "passive category income" or "general
category income" for U.S. foreign tax credit purposes. If you do not elect to claim a credit for any foreign taxes
paid during a taxable year, you may instead claim a deduction in respect of such foreign taxes. For purposes of
calculating the foreign tax credit, dividend income paid on our common shares or GDSs will be treated as
income from sources outside the United States. Further, in certain circumstances, if you:
• have held our common shares or GDSs for less than a specified minimum period during which you are
not protected from risk of loss; or
• are obligated to make payments related to the dividends.
You will not be allowed a foreign tax credit for foreign taxes imposed on dividends paid on our common
shares or GDSs. The rules governing the foreign tax credit are complex. You are urged to consult your tax
advisors regarding the availability of the foreign tax credit under your particular circumstances.
Distributions of our common shares or GDSs that are received as part of a pro rata distribution to all of our
shareholders generally will not be subject to U.S. federal income taxes.
Subject to the discussion below under "—Information Reporting and Backup Withholding," if you are a
Non-U.S. Holder, you generally will not be subject to United States federal income or withholding tax on
dividend income received by you on your common shares or GDSs, unless you conduct a trade or business in
the United States and such income is effectively connected with that trade or business.
Sale, Exchange or Other Taxable Disposition of Common Shares or GDSs
Subject to the discussion under "—Passive Foreign Investment Company Rules" below, a U.S. Holder generally
will recognize capital gain or loss upon the sale, exchange or other taxable disposition of common shares or GDSs
measured by the difference between the amount realized on the sale, exchange or other taxable disposition of our
common shares or GDSs and the U.S. Holder's adjusted tax basis in such common shares or GDSs. Any gain or loss
will be long-term capital gain or loss if our common shares or GDSs have been held for more than one year. Certain
U.S. Holders (including individuals) may be eligible for preferential rates of U.S. federal income tax in respect of
long-term capital gains under current law. The deductibility of capital losses is subject to limitations under the Code.
If a Brazilian tax is withheld on the sale or other disposition of common shares or GDSs, the amount
realized by a U.S. Holder will include the gross amount of the proceeds of that sale or other taxable disposition
before deduction of the Brazilian tax. Capital gain or loss, if any, realized by a U.S. Holder on the sale, exchange
or other taxable disposition of common shares or GDSs generally will be treated as U.S.-source gain or loss for
U.S. foreign tax credit purposes. Consequently, in the case of a gain from the disposition of a common share or
GDSs that is subject to Brazilian tax (see "—Brazilian Tax Considerations—Gains"), the U.S. Holder may not
be able to benefit from the foreign tax credit for that Brazilian tax, unless the U.S. Holder can apply the credit
against U.S. federal income tax payable on other income from foreign sources. Alternatively, the U.S. Holder
may take a deduction for the Brazilian tax, provided that the U.S. Holder elects to deduct all foreign taxes paid
or accrued for the taxable year.
Passive Foreign Investment Company Rules
Special U.S. federal income tax rules apply to U.S. persons owning shares of a passive foreign investment
company, or PFIC. A non-U.S. corporation generally will be classified as a PFIC for U.S. federal income tax
purposes in any taxable year in which, after applying relevant look-through rules with respect to the income and
assets of subsidiaries, either:
• at least 75.0% of its gross income is "passive income"; or

• on average at least 50.0% of the gross value of its assets is attributable to assets that produce passive
income or are held for the production of passive income.
For this purpose, passive income generally includes, among other things, dividends, interest, rents,
royalties, gains from the disposition of passive assets and gains from commodities transactions.
Based on certain estimates of our current and projected gross income and gross assets, we do not expect our
common shares or GDSs to be considered shares of a PFIC for our current fiscal year or for foreseeable future
fiscal years. However, because the determination of whether our common shares or GDSs constitute shares of a
PFIC will be determined by us on an annual basis, and is based upon the composition of our income and assets
(including, among others, entities in which we hold at least a 25.0% interest), and the nature of our activities,
from time to time, we cannot assure U.S. Holders that our common shares or GDSs will not be considered
shares of a PFIC for any fiscal year.
If our common shares or GDSs were shares of a PFIC for any year, U.S. Holders (including certain indirect
U.S. Holders) may be subject to adverse tax consequences upon a sale or other disposition of such common
shares or GDSs, or upon the receipt of certain "excess distributions" from us. If we are or become a PFIC, unless
a U.S. Holder elects to be taxed annually on a mark-to-market basis with respect to its common shares or GDSs,
any gain realized on a sale or other taxable disposition of our common shares or GDSs and certain "excess
distributions" (generally distributions in excess of 125.0% of the average distribution over the shorter of a
three-year period or the U.S. Holder's holding period for our common shares or GDSs) would be treated as
realized ratably over the U.S. Holder's holding period for our common shares or GDSs, and amounts allocated
to prior years while we were a PFIC would be taxed at the highest tax rate in effect for each such year. An
additional interest charge may apply to the portion of the U.S. federal income tax liability on such gains or
distributions treated under the PFIC rules as having been deferred by the U.S. Holder. Amounts allocated to the
current year and to any year before we became a PFIC would be taxed as ordinary income in such current year.
If we are treated as a PFIC, the rules described above can be avoided by a U.S. Holder that makes a
so-called "mark-to-market" election. A U.S. Holder may make a mark-to-market election for our common
shares or GDSs, if our common shares constitute "marketable stock" as defined in the U.S. Treasury
regulations. Our common shares or GDSs will be marketable stock if they are regularly traded on a "qualified
exchange or other market" within the meaning of the Treasury Regulations. We cannot provide any assurance
that our common shares or GDSs are or will be considered "marketable stock" for this purpose. In particular, it
is unclear whether the BOVESPA would meet the requirements for a "qualified exchange or other market." If a
mark-to-market election is made, a U.S. Holder would take into account each year the appreciation or
depreciation value of its common shares or GDSs as if our common shares or GDSs were sold at fair market
value at the end of the year. Such appreciation or depreciation generally would be treated as ordinary income or
ordinary loss to the extent of the net amount previously included in income as a result of the mark-to-market
election (any losses in excess of the net amount previously included in income would generally be capital
losses), as would gains or losses on actual dispositions of common shares or GDSs.
A U.S. Holder who owns shares during any taxable year that the company is a PFIC would be required to
file IRS Form 8621. U.S. Holders should consult with their tax advisor regarding the application of the PFIC
rules to our common shares or GDSs and the availability and advisability of making an election to avoid the
adverse tax consequences of the PFIC rules should we be considered a PFIC for any taxable year.
Information Reporting and Backup Withholding
In general, information reporting will apply to dividends in respect of our common shares or GDSs and the
proceeds from the sale, exchange or redemption of our common shares or GDSs that are paid to you within the
United States (and in certain cases, outside the United States), unless you are an exempt recipient such as a
corporation, a payee that is not a United States person that provides an appropriate certification and certain other
persons. A backup withholding tax may apply to such payments if you fail to provide your correct taxpayer
identification number or certification of other exempt status or fail to report in full dividend and interest income.
A payor may rely on a certification provided by a payee that it is not a United States person only if such payor
does not have actual knowledge or a reason to know that any such information or certification stated in such
certificate is incorrect.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules
will be allowed as a refund or a credit against your U.S. federal income tax liability provided the required
information is timely furnished to the Internal Revenue Service.
The above description is not intended to constitute a complete analysis of all tax consequences
relating to the acquisition, ownership or disposition of our common shares or GDSs. You should consult
your own tax advisor concerning the tax consequences of your particular situation.
CERTAIN ERISA CONSIDERATIONS
This disclosure was written in connection with the promotion and marketing of the common shares or
GDSs, and it cannot be used by any holder for the purpose of avoiding penalties that may be asserted against the
holder under the Internal Revenue Code of 1986, as amended, or the Code. Prospective purchasers of the
common shares or GDSs should consult their own tax advisors with respect to the application of the U.S. federal
income tax laws to their particular situations.
The Employee Retirement Income Security Act of 1974, as amended, or "ERISA", imposes certain
requirements on employee benefit plans subject to Title I of ERISA and on entities that are deemed to hold the
assets of such plans ("ERISA Plans"), and on those persons who are fiduciaries with respect to ERISA Plans.
Investments by ERISA, or Plans are subject to ERISA's general fiduciary requirements, including, but not
limited to, the requirement of investment prudence and diversification and the requirement that an ERISA Plan's
investments be made in accordance with the documents governing the ERISA Plan.
Section 406 of ERISA and Section 4975 of the Code prohibit certain transactions involving the assets of an
ERISA Plan (as well as those plans that are not subject to ERISA but which are subject to Section 4975 of the
Code, such as individual retirement accounts (together with ERISA Plans, "Plans")) and certain persons
(referred to as "parties in interest" or "disqualified persons") having certain relationships to such Plans, unless a
statutory or administrative exemption is applicable to the transaction. A party in interest or disqualified person
who engages in a prohibited transaction may be subject to excise taxes and other penalties and liabilities under
ERISA and the Code.
Prohibited transactions within the meaning of Section 406 of ERISA or Section 4975 of the Code may arise
if common shares or GDSs are acquired by a Plan with respect to which we, the selling shareholders, the
Brazilian underwriters or the international underwriters or any of their respective affiliates is a party in interest
or a disqualified person. Certain exemptions from the prohibited transaction provisions of Section 406 of
ERISA and Section 4975 of the Code may be applicable, however, depending in part on the type of Plan
fiduciary making the decision to acquire a share and the circumstances under which such decision is made.
Included among these exemptions are Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code
(relating to transactions involving non-fiduciary service providers who are parties in interest or disqualified
persons) and Prohibited Transaction class exemption ("PTCE") 96-23 (relating to transaction directed by an
"in-house asset manager"); PTCE 95-60 (relating to transactions involving insurance company general
accounts); PTCE 91-38 (relating to investments by bank collective investment funds), PTCE 84-14 (relating to
transactions effected by a "qualified professional asset manager") and PTCE 90-1 (relating to investments by
insurance company pooled separate accounts). There can be no assurance that any of these class exemptions or
any other exemption will be available with respect to any particular transaction involving common shares or
GDSs.
Any Plan fiduciary that proposes to cause a Plan to purchase the common shares or GDSs should consult
with its counsel regarding the applicability of the fiduciary responsibility and prohibited transaction provisions
of ERISA and Section 4975 of the Code to such an investment, and to confirm that such purchase and holding
will not constitute or result in a non-exempt prohibited transaction or any other violation of an applicable
requirement of ERISA or the Code.
Non-United States plans, governmental plans (as defined in Section 3(32) of ERISA) and certain church
plans (as defined in Section 3(33) of ERISA), while not subject to the fiduciary responsibility provisions of
ERISA or the prohibited transaction provisions of ERISA and Section 4975 of the Code, may nevertheless be
subject to other federal, state, local or foreign laws or regulations that are substantially similar to the foregoing
provisions of ERISA and the Code ("Similar Law"). Fiduciaries of any such plans should consult with their
counsel before purchasing the common shares or GDSs to determine the need for, if necessary, and the
availability of, any exemptive relief under any Similar Law.
Each purchaser of the common shares or GDSs will be deemed to have represented and agreed either:
(A) the purchaser is not (i) a Plan, (ii) an entity whose underlying assets are considered "plan assets" within the
meaning of ERISA and 29 C.F.R. § 2510.3-101 or (iii) a non-United States, governmental or church plan
subject to Similar Law or (B) the purchaser's purchase, holding and subsequent disposition of the common
shares or GDSs either (i) are not a prohibited transaction under ERISA or the Code and are otherwise
permissible under all applicable Similar Laws or (ii) are entitled to exemptive relief from the prohibited
transaction provisions of ERISA and the Code in accordance with one or more available statutory, class or
individual prohibited transaction exemptions and are otherwise permissible under all applicable Similar Laws.
The sale of any common shares or GDSs, or any interest respectively therein, to a Plan or a governmental,
church or non U.S. plan that is subject to Similar Laws is in no respect a representation by the selling
shareholders, the underwriters of the Brazilian offering and the international underwriters, or their respective
affiliates, that such an investment meets all relevant legal requirements with respect to investments by such
plans generally or any particular such plan; that the prohibited transaction exemptions described above, or any
other prohibited transaction exemption, would apply to such an investment by such plan in general or any
particular such plan; or that such an investment is appropriate for such plan generally or any particular such
plan.
The discussion of ERISA and Section 4975 of the Code contained in this confidential offering
memorandum, is, of necessity, general, and does not purport to be complete. Moreover, the provisions of
ERISA and Section 4975 of the Code are subject to extensive and continuing administrative and judicial
interpretation and review. Therefore, the matters discussed above may be affected by future regulations, rulings
and court decisions, some of which may have retroactive application and effect.
PLAN OF DISTRIBUTION
Subject to the terms and conditions stated in the underwriting agreement dated July 11, 2007, each
Brazilian underwriter named below has severally agreed to place the number of common shares set forth
opposite their names below.
Number of
Brazilian Underwriters Common Shares
Unibanco – União de Bancos Brasileiros S.A. ................................................................................. 50,275,843
Citigroup Global Markets Brasil, Corretora de Câmbio, Títulos e Valores Mobiliários S.A. ......................... 50,275,842
Banco Itaú BBA S.A. ....................................................................................................................... 50,275,842
Total ................................................................................................................................................. 150,827,527
Unibanco – União de Bancos Brasileiros S.A., Citigroup Global Markets Brasil, Corretora de Câmbio,
Títulos e Valores Mobiliários S.A. and Banco Itaú BBA S.A. will act as bookrunners. Unibanco Securities Inc.
will act as international underwriter on behalf of Unibanco – União de Bancos Brasileiros S.A., Citigroup
Global Markets Inc. will act as international underwriter on behalf of Citigroup Global Markets Brasil,
Corretora de Câmbio, Títulos e Valores Mobiliários S.A. and Itaú Securities, Inc. will act as international
underwriter on behalf of Banco Itaú BBA S.A. in connection with the placement of the common shares,
including sale of common shares in the form of GDSs, to investors outside Brazil.
The underwriting agreement provides that the obligations of the Brazilian underwriters to place the
common shares are subject to approval of legal matters by counsel and to other conditions. We have also
entered into a placement facilitation and purchase agreement dated July 11, 2007 with the international
underwriters relating to the placement of our common shares and the sale of common shares in the form of
GDSs outside Brazil, which contains conditions for the placement of common shares and sale of GDSs by the
international underwriters similar to those of the underwriting agreement.
The Brazilian underwriters and the international underwriters propose to offer the common shares or GDSs
at the offering price set forth on the cover page of this offering memorandum within the United States to QIBs (as
defined in Rule 144A) in reliance on Rule 144A and outside the United States in reliance on Regulation S. See
"Transfer Restrictions." The price at which the common shares and GDSs are offered may be changed at any time
without notice.
The common shares and GDSs have not been and will not be registered under the Securities Act or any state
securities laws and may not be offered or sold within the United States or to, or for the account or benefit of,
U.S. persons (as defined in Regulation S) except in transactions exempt from, or not subject to, the registration
requirements of the Securities Act. In addition, hedging transactions involving the shares may not be conducted
except as permitted by the Securities Act. See "Transfer Restrictions."
In addition, until 40 days after the commencement of this offering, an offer or sale of our common shares or
GDSs within the United States by a dealer that is not participating in this offering may violate the registration
requirements of the Securities Act if that offer or sale is made otherwise than in accordance with Rule 144A.
The selling shareholders have granted to Banco Itaú BBA S.A. an option, exercisable upon consultation with the
other bookrunners, within 30 days from the date of this offering memorandum, to place up to 21,124,128 additional
common shares, including common shares in the form of GDSs, to cover over-allotments, if any, at the offering price
less the discount. Any common shares or GDSs issued or sold under the option will be issued and sold on the same
terms and conditions as the other common shares and GDSs that are the subject of this offering.
We, certain of our officers and directors and the selling shareholders have agreed that, for a period of
180 days from the date of this offering memorandum, we and they will not dispose of or hedge any of our shares
or any securities convertible into or exchangeable for our shares. Additionally, we, our officers and directors
and the selling shareholders have agreed with the Brazilian underwriters and the international underwriters, for
the 180-day period referred to in the preceding sentence, not to enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of ownership of any shares of our
capital stock or any securities convertible into or exercisable or exchangeable for any shares of our capital stock,
or warrants or other rights to purchase any shares of our capital stock, whether any such transaction is to be
settled by delivery of shares of our capital stock or such other securities, in cash or otherwise, and not to
publicly announce an intention to effect any transaction specified in this paragraph. We call these actions, other
than issuance, "transfer." After this initial period of six months, the controlling shareholders and our directors
and executive officers have also agreed not to sell or offer to sell more than 40% of the shares that they hold, or
derivatives linked to those shares, for an additional six months.
Under this agreement, transfers of these securities could be made under the following circumstances:
• pursuant to bona fide gifts;

• pursuant to dispositions to any trust for the direct or indirect benefit of the transferor and/or the
immediate family of the transferor;
• transfers to any affiliates of the transferor (as such term is defined in Rule 405 under Securities Act);
• in connection with a loan to Banco Itaú BBA S.A. of a certain amount of common shares held by the
selling shareholders, for the purpose of the stabilization activities to support the market price of the
common shares in the BOVESPA; or
• with the prior consent of Unibanco – União de Bancos Brasileiros S.A., Citigroup Global Markets
Brasil, Corretora de Câmbio, Títulos e Valores Mobiliários S.A., Banco Itaú BBA S.A. and the
international underwriters, such consent not to be unreasonably withheld.
In either of the first three cases, it will be a condition of the transfer that the transferee agrees that it is
receiving and holding the transferred securities subject to the provisions of the lock-up agreement and that the
transferee will not transfer the securities except in accordance with the lock-up agreement for the remainder of
its term. It will also be a condition that any such transfer of securities will not involve a disposition for value.
We cannot assure you that Unibanco – União de Bancos Brasileiros S.A., Citigroup Global Markets Brasil,
Corretora de Câmbio, Títulos e Valores Mobiliários S.A., Banco Itaú BBA S.A. and the international underwriters
will not waive these lock-up obligations, in which case these shares would become eligible for sale earlier.
We cannot predict the effect, if any, that future sales of our shares, or the availability of such shares for future
sale, will have on the market price of our common shares or GDSs prevailing from time to time or on our ability to
raise capital in the future. Sales of substantial amounts of our shares in the public market, or the perception that
such sales could occur, could adversely affect the prevailing market price of the common shares and GDSs and our
ability to sell the common shares or GDSs in the future at a time and at a price that we deem appropriate.
Prior to this offering, there has been no public market for our common shares or GDSs. Consequently, the
offering prices for the common shares and GDSs were determined by negotiations among us, the selling
shareholders and the representatives. Among the factors considered in determining the offering price were our
results of operations, our current financial condition, our future prospects, our markets, the economic conditions
in and future prospects for the industry in which we compete, our management, and currently prevailing general
conditions in the equity securities markets, including current market valuations of publicly traded companies
considered comparable to our Company.
The common shares and GDSs will constitute a new class of securities with no established trading market.
We have applied to have our common shares listed on the Novo Mercado segment of the BOVESPA. However,
we cannot assure you that the prices at which the common shares or GDSs will sell in the market after this
offering will not be lower than the initial offering price or that an active trading market for the common shares
or GDSs will develop and continue after this offering. The underwriters have advised us that they currently
intend to make a market in the common shares and GDSs. However, they are not obligated to do so and they
may discontinue any market-making activities with respect to the common shares and GDSs at any time without
notice. In addition, market-making activity will be subject to the limits imposed by the Securities Act and the
Exchange Act and may be limited during the pendency of any shelf registration statement. Accordingly, we
cannot assure you as to the liquidity of or the trading market for the common shares and GDSs.
In connection with the offering, the underwriters may purchase and sell common shares and GDSs in the
open market. Purchases and sales in the open market may include short sales, purchases to cover short positions,
which may include purchases pursuant to the underwriters' option to purchase additional common shares or
GDSs and stabilizing purchases.
• Short sales involve secondary market sales by the underwriters of a greater number of common shares
or GDSs than they are required to purchase in the offering.
- "Covered" short sales are sales of common shares or GDSs in an amount up to the number of common
shares or GDSs represented by the underwriters' option to purchase additional common shares or GDSs.
- "Naked" short sales are sales of common shares or GDSs in an amount in excess of the number
of common shares or GDSs represented by the underwriters' option to purchase additional common
shares or GDSs.
• Covering transactions involve purchases of common shares or GDSs either pursuant to the
underwriters' option to purchase additional common shares or GDSs or in the open market after the
distribution has been completed in order to cover short positions.
- To close a naked short position, the underwriters must purchase common shares or GDSs in the open
market after the distribution has been completed. A naked short position is more likely to be created if the
underwriters are concerned that there may be downward pressure on the price of the common shares or GDSs
in the open market after pricing that could adversely affect investors who purchase in the offering.
- To close a covered short position, the underwriters must purchase common shares or GDSs in the
open market after the distribution has been completed or by exercising their option to purchase
additional common shares or GDSs. In determining the source of common shares or GDSs to close the
covered short position, the underwriters will consider, among other things, the price of common shares
or GDSs available for purchase in the open market as compared to the price at which they may purchase
common shares or GDSs by exercising their option to purchase additional common shares or GDSs.
• Stabilizing transactions involve bids to purchase common shares or GDSs so long as the stabilizing
bids do not exceed a specified maximum.
Purchases to cover short positions and stabilizing purchases, as well as other purchases by the underwriters
for their own accounts, may have the effect of preventing or retarding a decline in the market price of the
common shares or GDSs. They may also cause the price of the common shares and GDSs to be higher than the
price that would otherwise exist in the open market in the absence of these transactions. The underwriters may
conduct these transactions in the over-the-counter market or otherwise. If the underwriters commence any of
these transactions, they may discontinue them at any time.
The Brazilian underwriters, either directly or through their affiliates, are our controlling shareholders.
Unibanco, jointly with UPS and Dibens, Citi, through its affiliate Citibank, and Itaucard, which belong to Banco
Itaú BBA's financial conglomerate, each holds 31.9% of our common shares and are the selling shareholders in
connection with the offering of our common shares. Please refer to the section "Related Party Transactions." In
addition, the Brazilian underwriters have performed investment banking and advisory services for us from time
to time for which they have received (and may in the future receive) customary fees and expenses. The Brazilian
underwriters may, from time to time, engage in transactions with and perform services for us in the ordinary
course of their business.
WE HAVE AGREED TO INDEMNIFY THE UNDERWRITERS AGAINST CERTAIN
LIABILITIES, INCLUDING LIABILITIES UNDER THE SECURITIES ACT, OR TO CONTRIBUTE
TO PAYMENTS THAT THE UNDERWRITERS MAY BE REQUIRED TO MAKE BECAUSE OF
ANY OF THOSE LIABILITIES.
TRANSFER RESTRICTIONS
Because of the following restrictions, investors are advised to consult legal counsel prior to making any
offer, resale, pledge or other transfer of our common shares and GDSs.
Notice to Prospective Investors in the United States

Our common shares and GDSs have not been registered under the Securities Act. They may not be offered
or sold within the United States except:
• in compliance with the registration requirements of the Securities Act and all applicable securities laws
in the states of the United States; or
• pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the
Securities Act and any applicable securities laws of the states of the United States.
Accordingly, our common shares and GDSs are being offered and sold only:
• inside the United States to qualified institutional buyers, as defined in Rule 144 under the Securities Act; and
• outside the United States to non U.S. persons in reliance on Regulation S under the Securities Act.
In addition, purchasers of our common shares and GDSs may not be able to exercise the preemptive rights
relating to the common shares or GDSs unless an exemption from the registration requirements of the Securities
Act is available or a registration statement under the Securities Act is effective with respect to those rights. We
are not obligated to file a registration statement with respect to the common shares and GDSs relating to these
preemptive rights, and we may not file such a registration statement.
Each purchaser of our common shares or GDSs in the United States will be deemed to have agreed not to deposit
such common shares into any unrestricted American depositary receipt facility we may establish in the future for as
long as those shares are "restricted securities" within the meaning of Rule 144 under the Securities Act. Each initial
purchaser of our common shares or GDSs will be deemed to have represented and agreed as described below. These
representations will only be true in the case of initial purchasers of GDSs, subsequent holders will instead be
subject to the transfer restrictions described in the section "Description of Global Depositary Shares."
1. It understands and acknowledges that the common shares or GDSs have not been registered under the
Securities Act or any other applicable securities law, are being offered in transactions not requiring
registration under the Securities Act or any other securities law, and, unless so registered, may not be
offered, sold or otherwise transferred except in compliance with the registration requirements of the
Securities Act, or any other applicable securities law, pursuant to an exemption from registration or in
a transaction not subject to registration. We make no representation as to the availability of the
exemption provided by Rule 144 under the Securities Act for resales of our common shares and GDSs.
2. It understands that the common shares (to the extent they are in certified form in the future), unless
otherwise determined in accordance with applicable law, will bear a legend substantially to the
following effect:
THIS SHARE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933 (THE "SECURITIES ACT") OR WITH ANY SECURITIES REGULATORY AUTHORITY
OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH RULE
144A UNDER THE SECURITIES ACT TO A PERSON THAT THE HOLDER AND ANY PERSON
ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER, (2) IN AN OFF-SHORE TRANSACTION IN
ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT OR (3)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED
BY RULE 144 THEREUNDER (IF AVAILABLE), IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. NO REPRESENTATION
CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT FOR RESALE OF THIS SHARE.
3. It is not an affiliate (as defined in Rule 144 under the Securities Act) of us or acting on our behalf and
it is either:
• a qualified institutional buyer as defined under Rule 144A (or a QIB) and is aware that any sale of
the common shares or GDSs to it will be in reliance on an exemption from the Securities Act. Such
acquisition will be for its own account or for the account of another QIB; or
• a person who, at the time the buy order for the common shares or GDSs was originated, was
outside the United States and was not a U.S. person (and was not purchasing for the account or
benefit of a U.S. person) within the meaning of Regulation S under the Securities Act.
4. If it is a purchaser in a sale that occurs outside the United States within the meaning of Regulation S
under the Securities Act, it agrees that until the expiration of a 40-day "distribution compliance" period
within the meaning of Rule 903 of Regulation S under the Securities Act, no offer or sale of the
common shares or GDSs shall be made by it to a U.S. person or for the account or benefit of a U.S.
person within the meaning of Rule 902(k) of the Securities Act except to a QIB and in compliance with
the applicable selling restrictions.
5. Pursuant to Brazilian Resolution No. 2,689, transfers of common shares including by or between residents
of jurisdictions outside Brazil, may be effected only in Brazil. See "Market Information."
6. Neither we, the selling shareholders, the underwriters nor any person representing us, the selling
shareholders, or the underwriters have made any representation to it with respect to us or the offering
or sale of any common shares of GDSs, other than the information contained in this offering
memorandum, which has been delivered to it and upon which it is relying in making its investment
decision with respect to the common shares or GDSs. It acknowledges that no representation or
warranty is made by the underwriters or their agents as to the accuracy or completeness of such
materials. It has had access to such financial and other information concerning us and the common
shares or GDSs as it has deemed necessary in connection with its decision to purchase the common
shares or GDSs, including an opportunity to ask questions of and request information from us, the
selling shareholders, and the underwriters or their agents.
7. It acknowledges that we, the selling shareholders, the underwriters and their agents and our respective counsel
will rely upon the truth and accuracy of the foregoing acknowledgments, representations and agreements and
agrees that, if any of the acknowledgments, representations or warranties deemed to have been made by its
purchase of shares or GDSs are no longer accurate, it shall notify us, the selling shareholders and the
underwriters. In the event that it is acquiring any shares or GDSs as a fiduciary or agent for one or more
investment accounts, it represents that it has sole investment discretion with respect to each such account and
that it has full power to make the foregoing acknowledgments, representations and agreements on behalf of
each such account. In the event that an agent or representative of the purchaser is making any
acknowledgment, representation or agreement on behalf of the purchaser, such agent or representative
represents that it is duly authorized to execute the subscription agreement on behalf of the purchaser and has
confirmed the foregoing acknowledgments, representations and agreements with the purchaser.
We acknowledge that for so long as the common shares and GDSs are "restricted securities" within the
meaning of Rule 144(a)(3) under the Securities Act, holders of such restricted securities, and prospective
purchasers (as designated by such holders) of such restricted securities, shall have the right to obtain upon request
any information required to be provided by Rule 144A(d)(4) under the Securities Act during any period in which
we are no subject to and in compliance with Section 13 or 15(d) of the Exchange Act, or we are not exempt from
such reporting requirements pursuant to and in compliance with Rule 12g3-2(b) under the Exchange Act.
In addition, holders of our GDSs will be subject to the transfer restrictions described in "Description of
Global Depositary Shares."
Notice to Prospective Investors in the European Economic Area
In relation to each member state of the European Economic Area that has implemented the Prospectus Directive
(each, a relevant member state), with effect from and including the date on which the Prospectus Directive is
implemented in that relevant member state (the relevant implementation date), an offer of shares or GDSs described in
this offering memorandum may not be made to the public in that relevant member state prior to the publication of a
prospectus in relation to the shares or GDSs that has been approved by the competent authority in that relevant member
state or, where appropriate, approved in another relevant member state and notified to the competent authority in that
relevant member state, all in accordance with the Prospectus Directive, except that, with effect from and including the
relevant implementation date, an offer of securities may be offered to the public in that relevant member state at any time:
• to any legal entity that is authorized or regulated to operate in the financial markets or, if not so
authorized or regulated, whose corporate purpose is solely to invest in securities;
• to any legal entity that has two or more of (1) an average of at least 250 employees during the last
financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of
more than €50,000,000, as shown in its last annual or consolidated accounts;
• in any other circumstances that do not require the publication of a prospectus pursuant to Article 3 of
the Prospectus Directive.
Each purchaser of shares or GDSs described in this offering memorandum located within a relevant
member state will be deemed to have represented, acknowledged and agreed that it is a "qualified investor"
within the meaning of Article 2(1)(e) of the Prospectus Directive.
For purposes of this provision, the expression an "offer to the public" in any relevant member state means
the communication in any form and by any means of sufficient information on the terms of the offer and the
securities to be offered so as to enable an investor to decide to purchase or subscribe the securities, as the
expression may be varied in that member state by any measure implementing the Prospectus Directive in that
member state, and the expression "Prospectus Directive" means Directive 2003/71/EC and includes any
relevant implementing measure in each relevant member state.
The sellers of the shares or GDSs have not authorized and do not authorize the making of any offer of shares or
GDSs through any financial intermediary on their behalf, other than offers made by the underwriters with a view to the
final placement of the shares as contemplated in this offering memorandum. Accordingly, no purchaser of the shares or
GDSs is authorized to make any further offer of the shares or GDSs on behalf of the sellers or the underwriters.
Notice to Prospective Investors in the United Kingdom
This offering memorandum is only being distributed to, and is only directed at, persons in the United
Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive
("Qualified Investors") that are also (i) investment professionals falling within Article 19(5) of the Financial
Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (ii) high net worth entities,
and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order
(all such persons together being referred to as "relevant persons"). This offering memorandum and its contents
are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by
recipients to any other persons in the United Kingdom. Any person in the United Kingdom that is not a relevant
person should not act or rely on this document or any of its contents.
Notice to Prospective Investors in France
Neither this offering memorandum nor any other offering material relating to the shares or GDSs described
in this offering memorandum has been submitted to the clearance procedures of the Autorité des Marchés
Financiers or by the competent authority of another member state of the European Economic Area and notified
to the Autorité des Marchés Financiers. The shares or GDSs have not been offered or sold and will not be
offered or sold, directly or indirectly, to the public in France. Neither this offering memorandum nor any other
offering material relating to the shares or GDSs has been or will be:
• released, issued, distributed or caused to be released, issued or distributed to the public in France; or
• used in connection with any offer for subscription or sale of the shares or GDSs to the public in France.
Such offers, sales and distributions will be made in France only:
• to qualified investors (investisseurs qualifiés) and/or to a restricted circle of investors (cercle restreint
d'investisseurs), in each case investing for their own account, all as defined in, and in accordance with,
Article L.411-2, D.411-1, D.411-2, D.734-1, D.744-1, D.754-1 and D.764-1 of the French Code
monétaire et financier; or
• to investment services providers authorized to engage in portfolio management on behalf of
third parties; or
• in a transaction that, in accordance with article L.411-2-II-1°-or-2°-or 3° of the French Code monétaire
et financier and article 211-2 of the General Regulations (Règlement Général) of the Autorité des
Marchés Financiers, does not constitute a public offer (appel public à l'épargne).
The shares or GDSs may be resold directly or indirectly, only in compliance with Articles L.411-1,
L.411-2, L.412-1 and L.621-8 through L.621-8-3 of the French Code monétaire et financier.
Notice to Prospective Investors in Germany
The shares and GDSs offered by this offering memorandum have not been and will not be offered to the
public within the meaning of the German Sales Prospectus Act (Verkaufsprospektgesetz) or the German
Investment Act (Investmentgesetz). The shares and GDSs have not been and will not be listed on a German
exchange. No sales prospectus pursuant to the German Sales Prospectus Act has been or will be published or
circulated in Germany or filed with the German Federal Financial Supervisory Authority (Bundesanstalt für
Finanzdienstleistungsaufsicht) or any other governmental or regulatory authority in Germany. This offering
memorandum does not constitute an offer to the public in Germany and it does not serve for public distribution
of the shares or GDSs in Germany. Neither this offering memorandum, nor any other document issued in
connection with this offering, may be issued or distributed to any person in Germany except under
circumstances which do not constitute an offer to the public within the meaning of the German Sales Prospectus
Act or the German Investment Act.
Notice to Prospective Investors in Italy
This offering has not been registered with the Commissione Nazionale per le Società e la Borsa
(CONSOB) pursuant to Italian securities legislation. The shares or GDSs offered by this offering memorandum
may not be offered or sold nor may the offering memorandum or any other offering materials be distributed in
the Republic of Italy unless such offer, sale or distribution is:
• made by an investment firm, bank or financial intermediary permitted to conduct such activities
in the Republic of Italy in accordance with Legislative Decree No. 385 of September 1, 1993
(Decree No. 385), Legislative Decree No. 58 of February 24, 1998, CONSOB Regulation No. 11971
or May 14, 1999 and any other applicable laws and regulations;
• made (i) to professional investors (operatori qualificati) as defined in Article 31, second paragraph
of CONSOB Regulation No. 11422 of July 1, 1998, as amended, or Regulation No. 11522, (ii) in
circumstances where an exemption from the rules governing solicitations to the public at large applies
pursuant to Article 100 of Legislative Decree No. 58 of February 24, 1998 and Article 33, first
paragraph, of CONSOB Regulation No. 11971 of May 14, 1999, as amended or (iii) to persons located
in the Republic of Italy who submit an unsolicited request to purchase shares or GDSs; and
• in compliance with all relevant Italian securities and tax laws and regulations.
Notice to Prospective Investors in Hong Kong
The shares or GDSs may not be offered or sold in Hong Kong, by means of this offering memorandum or
any document other than to persons whose ordinary business is to buy or sell shares or debentures, whether as
principal or agent, or in circumstances which do not constitute an offer to the public within the meaning of the
Companies Ordinance (Cap. 32) of Hong Kong. No advertisement, invitation or document relating to our shares
or GDSs, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be
accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong
Kong) will be issued other than with respect to shares which are or are intended to be disposed of only to
persons outside Hong Kong or only to "professional investors" within the meaning of the Securities and Futures
Ordinance (Cap. 571) of Hong Kong and any rules made thereunder.
Notice to Prospective Investors in Japan
The shares and GDSs offered in this offering memorandum have not been registered under the Securities
and Exchange Law of Japan. The shares or GDSs have not been offered or sold and will not be offered or sold,
directly or indirectly, in Japan or to or for the account of any resident of Japan, except (i) pursuant to an
exemption from the registration requirements of the Securities and Exchange Law and (ii) in compliance with
any other applicable requirements of Japanese law.
Notice to Prospective Investors in Singapore
This offering memorandum has not been registered as a prospectus with the Monetary Authority of
Singapore. Accordingly, this offering memorandum and any other document or material in connection with the
offer or sale, or invitation for subscription or purchase, of the shares or GDSs may not be circulated or
distributed, nor may the shares or GDSs be offered or sold, or be made the subject of an invitation for
subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional
investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA"), (ii) to a
relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with
the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the
conditions of, any other applicable provision of the SFA, in each case subject to compliance with conditions set
forth in the SFA.
Where the shares or GDSs are subscribed or purchased under Section 275 of the SFA by a relevant person which is:
• a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole
business of which is to hold investments and the entire share capital of which is owned by one or more
individuals, each of whom is an accredited investor; or
• a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and
each beneficiary of the trust is an individual who is an accredited investor,
shares, debentures and units of shares and debentures of that corporation or the beneficiaries' rights and interest
(howsoever described) in that trust shall not be transferred within six months after that corporation or that trust
has acquired the shares pursuant to an offer made under Section 275 of the SFA except:
• to an institutional investor (for corporations, under Section 274 of the SFA) or to a relevant person
defined in Section 275(2) of the SFA, or to any person pursuant to an offer that is made on terms that
such shares, debentures and units of shares and debentures of that corporation or such rights and
interest in that trust are acquired at a consideration of not less than S$200,000 (or its equivalent in a
foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of
securities or other assets, and further for corporations, in accordance with the conditions specified in
Section 275 of the SFA;
• where no consideration is or will be given for the transfer; or
• where the transfer is by operation of law.
NOTICE TO CANADIAN RESIDENTS
This offering memorandum is not, and under no circumstance is to be construed as, an advertisement or a
public offering of the common shares or GDSs in Canada or any province or territory thereof. Any offer or sale
of the common shares or GDSs in Canada will be made only pursuant to an exemption from the requirements to
file a prospectus with the relevant Canadian securities regulators and only by a dealer properly registered under
applicable provincial securities laws or, alternatively, pursuant to an exemption from the dealer registration
requirement in the relevant province or territory of Canada in which such offer or sale is made.
LEGAL MATTERS
The validity of our common shares under Brazilian law will be passed upon by Mattos Filho, Veiga Filho,
Marrey Jr. e Quiroga Advogados, Brazilian counsel to our company and the selling shareholder, and by Souza,
Cescon Avedissian, Barrieu e Flesch Advogados, Brazilian counsel to the Brazilian underwriters and the
international underwriters. We and the selling shareholders have been represented as to U.S. legal matters by
Shearman & Sterling LLP. The Brazilian underwriters and the international underwriters have been represented
as to certain U.S. legal matters by Cleary Gottlieb Steen & Hamilton LLP.
INDEPENDENT ACCOUNTANTS
Our financial statements as of and for the years ended December 31, 2004, 2005 and 2006, and as of and for
the three-month period ended March 31, 2007 have been audited in accordance with auditing standards
accepted in Brazil, by KPMG Auditores Independentes.
Our financial statements as of and for the three-month period ended March 31, 2006, have been subject to a
limited review, in accordance with specific rules established by IBRACON by KPMG Auditores
Independentes. KPMG report on these financial statements, included in this offering memorandum, states that
the scope of a limited review is significantly less than that of an audit and does not provide them with a base to
express an opinion on the financial statements taken as a whole. Accordingly, the degree of reliance on their
report on such information should be restricted in light of the limited nature of the review procedures applied.
ENFORCEMENT OF JUDGMENTS AND SERVICE OF PROCESS
We are incorporated under the laws of Brazil. All of our directors and officers named herein reside in
Brazil, and substantially all of our assets and those of other persons are located in Brazil. As a result, it may not
be possible (or it may be difficult) for you to effect service of process upon us or these other persons within the
United States or to enforce judgments obtained in United States courts against us or them, including those
predicated upon the civil liability provisions of the federal securities laws of the United States.
In addition, any claims under the Novo Mercado regulations must be submitted to arbitration conducted in
accordance with the rules of the Market Arbitration Chamber of the BOVESPA. See "Description of Our Share
Capital—Arbitration."
We have been advised by our Brazilian counsel, Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga
Advogados, that a judgment of a United States court for civil liabilities predicated upon the federal securities
laws of the United States may be enforced in Brazil, subject to certain requirements described below. Such
counsel has advised that a judgment against us, the directors and officers or certain advisors named herein
obtained in the United States would be enforceable in Brazil upon confirmation of that judgment by the
Superior Tribunal de Justiça (STJ). That confirmation, generally, will be available if the U.S. judgment:
• fulfills all formalities required for its enforceability under the laws of the United States;
• is issued by a court of competent jurisdiction after proper service of process;
• is not subject to appeal;
• is for payment of a sum certain;
• is authenticated by a Brazilian consular office in the United States and is accompanied by a sworn
translation into Portuguese; and
• is not contrary to Brazilian national sovereignty or public policy.
Notwithstanding the foregoing, we cannot assure you that confirmation will be obtained, that the process
described above will be conducted in a timely manner or that Brazilian courts will enforce a monetary judgment
for violation of the United States securities laws with respect to the ordinary shares. We have been further
advised by Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados that an action may be brought in
Brazilian courts in connection with this offering memorandum predicated solely on the federal securities laws
of the United States and that, subject to applicable law, Brazilian courts may enforce liabilities in such action
against us (provided that provisions of the federal securities laws of the United States do not contravene
Brazilian policy, good morals or national sovereignty and provided further that Brazilian courts can assert
jurisdiction over the particular action) or the directors and officers and certain advisors named herein and the
ability of a judgment creditor or the other persons named above to satisfy a judgment by attaching certain assets
of ours or of the selling shareholders, respectively, is limited by provisions of Brazilian law.
In addition, a plaintiff (whether Brazilian or not) that resides outside Brazil during the course of litigation in
Brazil must post bond to secure payment of costs and fees if the plaintiff owns no real property in Brazil. This
bond must have a value sufficient to satisfy the payment of court fees and defendant attorney's fees, as determined
by the Brazilian judge, except in the case of the enforcement of foreign judgments that have been duly confirmed
by the Superior Tribunal de Justiça (STJ). Notwithstanding the foregoing, we cannot assure you that confirmation
of any judgment will be obtained, or that the process described above can be conducted in a timely manner.
INDEX TO FINANCIAL STATEMENTS
Audited Consolidated Financial Statements as of and for the Year Ended March 31, 2007
Report of Independent Auditors ...................................................................................................................... F-7
Balance Sheets as of March 31, 2007.............................................................................................................. F-8
Statements of Income for the Year Ended March 31, 2007............................................................................. F-9
Statements of Shareholders’ Equity............................................................................................................... F-10
Changes in Financial Position for the Year Ended March 31, 2007.............................................................. F-11
Notes to the Financial Statements as of and for the Year Ended March 31, 2007......................................... F-12
Audited Consolidated Financial Statements as of and for the Year Ended December 31, 2006
Report of Independent Auditors .................................................................................................................... F-40
Balance Sheets as of December 31, 2006...................................................................................................... F-41
Statements of Income for the Year Ended December 31, 2006..................................................................... F-42
Changes in Financial Position for the Year Ended December 31, 2006........................................................ F-44
Notes to the Financial Statements as of and for the Year Ended December 31, 2006................................... F-45
F-1 Final_Redecard_e5
Final_Redecard_e5
Redecard S.A.
Financial statements
March 31, 2007 and 2006
(A translation of the original report in Portuguese as published in Brazil
containing financial statements prepared in accordance with accounting
practices adopted in Brazil)
Final_Redecard_e5
Redecard S.A.
March 31, 2007 and 2006
CONTENTS
Independent auditors' report ............................................................................................................................F-7

Balance sheets ................................................................................................................................................F-8
Statements of income ......................................................................................................................................F-9
Statements of changes in shareholders' equity ..............................................................................................F-10
Statements of changes in financial position ..................................................................................................F-11
Notes to the financial statements ..........................................................................................................F-12 – 32
Final_Redecard_e5
INDEPENDENT AUDITORS' REPORT
To
The Board of Directors and Shareholders
Redecard S.A.
São Paulo – SP
We have examined the balance sheet of Redecard S.A., as of March 31, 2007 and the related statements
of income, changes in shareholders' equity and changes in financial position for the period from January 01,
to March 31, 2007, which are the responsibility of its management. Our responsibility is to express an opinion
on these financial statements.
Our examination was conducted in accordance with auditing standards accepted in Brazil and included:
(a) planning of the audit work, considering the materiality of the balances, the volume of transactions and the
accounting systems and internal accounting controls of the Company; (b) verification, on a test basis, of the
evidence and records which support the amounts and accounting information disclosed; and (c) evaluation of
the most significant accounting policies and estimates adopted by Company management, as well as the
presentation of the financial statements taken as a whole.
In our opinion the financial statements referred to above present fairly, in all material respects, the
financial position of Redecard S.A. as of March 31, 2007, the results of its operations, changes in its
shareholders' equity and changes in its financial position for the period from January 01, to March 31, 2007,
in conformity with accounting practices adopted in Brazil.
The financial statements for the period ended March 31, 2006 were reviewed by us, and based on this
limited review, we are not aware of any significant modifications that should be made to these financial
statements for them to be in accordance with accounting practices adopted in Brazil. However, the scope of a
limited review is significantly less than that of an audit and does not provide us with a base to express an
opinion on the financial statements taken as a whole.
April 19, 2007, with the exception of notes 1, 3i, 6, 7, 8, 10, 11, 14, 15 and 16 to the financial statements,
dated June 06, 2007, which were expanded to better reflect the disclosures required by the Brazilian
Securities and Exchange Commission, as reported in note 3.
KPMG Auditores Independentes

CRC 2SP014428/O-6
Original report in Portuguese signed by
Giuseppe Masi
Accountant CRC 1SP176273/O-7
Redecard S.A.
Balance sheets
March 31, 2007 and 2006
(In thousands of Reais)
Assets Note 2007 2006 Liabilities Note 2007 2006
Current assets 8,574,467 6,598,699 Current liabilities 8,607,713 6,601,983
Cash and cash equivalents 4 16,679 10,386 Accounts payable to merchants 3f 7,738,331 5,840,309
Accounts receivable from issuers 3f 8,444,262 6,513,271 Labor liabilities 11,696 11,198
Other receivables 59,032 36,033 Tax liabilities 18,691 15,650
Deferred income tax and 5 54,494 39,009 Borrowings 7 361,888 373,857
social contribution Other liabilities 8 477,107 360,969
Non current assets 213,825 276,002 Non current liabilities 180,579 272,718
Non current 39,804 65,387 Non current liabilities 116,318 208,457
F-8
Deferred income tax and Provision for contingent liabilities 11 116,318 208,457
social contribution 5 26,097 52,384
Legal deposits 13,707 13,003 Shareholders' equity 9 64,261 64,261
Permanent assets 6 174,021 210,615 Capital 53,552 53,552

Revenue reserves 10,709 10,709
Property, plant and equipment 704,296 624,907
Accumulated depreciation (530,275) (414,292)
8,788,292 6,874,701 8,788,292 6,874,701
See the accompanying notes to the financial statements
Final_Redecard_e5
Redecard S.A.
Statements of income
January 01, to March 31, 2007 and 2006
(In thousands of Reais, except net income per share)
Note 2007 2006
Result from Redecard Consortium Participation 14 149,092 83,573
(Operational profit from Consórcio Redecard

in 2007 R$ 345,269 and 2006 R$ 189,025)
Income before income and

social contribution taxes 149,092 83,573
Income tax and social contribution 12 (40,246) (27,300)
Current (11,387) (24,400)

Deferred (28,859) (2,900)
Net income for the period 108,846 56,273
Net income per share - R$ 57.95 29.96
Redecard S.A.
Statements of changes in shareholders' equity
Revenue
reserves
Capital
subscribed Legal Retained
Note and paid up reserve earnings Total
Shareholders' equity at December 31, 2005 53,552 9,338 - 62,890
Net income for the period - - 56,273 56,273
Destination:
Legal reserve - 1,371 (1,371) -
Distribution of dividends - - (54,902) # (54,902)
Shareholders' equity at March 31, 2006 9 53,552 10,709 - 64,261
Shareholders' equity at December 31, 2006 53,552 10,709 - 64,261
Net income for the period - - 108,846 108,846
Distributions:
Dividends distributed - - (108,846) (108,846)
Shareholders' equity at March 31, 2007 9 53,552 10,709 - 64,261
Redecard S.A.
Statements of changes in financial position

2007 2006
Origin of funds
From operations
Net income for the period....................................................................................... 108,846 56,273
Expenses that do not affect working capital
Depreciation and amortization ............................................................................ 28,265 34,636
Profit on sale of fixed assets................................................................................ (261) –
Decrease in non current assets .............................................................................. 14,728 –
151,578 90,909
From third parties

Sales value of fixed assets........................................................................................ 462 89
Disposal of fixed assets at a loss .............................................................................. – 1,360
Increase in non current liabilities ............................................................................. – 12,686
462 14,135
152,040 105,044
Applications of funds
Investments in
Property, plant and equipment ................................................................................. 27,210 41,805
Increase in non current assets ....................................................................................... – 4,005
Decrease in non current liabilities ................................................................................ 67,426 –
Distribution of dividends .............................................................................................. 108,846 54,902
203,482 100,712
Increase/(decrease) ecrease in net working capital ....................................................... (51,442) 4,332
Change in net working capital

2007 2006
Beginning End Variation Variation
Current assets ............................................................. 10,281,907 8,574,467 (1,707,440) (1,501,943)
Current liabilities ....................................................... 10,263,711 8,607,713 (1,655,998) (1,506,275)
Net working capital.................................................. 18,196 (33,246) (51,442) 4,332
Redecard S.A.
Notes to the financial statements

January 01 to March 31, 2007 and 2006
1 Operations
Redecard S.A. was constituted on November 01, 1996, and its main activity is to act as a trader for
transactions using the credit cards under the banners MasterCard®, MasterCard Electronic® and Diners Club
International®, and with the debit cards MasterCard Maestro®, RedeShop® and Maestro®, through
registering and approving trade merchants.
The business model for Redecard's trading activities consists of registering and approving trade and
service entities, and also capturing, transmitting, processing and settling transactions that use the
aforementioned credit and debit cards.
Redecard's operations are organized between the following businesses:
a. Credit and Debit cards: through capturing, processing and settling trade and financial transactions using
the aforementioned cards. For the services provided, Redecard charges these establishments an
administration fee, which comprises the issuer's remuneration, referred to as interchange and
remuneration for the services provided by Redecard;
b. Anticipated financial settlement to registered trade merchants for amounts receivable from the credit
cards MasterCard and Diners Club International, through requests made by these establishments and only
for those transactions made using these cards. Redecard earns financial income from these operations;
c. Hire of equipment to register the electronic transactions, referred to as POS. The Company earns monthly
income from hiring this equipment;
d. Services provided to partner companies through capturing, routing and transmitting transactions made
using benefit cards (vouchers), such as: food, meals, fuel, etc, as well as Private Label cards, usually
issued by financial companies. The income earned by Redecard consists of the fees charged to the
voucher and financial companies;
e. Services provided to trade merchants by means of consulting checks using the POS equipment, together
with the Serasa data base. The income earned by Redecard consists of the fees charged directly to these
establishments and a small margin on the costs from Serasa.
Redecard was the leader of a consortium (Consórcio Redecard), constituted on November 1st, 1996, the
date the Company started operating, and which was terminated on March 31, 2007, consisting of the
following consortium members, besides Redecard S.A: Banco Itaucard S.A, Unibanco – União de Bancos
Brasileiros S.A. and Banco Citibank S.A. After the Consórcio Redecard ended, all of its activities were
assumed by Redecard S.A.
Consórcio Redecard was not a corporate legal entity; and operated as a common enterprise to provide
services related to the use of credit and debit cards and other means of payment, at establishments registered
and approved by Redecard in Brazil, and its activities included developing promotional and publicity
activities aimed to encourage the use of the aforementioned cards.
Redecard S.A.

Redecard Consortium
Background
At the end of 1970, three large banks, Citibank, Itaú and Unibanco, founded Credicard, a company set up
to administer credit cards. Since the start, Credicard issued credit cards and registered merchant outlets. In
1983, it joined Visa International, and started to issue its cards according to the rules under this banner. In
1987, Credicard interrupted its contract with Visa and joined MasterCard International.
In 1990, Credicard administered the credit card portfolio of 60 financial institutions in Brazil, sharing the
results earned from the credit card portfolio, since it still had exclusive right to issue Mastercard credit cards.
Its exclusive right to issue credit cards under the MasterCard banner was interrupted in 1996, as a result
of the changes in the market, mainly from the incorporation of the activities of Banco Nacional by Unibanco.
This incorporation resulted in the same Corporation having an entity responsible for issuing Visa Cards
(Banco Nacional) and another entity (Unibanco) being exclusively responsible for issuing, via Credicard, the
credit cards with the MasterCard banner.
Until then, both Credicard, the issuer authorized for the MasterCard banner, and also the issuers of credit
cards authorized by Visa, maintained as part of their operations, the activities related to granting credit to the
credit card holders and those that consisted of registering merchant entities so that they could accept
payments for their sales through the use of credit cards with these two banners.
The interruption in the exclusive right to the MasterCard and Visa banners for issuing credit cards,
resulted therefore, in the need to define mechanisms and processes that would encourage the issue of the
maximum possible volume of its credit cards, but at the same time, mitigating risks and reducing costs.
Consequently, on September 02, 1996, Redecard was constituted from the spin off of the area
responsible for registering merchant entities from Credicard, with the three main shareholders of Credicard
being retained in the company. Later, during 1997, MasterCard International became a shareholder of
Redecard. The focus of Redecard was on the relationships with the trading merchants and developing and
maintaining the systems and specific processes to attend the credit card issuers with the MasterCard banner in
Brazil, as well as the debit card issuers with Redeshop and Maestro banners.
In addition, within the concept of a two sided market, it was necessary to create mechanisms to improve
the incentive for issuing credit cards with the MasterCard and Redeshop banners, by other credit card
administrators. The constitution of the Redecard Consortium, since the first day of Redecard's operations, on
November 01, 1996, was the most effective means identified by the Controlling Shareholders to formalize the
association and administer Redecard, taking into consideration the credit card base issued by Credicard and
the systems that had been operating at Credicard, which were transferred to Redecard.
Redecard S.A.

Initially, the RedeCard consortium was constituted with the participation of two consortium members:
Credicard and Redecard. In April 1997, in the first alteration to the Statutes of the RedeCard Consortium,
Credicard assigned part of its rights to the results from the Consortium directly to the controlling
shareholders, common to the two companies. In December 1997, in the second alteration to the Statutes, the
shareholder Itaú was entitled to the results on the same basis as Credicard, through the assignment of the
participation equivalent to the credit card base issued by Itaucard. In the third alteration in January 2006,
Credicard withdrew from the Redecard Consortium and the controlling shareholders of Redecard started to
receive the results, which until then, were distributed to Credicard. Finally, the fourth and last alteration,
dated March 31, 2007, refers to the interruption and liquidation of the Redecard Consortium.
The legal basis for the Contract for the Constitution of the Redecard Consortium was articles 278 e 279
of law 6.404 of December 15, 1976; it was not a legal entity, and its objects, according to the Third Clause of
the Contract, consisted of " common enterprise to produce the following services related to the use, through
the Redecard system, of credit cards issued by its Members:
a. Administration of the network of merchant entities that accept transactions using credit cards;
b. Obtaining, transmitting, processing and settling transactions generated from using credit cards;
c. Develop other activities that are similar or related to the interests of the Consortium.
The rights and obligations related to income and the allocation of expenses were regulated in annexes I, II, III
and IV. Annex I established the rules to preserve the results from the portfolio of credit cards issued by Credicard
and subsequent to December 1997, also by Itaucard. This Annex determined the distribution to the Consortium
members Credicard and Itaucard, of the income from the discount rates charged to the merchant entities, from
using the credit cards issued by Credicard and Itaucard, in proportion to their participation in the income earned.
Annex II includes the income from the discount rates earned from transactions undertaken at the
merchant entities, using credit cards issued by the other credit card administrators authorized by MasterCard,
both in Brazil and overseas. In addition, income from the hire of POS equipment was also included. The
income was distributed to the Consortium members based on their shareholding interest in Redecard, except
MasterCard.
The purpose of separating the consortium members, in accordance with these two Annexes, was to admit
new partners that issue credit cards with the MasterCard banner, increasing and encouraging business for
Redecard, but, at the same time, the shareholders did not wish to share the results that could be earned from
the credit card base that Credicard had built up over the 25 years of its operations.
Annex III of the Consortium's contract included income from the discount rates charged to the
establishments on transactions undertaken using debit cards with the banners Redeshop and Maestro, and also
income from anticipation of amounts payable to the establishments.
Annex IV of the Consortium's contract presented a summary and a diagram of the distribution of income,
based on the nature of such, according to Annexes I, II and III.
Expenses incurred by Redecard, the leader of the consortium, were allocated between all of the consortium
members based on the nature of the expense and considering the proportional participation of each member in
the consortium income. Thus, all of the expenses were allocated except those of a financial nature, which were
allocated directly to the results from the business from the anticipation of amounts payable to the establishments.
Redecard S.A.

The partnerships idealized at the time of constituting the Redecard Consortium, however, did not occur,
and in fact the changes in the corporate structure of Credicard in 2004, resulted in changes being made to the
Consortium Contract.
The Redecard Consortium operated until March 31, 2007, and its objects referred to the same activities
as those currently undertaken by the Company, which include the registering of establishments to accept
credit card payments and also obtaining, transmitting, processing and settling transactions undertaken using
MasterCard and Diners credit and debit cards in Brazil. On this date, the members of the Redecard
Consortium were the controlling shareholders and Redecard.
The Company, as the leader of the Redecard Consortium, performed all of the activities and acts of the
Redecard consortium. Since March 31, 2007, with the end of the activities undertaken by the Redecard
Consortium, the obligations, rights, income, expenses and financial and operational results, refer solely to
Redecard.
Results
Redecard's statements of income for the three months ended March 31, 2006 and 2007, refer only to the
results from the distribution of the Company's participation in the Redecard consortium.
To facilitate the analysis of the Company's audited financial statements, in the past, a note to the
statements was prepared with the heading "results from Redecard Consortium participation", which reported
the income, expenses and operational profit of the Redecard Consortium, and not just the results from
Redecard S.A.'s participation.
Thus, the Company believes that the statement of income that best reflects the operational activities for the
three months ended March 31, 2006 and 2007, is that presented in note 14 "results from participation in the
consortium", since it presents the total results for the period from the activities currently undertaken by the
Company.
2 Distribution of net income to the consortium members
Net income recognized by Consórcio Redecard is distributed according to criteria set forth in the
Consórcio Redecard Organization Agreement, consisting basically of the allocation of income and expenses.
3 Presentation of significant accounting policies
The financial statements were prepared based on Corporate Legislation and accounting practices adopted
in Brazil, observing the rulings including in Corporate Law. These financial statements include the alterations
introduced by the following accounting norms: Accounting Norms and Procedures, number 27 – NPC 27,
"Presentation and Disclosures", Accounting Norms and Procedures, number 22 – NPC 22, "Provisions,
Liabilities, Contingent liabilities and Contingent Assets", both issued by IBRACON – Institute of
Independent Auditors in Brazil, on October 03, 2005.
These financial statements were prepared as part of the process to register the Company with the
Securities Commission, and therefore the figures for the same period from the previous year have been
presented for comparison purposes.
Redecard S.A.

a. Statement of income
Income and expenses are recognized in the income statement on an accruals basis. Income earned from
credit and debit card transactions is appropriated to results on the dates the transactions are processed. Income
from services provided to partners and to trade merchants is recognized to results based on the realization of
such.
Consórcio Redecard income and expenses (Note 14) were recorded for the consortium members and for
Redecard S.A according to their respective shares in the consortium, based on the criteria stated in the
Contract for Constituting the Consórcio Redecard.
b. Accounting estimates
The preparation of the financial statements in accordance with accounting practices adopted in Brazil
requires that management uses its judgment in determining and recording accounting estimates. Significant
assets and liabilities subject to these estimates and assumptions include the residual value of property, plant
and equipment, the provision for doubtful accounts, deferred income tax and social contribution and the
provision for contingencies. The settlement of transactions involving these estimates may result in
significantly different amounts due to the inaccurates inherent to determining such. The Company reviews the
estimates and assumptions at least annually.
c. Foreign currency
Monetary assets and liabilities denominated in foreign currencies were translated into reais at the foreign
exchange rate ruling at the balance sheet date. Foreign exchange variations arising on translation are
recognized in the income statement. These balances originate mainly from transactions undertaken at
establishments using credit and debit cards issued by foreign institutions, licenced to use MasterCard and
Diners Club International cards.
d. Property, plant and Equipment
Property, plant and equipment are recorded at acquisition cost and depreciated using the straight-line
method at rates which take into account the estimated useful lives of the assets. The costs incurred from
replacing a fixed asset component are not capitalized given the difficulty in estimating the future economic
benefit from such.
e. Income tax and social contribution
The income and social contribution taxes, both current and deferred, are calculated based on the rates of
15% plus a surcharge of 10% on taxable income in excess of R$240 thousand for income tax and 9% on
taxable income for social contribution on net income.
The provision for these taxes is recorded to "Tax liabilities". The deferred tax assets arising from
temporary differences have been recorded in accordance with CVM Instruction 371 of June 27, 2002, and
take into consideration past profitability and the expectation of future taxable profits based on a technical
viability study (Note 5).
Redecard S.A.

f. Accounts receivable – Issuers and accounts payable to trade merchants
These amounts refer to the values of transactions undertaken by holders of credit cards issued by
financial institutions licensed to use MasterCard and Diners Club International cards; the balances for
accounts receivable from issuers are net of interchange fees and the balances for accounts payable to
merchants are net of administration fees (discount), with recovery from the issuers and payment to the
merchants falling due within one year.
g. Borrowings
Stated at the amounts borrowed from financial institutions, plus contractual charges incurred to the
balance sheet date.
h. Provision for doubtful debts
The provision for doubtful debts is recorded based on an analysis of risks from recovering credits
receivable from issuers and merchants, mainly based on the past history of recovery, default and inactivity of
issuers and merchants, and is recorded for an amount considered sufficient to cover possible losses. At March
31, 2007 and 2006, it was not necessary to record a provision for accounts receivable from issuers. A
provision has been recorded for the rental of equipment for capturing transactions (POS) installed at
merchants considered to be inactive by the Company, and for amounts claimed by credit-card holders against
merchants that had not been registered and approved by the Company, at the time of the complaint or that do
not have credits receivable from transactions undertaken using MasterCard and Diners Club International
credit cards.
i. Contingent liabilities
These arise from legal processes inherent to the normal course of business, filed by third parties and ex-
employees, through civil and labor claims. These contingencies are evaluated by legal advisors and are
quantified using models and criteria that enable the amounts to be adequately determined, despite the
uncertainty inherent to the period and amount. The contingencies are classified between probable, for which a
provision is recorded; possible, which are disclosed but for which no provision is recorded; and remote, for
which disclosure or a provision is not required. The provisions that involve tax processes are recorded for an
amount equivalent to the total value of the taxes being legally disputed, plus updates for inflation and interest
for late payment, as if due, to the balance sheet date.
The provisions for the proceedings with the Labor Courts related to Redecard have been recorded for the
total value of the labor claims, updated for inflation, plus interest calculated to the balance sheet dates.
j. Provisions
A provision is recognized in the balance sheet when the Company has a legal obligation or is constituted
as a result of a past event, and it is probable that economic resources will be required to settle the obligation.
Provisions are recorded considering the best estimates of the risk involved.
k. Other current and non current assets and liabilities
Stated at net realizable values, at known or calculated amounts, plus, when applicable, the related
charges, monetary and/or exchange variations incurred to the balance sheet date.
Redecard S.A.

4 Cash and cash equivalents
Consist of amounts available in the Company's bank accounts, represented by amounts deposited with
financial institutions that issue credit cards, with these amounts used to settle transactions with merchants on
the first business day of the month subsequent to the balance sheet date.
5 Tax credits
a. Tax credits held at the balance sheet date are recorded as assets, as deferred income tax and social
contribution, and calculated on the temporary differences arising from the following non deductible
provisions at March 31, 2007:
Income tax Social contribution

Temporary differences:
Provision for tax contingencies............................................................ 17,517 3,896
Provision for civil contingencies ......................................................... 1,599 576
Provision for labor contingencies ........................................................ 1,845 664
Provision for other expenses................................................................ 40,069 14,425
Total ...................................................................................................... 61,030 19,561
b. Expected realization, which takes into consideration the nature of the non deductible provisions and
future taxable profits being generated, is presented below:
Year of realization Income tax Social contribution

2007 ........................................................................................................ 35,167 12,265
2008 ........................................................................................................ 7,450 1,561
2009 ........................................................................................................ 5,263 1,839
2010 ........................................................................................................ 13,150 3,896
Total ....................................................................................................... 61,030 19,561
Deferred income tax and social contribution are recorded to reflect the future tax effects
attributable to temporary differences between the tax base for assets and liabilities and the
respective book values.
The book value of the deferred tax asset is periodically revised, in the event of significant
factors that alter the forecasts, and these are revised by the Company during the year.
Management considers that the deferred assets arising from temporary differences will be
realized at the time of the final resolution of the contingencies and events. At March 31, 2007 and
2006, the Company did not have significant balances for tax losses and negative taxable base.
Redecard S.A.

6 Property, plant and equipment
Annual 2007 2006

depreciation rate Cost Accumulated Cost Accumulated
(%) value depreciation value depreciation
Equipment for recording transactions (POS) . 33.33 606,584 (462,893) 530,271 (354,508)
Network equipment for transactions
capturing ...................................................... 20 33,875 (29,063) 32,341 (24,826)
EDP Equipment ............................................. 20 15,362 (11,432) 19,811 (13,721)
Data processing system – Softwares .............. 20 29,364 (19,704) 23,741 (15,911)
Vehicles ......................................................... 20 4,829 (1,820) 4,602 (1,527)
Fixtures and fittings ....................................... 10 3,174 (1,731) 2,973 (1,433)
Facilities......................................................... 10 1,801 (873) 1,822 (719)
Leasehold improvements ............................... 9.5 7,636 (2,759) 6,352 (1,647)
Fixed assets in progress.................................. – 1,671 – 2,994 –
Total .............................................................. 704,296 (530,275) 624,907 (414,292)
The net amount reported as "Equipment for Capturing Transactions (POS)" of R$143,691, in
2007, net of accumulated depreciation (R$175,763 in 2006), refers to the equipment for recording
electronic transactions available at the establishments registered with the Redecard System. At
March 31, 2007, the Company had installed 659,577 items of "POS" equipment, which represented
58.4% of the volume of transactions recorded electronically by the Company. Redecard has two
different types of equipment:
a. Fixed equipment, also called POS (Points of Sale) Desktop. At March 31, 2007, the Company
had installed 623,417 items of equipment.
b. Wireless equipment, also called POS Wireless. At March 31, 2007, the Company had installed
36,160 items of equipment, which were separated between:
• Indoor: for internal use by registered establishments.
• Outdoor: for external use by registered establishments.
Redecard S.A.

7 Borrowings
Represented by the contracts stated below and refer to fundings from financial institutions for the total
amount of R$361,888 (R$373,857 during the first quarter of 2006). There are no restrictive clauses or
reciprocal clauses in the contracts presented below.
Average period –
Domestic currency Days incurred 31/03/2007
Banco Bradesco .................................................................................................. 59 146,270
Financing, subject to variation in the rate for Interbank Certificates of
Deposit (CDI) forecast at 104.0%, with no guarantee. Maturities:
15% April 2007; 47% May 2007 and 38% August 2007
Banco Safra......................................................................................................... 65 209,648
Financing, subject to variation in the rate for Interbank Certificates of
Deposit (CDI) forecast at 103.2%, with no guarantee. Maturities:
40% in June 2007; 52% in July 2007 and 8% in August 2007
Guaranteed account........................................................................................... 5,970
Total .................................................................................................................... 361,888
8 Other accounts payable
Represented by the following obligations:
31/03/2007 31/03/2006
Due to suppliers and provisions for expenses ...................................................... 172,084 179,022
Participation in the consortium payable ............................................................... 196,177 123,053
Dividends to distribute ......................................................................................... 108,846 58,894
Total .................................................................................................................... 477,107 360,969
Redecard S.A.

Participation in the consortium payable – Refers to the amounts recorded as "participation in

Consortium payable" which refers to the results calculated for the period January 01, to March 31, 2007
(January 01, to March 31, 2006 – notes 1 and 15), according to the Contract for the Constitution of the
Redecard Consortium, with subsequent alterations. These amounts were settled in the month subsequent to
the results being calculated (April 2007 and April 2006).
Dividends to distribute – The amount recorded to this heading refers to the amount for Redecard S.A.,
the leader in the Redecard Consortium, from the distribution of the Consortium's results in accordance with
the Contract for the Constitution of the Redecard Consortium, according to the results calculated for the
period January 01 to March 31, 2007 (January 01, to March 31, 2006), (Notes to the financial statements 12
and 14). These amounts were liquidated, in accordance with article 16 of the Statutes, in the month
subsequent to the results being calculated (April 2007 and 2006).
9 Capital
Capital is represented by 1,878,329 shares, being 626,110 ordinary shares and 1,252,219 preference
shares, nominative, with no par value, distributed as follows:
%
Banco Citibank S.A. .............................................................................................................................. 31.9433
Banco Itaucard S.A. ............................................................................................................................... 31.9433
Unibanco – União de Bancos Brasileiros S.A........................................................................................ 31.9433
Mastercard International Incorporated ................................................................................................... 4.1701
As from 2006, the shares belonging to FNC – Comércio e Participações Ltda. were transferred to Banco
Citibank S.A., and the shares belonging to Unicard Banco Múltiplo S.A., were transferred to Unibanco –
União de Bancos Brasileiros S.A.
Revenue reserves represent the amounts recorded to the Legal Reserve, at the rate of 5% of net profit,
determined each financial year, under the terms of article 193 of Law 6404/76, up to a limit of 20% of capital.
The preference shares do not have voting rights, but have priority in the distribution of dividends as
provided in Law 6404/76, with the new text provided under Law 9457/97. Minimum statutory compulsory
dividends correspond to 25% of adjusted net profit for the year. The dividends for the first quarter of 2007
were distributed in April 2007.
Dividends were calculated as follows:
31/03/2007 31/03/2006
Net profit for the period ................................................................................. 108,846 56,273
Calculation base ............................................................................................. 108,846 56,273
(=) Dividends payable.................................................................................... 108,846 56,273
Redecard S.A.

10 Related party transactions
The related party transactions at March 31, 2007 and 2006 refer to accounts receivable from the issuers,
who are also the Company's controlling shareholders, and also the cost of services provided by Orbitall.
31/03/2007 31/03/2006
Accounts receivable from issuers
Citibank............................................................................................................ 1,860,827 1,588,080
Itaucard ............................................................................................................ 3,187,704 2,656,837
Unibanco .......................................................................................................... 853,770 701,317
Service expenses
Orbitall(1) ........................................................................................................ 11,071 12,462
(1) Orbitall Serviços e Processamento de Informações Comerciais S.A. is a subsidiary company of Itaú Holding
Financeira S.A., the same controlling shareholder of the controlling shareholder Itaú.
The amounts for accounts receivable from issuers refers to the amounts due to the Company, from
transactions from consumers undertaken using credit and debit cards with the banners MasterCard and Diners
Club, which will be subsequently paid out by the Company to the registered merchant establishments.
The terms for contracting the issuers are established based on the regulations and manuals issued by the
banners MasterCard and Diners Club. Consequently, these related party transactions are performed at prices
and terms similar to those practiced by the other credit or debit card issuers authorized under the banners
MasterCard and Diners Club.
The Company agreed a service contract with Orbitall, including the maintenance and supply of hardware
infra-structure, both for the mainframe platform and for the distributed platform, and also for the
management, operation and administration of communications between these platforms and third party
platforms, and also data processing. The contractual terms, for both the prices and the minimum levels for the
services contracted, are consistent with those normally found on the market.
On November 15, 1996, Redecard agreed with MasterCard International a Contract for Licensing Brand
names, whereby MasterCard International licensed the Company, with non exclusive rights, to use the
MasterCard brand name for registering merchant establishments. The period for this contract is not specified,
and Redecard has to comply with the standards established by Mastercard for registering merchant
establishments, which include rules on the signs for the establishments, ownership rights to brand names, etc.
On October 24, 2002, Redecard agreed with MasterCard International a Contract for Licensing Brand
Redeshop brand name, previously acquired by MasterCard International from Credicard.
On April 27, 2005, Redecard agreed with MasterCard International a Contract for Licensing Brand
MasterCard brand names, including MasterCard Maestro and other logos under the MasterCard brand name.
11 Contingent liabilities
Redecard S.A. is party to administrative processes and legal claims with various courts and government
bodies, arising from its normal operations, which involve tax, labor, civil and other questions.
Redecard S.A.

The balances in the financial statements refer to the provisions which, according to Company
management, and based on the opinion of its legal advisors, have been recorded for amounts considered
adequate to cover losses expected to be incurred. These provisions are periodically reviewed by Company
management and consist of: Provisions for tax contingencies – R$102,545 (first quarter of 2006 –
R$197,380) and Civil and Labor contingencies – R$13,773 (first quarter of 2006 – R$11,077). The
corresponding legal deposits in guarantee are corrected according to the regulation in force and are reported
as non current assets – R$13,707 (first quarter of 2006 – R$13,003).
a. Composition of provisions
Management, based on information from its legal advisors, analyses of pending legal claims and, with
respect to labor claims, based on prior experience from amounts claimed, has recorded a provision for an
amount considered sufficient to cover losses estimated from the outstanding claims, as follows:
Nature 31/03/2007 31/03/2006

Civil ...................................................................................................................... 6,396 5,628
Labor..................................................................................................................... 7,377 5,449
Tax........................................................................................................................ 102,545 197,380
Total ..................................................................................................................... 116,318 208,457
b. Movement on provisions
December
31, 2006 January 01, to March 31, 2007
Opening Additions to Closing
Nature balance provision Used Reversals balance
Civil ............................................................................ 6,168 228 – – 6,396
Labor........................................................................... 7,412 159 (194) – 7,377
Tax.............................................................................. 170,164 6,927 – (74,546) 102,545
Total ........................................................................... 183,744 7,314 (194) (74,546) 116,318
Management, based on information from its legal advisors, during the period analyzed reversed amounts
recorded as "Tax Contingencies". These amounts refer to: a) PIS and Cofins calculated on financial income, for
the amount of R$48,017; and b) deductibility of CSLL charged on adjusted profit, for the amount of R$26,529.
c. Total risk
Nature 31/03/2007 31/03/2006

Civil ...................................................................................................................... 6,396 5,628
Labor..................................................................................................................... 7,377 5,449
Tax........................................................................................................................ 102,545 197,380
Total ..................................................................................................................... 116,318 208,457
The value of the total risk from contingencies reported above was calculated considering the claims filed
by plaintiffs for each of the processes.
Redecard S.A.

d. Tax processes (disputed in court)
Provisions have been made for the legal processes of a tax nature for the total value of the risk and
consist of the following:
2007
Tax on services from hire of assets............................................................................................................ 44,642
Non deductibility of social contribution on net profit in the taxable profit calculation ............................. 41,774
PIS and COFINS – Extension of the calculation base on the results from foreign exchange variations.... 5,426
PIS and COFINS – Injunction against laws 10.637/02 and 10.833/03 ...................................................... 6,370
CIDE – Suspension of tax liability ............................................................................................................ 3,697
Demand for withholding tax, PIS and COFINS for 1999 – PIS Repique .................................................. 636
Total .......................................................................................................................................................... 102,545
ISS on hire of assets – Service Tax or ISS, is a tax charged by the municipal and due on income earned
from services of any nature. The Company, understanding that the hire of assets does not constitute a fact
subject to ISS, has not paid the tax on this income as from November 2000. However, since it considers this
tax a legal obligation, the Company has recorded a provision until Complementary Law 116/03, of August
2003, comes into force. A Declaratory Action was filed, aimed at the anticipated concession of the effects of
the court order under the terms of article 273, I, of the civil process code, combined with article 151, V, of the
National Tax Code, with the text provided by Complementary Law 104/2001, to suspend the liability for ISS,
on rental of assets, in the municipals of São Paulo, Belo Horizonte, Brasília, Rio de Janeiro, Recife, Salvador,
Manaus and Maceió. According to the evaluation performed by Management and its legal consultants, the
risk of loss is considered possible.
Non deductibility of social contribution from income tax base – The Company filed an action in court
against the Federal Tax Office, on April 16, 1998, through a Court injunction filed against Law 9.316/96,
which made social contribution on net profit non deductible for purposes of determining taxable profit. The
risk of loss is possible, however, since it refers to a legal obligation, a provision has been recorded.
PIS and COFINS
a. In 2001, the Company through the concession of the restraining order, related to the base period
February 1999 and subsequent periods, to suspend the liability for PIS and COFINS under the terms of
Law 9.718/98, at the rate of 3%, on income that does not fall within the concept of revenue (financial
income, including monetary variations and interest income, etc.), guaranteeing the payment in
accordance with Complementary Law 70/91, or, at least, to guarantee the right to set off in full the
expenses arising from foreign exchange variation, including that from repass and swap/hedge contracts,
for purposes of calculating PIS and COFINS. In April 2002, a sentence was published which partially
granted the injunction filed, which declared the unconstitutional nature of paragraphs 1 of article 3, of
Law 9.718/98, enabling the Company to pay PIS and COFINS – in accordance with the concept of
revenue stated in Complementary Law 70/91, but maintaining the rate of 3%. The Federal Tax Office has
appealed.
Redecard S.A.

In February 2007, a decision was published that was unfavorable to the Federal Tax Office, confirming
the sentence that declared the unconstitutional nature of the increase in the PIS and COFINS calculation
base, which should be considered as revenue to the Company, but retaining the rate of 3%. The Company
requested that the Supreme Court provide further clarifications as to the concept of revenue. With respect
to the risk involved, the Supreme Court decided that COFINS and PIS, under the terms of Law 9.718/98,
can only be demanded on income arising from the sale of goods and/or services. Given the jurisprudence
established, as a result of the decisions passed by the Supreme Court, and considering the evaluation of
the loss, the Company has reversed the provisions, as reported in item "b" – Movement on provisions.
Since the income arising from the foreign exchange variations was the specific object of the declaratory
appeals, the Company decided to maintain the provision recorded, thus observing the accounting
concepts for registering legal obligations, since the risk from loss is considered to be possible.
b. In March 2004, the Company filed an injunction against Laws 10.637/02 and 10.833/03, suspending the
liability for PIS and COFINS contributions, calculated using the non cumulative method, at the rates of
1.65% and 7.60%, respectively, and made legal deposits for the amounts calculated each month. In July
2004, a sentence was published judging the request to be unfounded. Consequently, the Company
requested an official dispatch to Caixa Econômica Federal, so that the legal deposits could be converted
to income for the State. The accumulated value of the legal deposits is R$6,370.
c. In October 2004, Redecard was informed of a tax foreclosure with respect to a debt from "PIS Repique"
for 1999, for amounts declared in the DCTF but not located in the payments made. In the same month,
Redecard requested the suspension (i) of the course of the tax foreclosure; and (ii) the cancellation of the
Company's name in the register of tax debtors with the Federal Government. In November 2004, a legal
decision was passed in favor of the two requests. In July 2005, a petition was dispatched with a copy of
the payment document and in the following month, a stay of execution was registered, which is awaiting
an opinion to be given by the National Treasury. The tax foreclosure has been suspended. The risk of
loss has been classified as possible. The provision recorded is for the amount of R$0.6 million.
Contribution for Intervention in the Economic Domain (CIDE) – Court injunction aimed at
suspension of liability for payment of CIDE, Law 10.168/2000, altered by law 10.332/2001. In July 2004, a
sentence was declared judging the request unfounded. An appeal was filed in July 2004, and since then the
Company has made legal deposits for the amounts. In September 2006, the Company requested the
withdrawal of the appeal, and requested an official dispatch to the Caixa Econômica Federal, to enable the
legal deposits to be converted to income for the State. The accumulated value of the legal deposits is
R$3,697.
Management understands that since provisions have been made for all of the tax, labor and civil
discussions, it does not anticipate additional significant reductions to the Company's shareholders'
equity/results, when the processes are concluded.
Redecard S.A.

12 Income tax and social contribution:
Presented below is the effective rate for income tax and social contribution for the periods January 01 to
March 31, 2007 and 2006:
31/03/2007 31/03/2006
Net profit before income tax and social contribution...................................................... 149,092 83,573
Income tax and social contribution at the rates in force – 34%....................................... 50,691 28,415
Effect from net permanent differences............................................................................ 1,394 (1,115)
Reversal of provision ...................................................................................................... (11,839) –

Income tax and social contribution ................................................................................. 40,246 27,300
Current ............................................................................................................................ (22,750) (24,400)

Deferred .......................................................................................................................... (29,335) (2,900)
Reversal of provision ...................................................................................................... 11,839 –
13 Financial instruments
The estimated realizable values of the Company's financial assets and liabilities were determined based
on information available on the market and appropriate evaluation methodologies. However, considerable
judgment was required in interpreting market data to arrive at the most appropriate estimated realizable
values. Consequently, the following estimates do not necessary reflect the amounts that could be realized on a
current exchange market. The use of different market methodologies could have a material effect on the
estimated realizable values.
These instruments are managed by means of operational strategies aimed at liquidity, profitability and
security. The control policy consists of permanently accompanying the rates contracted compared to market
rates in force. The Company does not make speculative investments in derivatives or any other high risk
assets.
a. Composition of balances
In compliance with CVM Instruction 235/95, the book balances and the market values of financial
instruments included in the balance sheet as at March 31, 2007 and 2006, are presented below:
Description Book balance Market value

Borrowings – Domestic currency ......................................................................... 361,888 361,888
Redecard S.A.

b. Criteria, premises and limitations adopted to calculate market values
• Borrowings
The market values of borrowings were calculated based on their present values calculated based on
future cashflows, using interest rates applicable to instruments of a similar nature, with similar terms
and risks, or based on market quotations for these securities.
• Limitations
The market values were estimated at the balance sheet date, based on 'relevant market information".
Any changes in the premises could significantly affect the estimates reported.
c. Credit risk
The values for accounts receivable from issuers represent the values of transactions undertaken by
cardholders issued by financial institutions licensed by the banners MasterCard and Diners Club International
and are guaranteed by these banner institutions in the event of default. These guarantees are stipulated in the
regulations issued by these two credit card systems. In addition, MasterCard stipulates the requirement for
effective guarantees (real or bank guarantees) for each participant in the system, without which it is not
possible to obtain a license, or the license could be lost if this requirement is not fulfilled.
The company is the only registering entity in Brazil for the banners MasterCard and Diners Club
International and has a specific policy for registering and approving trade merchants, for them to accept these
two credit cards for their commercial and financial activities.
This policy defines the criteria for approving trade merchants, which considers, amongst other factors,
the type of trade activity and the time they have been trading, and also specifies the documents required and
the investigation method to enable the Company to register the trade merchant.
The Company has operational systems and a portfolio management area that accompanies the sales
performance recorded daily by the approved merchants, and any deviations in performance are monitored and
measures are taken to mitigate losses being incurred by any of the participants in the credit card system.
For those authorized merchants that do not have their own systems for recording transactions, the
Company can deliver equipment for registering electronic transactions (POS), under rental contract. The
rental value is deducted, on the due date, from the value of the transactions settled with the merchants.
However, it is possible that the rent is not received on the due date in the event balances payable by the
merchants do not exist. In such cases, the Company charges the amount using firms specialized in recovering
credits, and significant losses from rents may exist.
The systems used by the credit card companies also provide for the possibility that transactions
undertaken using credit cards are questioned by the titleholders, within a certain period as from the date of
performing the transaction. If the merchant is not authorized on the date of the complaint or there are no
amounts receivable from the Company, collection is made through firms specialized in recovering credits,
with the possibility of losses being incurred by the Company.
Redecard S.A.

The Company also has a provision for doubtful debts, for the amount of R$17,347 thousand (first quarter
2006 – R$16,685 thousand) representing 29.4% of the balance for other accounts receivable outstanding (first
quarter 2006 – 46.3%), to cover credit risks.
d. Foreign exchange risk
The Company's income is not subject to significant variations from the effects of foreign exchange
variations on liabilities tied to foreign currencies, mainly the North American dollar.
e. Interest rate risk
The Company's results are susceptible to significant variations from borrowings contracted based on
variable exchange rates.
In accordance with its financial policies, the Company has not undertaken operations involving financial
instruments of a speculative nature.
14 Results from Redecard Consortium Participation
The net income of Consórcio Redecard, for the periods ended March 31, 2007 and 2006, is composed of
the following:
31/03/2007 31/03/2006
Net revenue
Operational revenue........................................................................................... 418,188 361,481
Taxes on services ............................................................................................... (15,279) (13,501)
PIS (2,758) (3,217)
COFINS ............................................................................................................. (16,715) (16,956)
Financial revenue............................................................................................... 208,031 148,516
Financial expenses ............................................................................................. (45,672) (55,052)
Net revenue .......................................................................................................... 545,795 421,271
Operating cost .................................................................................................... (62,687) (70,883)
Gross profit.......................................................................................................... 483,108 350,388
Operational expenses
Administrative ................................................................................................... (51,297) (66,965)
Administrative – provision for profit share........................................................ (6,738) (6,892)
Depreciation and amortization ........................................................................... (28,265) (34,636)
Other operational expenses ................................................................................ (51,539) (52,870)
(137,839) (161,363)
Operational profit.................................................................................................. 345,269 189,025
Redecard S.A. .................................................................................................... 149,092 83,573
Other consortium members................................................................................ 196,177 105,452
Total ..................................................................................................................... 345,269 189,025
Redecard S.A.

15 Subsequent events
The Redecard Consortium operated until March 31, 2007, and its activities were the same as those
currently undertaken by the Company, which include the registering of establishments to accept credit card
payments and also obtaining, transmitting, processing and settling transactions undertaken using MasterCard
and Diners credit and debit cards in Brazil. The members of the Redecard consortium are the same controlling
shareholders of Redecard S/A.
On March 31, 2007, according to the "Term of Dissolution of the Redecard Consortium", the consortium
members approved the dissolution and liquidation of the Redecard Consortium. Consequently, Redecard will
exercise, under its own name, all of the activities which until then were the responsibility of the Redecard
Consortium – related to the operationalization and functioning of the Redecard System.
In order to adapt to the New Market rules, the Company revised its Statutes on May 28, 2007, converting
the preference shares (note 9) to ordinary shares.
Since this date, the liabilities, assets, income, expenses, and financial and operational results refer only to
Redecard S.A.
The subsequent effects refer directly to the tax calculations – PIS, Cofins, corporate income tax and
social contribution on profit. With respect to PIS and COFINS, the rates charged on operational income are
based on the non cumulative rule (Laws 10.637/02 and10.833/03), that is, 1.65% for PIS and 7.6% for
Cofins. This alteration will have an unfavorable impact on the Company's results. The rates previously
charged to the consortium members were based on the cumulative method (1.65% for PIS and 3% for
Cofins). The effect, in 2007, will be approximately R$50 million, that is, 3.2% of operational income. For
income tax and social contribution the alteration will be made to the calculation base, which will be the total
LAIR for the business. Previously, the LAIR was distributed to the consortium members, and taxation for
Redecard S.A. referred only to its share in the Consortium. The rate remains the same, that is, 34%. (25%
IRPJ and 9% CSLL).
16 Additional information
a. On November 15, 1996, Redecard agreed with MasterCard International to a Contract for Licensing
Brand names, whereby MasterCard International licensed the Company, with non exclusive rights, to use
the MasterCard brand name for registering merchant establishments. The period for this contract is not
specified, and Redecard has to comply with the standards established by Mastercard for registering
merchant establishments, which include rules on the signs for the establishments, ownership rights to
brand names, etc.
The obligations assumed by Redecard towards MasterCard International, include the concession or
delivery of formal guarantees for all of the amounts considered exposed, according to the Regulations
and Policies of the MasterCard banner. The exposed amounts are considered to be those arising from
transactions undertaken using credit cards issued with the banner MasterCard received from the issuers
of Redecard but still not paid to the establishments. This exposure is equivalent, on average, to three days
worth of transactions.
Redecard S.A.

In order to provide this guarantee, the Company contracted from Brazilian financial institutions, that are not
shareholders, the concession of surety letters, for approximately R$1.1 billion, with the beneficiary being
MasterCard International. The related financial costs are supported in full by Redecard. The surety letters
were issued on March 12, 2007, and mature in one year, on March 12, 2008, and submission of such to
Mastercard is an essential condition for the continuity of the licensing of Redecard by MasterCard:
Financial institution Value – R$ million

Banco Santander .................................................................................................................... 342
Banco do Brasil...................................................................................................................... 300
Banco Bradesco...................................................................................................................... 246
Banco Real ............................................................................................................................. 142
Banco Safra ............................................................................................................................ 70
The Company's Statutes prohibit sureties, bonds, endorsements or any other guarantees from being
provided that are not related to the corporate objects, that is, contrary to that provided in the Statutes, and
the surety, bond or other guarantee, with the exception of bonds or other guarantees necessary for the
transfer and accommodation of the employees.
The Company does not provide a surety, bond or guarantee without previous authorization from its
Board of Directors, under the terms of article 16, letter "f" of its Statutes.
b. Although the Company has reported a low risk from claims, it adopts the policy to contract insurance
coverage for its assets. The insurance policies contracted with Royal SunAlliance, through AON Risk
Services, as the Company's insurance broker, effective from April 2007 to April 2008, are divided as
follows:
Sector Assets assured Value At risk Amounts covered

RD Equity Buildings, fixtures, fittings and facilities that R$27 million (*)
comprise the Company's establishments,
(head office and branches), described in the policy.
Vehicles All of the company's vehicles R$5 million R$5 million
"POS" equipment Equipment allocated to the network of (**) R$500 thousand

establishments registered with Redecard against the
risk of fire, lightening, theft and/or burglary, etc.
(*) The most significant insured values, according to the insurance policy, are: (i) fire, lightening and explosion, for
the Company's offices – R$23 million; (ii) Civil Responsibility – R$2 million.
(**) The total value of this equipment is approximately R$600 million, with the purchase cost recorded to the fixed
asset account – Equipment for capturing transactions , (POS). This equipment is installed at the establishments
approved by Redecard throughout Brazil, amounting to more than 1 million locations. In order to define the
"value of the risk", several variables are analyzed, including the probability of simultaneous claims being made
at all of the establishments. Historically, the value of the claims made during the duration of the policy, was
approximately R$100 thousand.
c. Employee participation in the Company's results was calculated based on the plan for goals established
by management and approved by the Board of Directors. For the year ended December 31, 2006, the
Company paid a total of R$15.6 million to its employees as profit share (R$12.9 million for the year
ended December 31, 2005) which has been registered to the Consortium.
Redecard S.A.

d. Remuneration of directors and Board of Directors: (i) the directors are the Company's legal
representatives, responsible, mainly for its daily administration and for implementing the general
guidelines and policies established by the Board of Directors. They are all Brazilian and resident in
Brazil. The Directors are elected by the Board of Directors, and have a mandate of two years, with
re-election permitted, and they can at any time, be removed from office by the Board. According to the
Company's Statutes, the Board of Directors should comprise a minimum of three and maximum of ten
members. At March 31, 2007, the company's board of directors consisted of six members, with one
Managing Director. During the year ended December 31, 2006, remuneration paid to management
amounted to R$5.2 million, divided between: (i) salaries for the current year; and (ii) Company profit
share, for the year 2005. During the quarter ended March 31, 2007, management remuneration was
R$4.5 million, divided between: (i) salaries for the first quarter of 2007; and (ii) Company profit share
for 2006, in accordance with the program approved by the Board of Directors. The expenses related
directors fees are recorded to the Consortium, in accordance with the model in force (Note 1). The Board
of Directors comprises 4 effective members and 4 substitutes. The remuneration for the Board was fixed
at R$900.00 per annum, individually, in accordance with the ordinary general meeting of April 25, 2006.
However, in this same meeting, the board members presented a request to refrain from receiving this
remuneration, in favor of social works to be defined in the future.
The directors are not shareholders in the Company and do not have options to purchase shares granted by
the Company.
e. Redecard sponsors the retirement and Credicard supplementary retirement plans, both maintained by
CITIPREVI – Closed Entity for Complementary Pensions. Redecard is not the only sponsor for these
plans, but its adhesion to the plans is not joint, that is, the costing and the assets of the retirement plans to
which Redecard adhered are segregated from the other sponsors.
Redecard is responsible for 100% of the costs of the retirement benefits provided to its employees, which
is a defined benefit plan (Credicard Retirement plan – Sponsor: Redecard). In addition, it makes 50% of
the contributions for a retirement benefit plan for those employees that opted for this plan, which is a
defined contribution plan (Credicard supplementary retirement plan – Sponsor: Redecard). The
employees can participate in both plans, in one plan or in none of the plans.
The benefit plans are evaluated by an actuary at the end of the year, in order to check whether the
contribution rates are sufficient to create the reserves necessary for the commitments towards existing
and future payments. CITIPREVI – Closed Entity for Complementary Pensions, is a closed
complementary pension entity, constituted in accordance with complementary law 109, of May 29, 2001,
as a corporate entity that is separate from its sponsors.
Redecard S.A.

Presented below is a summary of the actuarial position for the liabilities related to the retirement plans, at
December 31, 2006, according to the actuarial reports issued by Mercer Human Resource Consulting
Ltda. and approved by the Deliberative Body of CITIPREVI – Closed Entity for Complementary
Pensions, under the terms of the Statutes of CITIPREVI, of June 28, 2005, approved by Notification
2256/SPC/DETEC/CGAT of November 30, 2005:
R$(000) Defined benefit Defined contribution

Actuarial liability........................................................................... 28.278 26.165
Benefits granted ............................................................................. 4.620 891
Benefits to grant............................................................................. 23.658 25.274
Accumulated technical surplus ...................................................... 6.335 686
Contingency reserve ...................................................................... 6.335 686
Funds (pension) ............................................................................. – 501
In the actuarial report issued on March 28, 2007, the "Unit Credit" method was used for the Defined
Benefit Plan (Credicard Retirement Plan – Sponsor: Redecard), given that the plan has surplus amounts,
and it is not necessary to maintain such conservative capitalization as that adopted for the actuarial
evaluation for 2005. The impact of this change is not to project salaries for the active population until
their retirement dates, with the commitments anticipated in the Plan recognized as they occur.
The values for the Pension Fund for the Defined Contribution Retirement Plan were constituted with the
contributions from the Sponsor, to which the participants were not entitled since they left the Sponsor
before they became eligible to the benefits from the Plan. According to Complementary Law 109, of
May 29, 2001, article 20, paragraph 3, the Sponsor will use the amounts from the Pension fund to offset
against its contributions during 2007.
The main factor that resulted in the surpluses being constituted in the Retirement Plans, both the defined
benefit plan and defined contribution plan, was the profitability earned by CITIPREVI in 2006, above the
actuarial goal for the Plans, which is IGP-DI + 6% p.a., in addition to the surplus that existed at
December 31, 2005.
There are no shortfalls of reserves for the plans and there are no overdue liabilities. The surplus amounts
were not registered as assets by the Company.
The cost for the Company, for the quarter ended March 31, 2007, from sponsoring the two retirement
plans, as described above, was R$239 thousand (quarter ending March 31, 2006, R$244 thousand). The
administrative excess of CITIPREVI can not exceed 15% of total income from contributions forecast for
2007, in accordance with item number 42 of Resolution MPAS/CPC number 1, of October 9, 1978.
The amount paid by the Company, during the quarter ended March 31, 2007, as administrative costs, was
R$39 thousand (quarter ending March 31, 2006, R$39 thousand). The Company is not responsible for
the administrative expenses of the tied or self-sponsored participants, who participate in the defined
contribution retirement plan, and who did not make payments to CITIPREVI for such.
The Company's Statutes do not include any reference to commitments in relation to equity shortfalls.

Redecard S.A.
December 31, 2006 and 2005
(A free translation of the original report in Portuguese
containing financial statements prepared in accordance
with accounting practices adopted in Brazil)
Final_Redecard_e5

Redecard S.A.
Contents
Management report F-37
Independent auditors’ repor F-40
Balance sheets F-41
Statements of income F-42
Statements of changes in shareholders’ equity F-43
Statements of changes in financial position F-44
Notes to the financial statements F-45 - 61
Final_Redecard_e5
Management Report 2006
Dear Shareholders:
We present the Management Report and the financial statements of Redecard S.A. for the year
ended December 31, 2006, together with the Independent Auditors’ Report.
Economic environment
The growth in GDP in 2006 was 3.7%, basically as a result of the increase in domestic demand,
which represented a significant change compared to the previous year, when expansion was
sustained by high export levels. Throughout 2006, IBGE introduced changes in the criteria for
calculating the GDP, recalculating the size of the economy since 1995, particularly from 2000 to
date.
The performance for Family Consumption completed, at the end of 2006, its 14th consecutive
quarter of marginal expansion (high of 4.3%, compared to the last quarter of 2005), due mainly to
the significant increase in real income (5.7%), the reduced costs of food products and continued
credit expansion (30.8% of GNP in December/2006 compared to 28.1% in December/ 2005).
The Gross formation of Fixed Capital (FBFC) reported significant growth during the year, mainly
during the last quarter (6.3% in the last quarter of 2006); far higher than the total GNP. This
performance was due to accelerated domestic demand, a decrease in real interest rates, the increase
in federal public investments and the relative decrease in the price of machinery and equipment
(due to the increase in the penetration of imported capital goods).
Even with the reduction in the nominal interest rates, measured by the CDI (from 17.99% p.a. in
December 2005 to 13.13% in December 2006), the anticipated increase in the exchange rate did
not occur, in fact the opposite occurred, the Real appreciated 6.28% between December 2005 and
December 2006 (average rate), which contributed towards maintaining Brazil’s surplus balance of
trade and the high level of real interest rates.
Inflation reported a significant reduction between 2005 and 2006, whether measured by the IPCA
(from 5.69% p.a. to 3.14% p.a.) or by the IPC-Fipe (decreased from 4.53% p.a. to 2.54% p.a.).
Panorama for the Sector
According to data published by ABECS (Brazilian Association of Credit Card Companies and
Services), the number of cards issued, which includes those with credit and debit functions and
those referred to as shop cards, reached a record of 360 million, representing growth of 16%
compared to 2005.
The number of transactions and respective financial volumes increased 18% and 20%,
respectively, demonstrating the growing acceptance of cards by trade entities and service entities,
replacing the traditional means of payment, mainly check payments.
According to the Central Bank of Brazil, the use of checks for transactions without using cash,
decreased from 62.5% in 1999 to 28.5% in 2005, whilst the use of credit cards increased from
16.5% to 42.8% during the same period. If we compare these data with the statistics from the Bank
for International Settlements (BIS), we can observe that in no other country was the replacement
between two forms of payment so rapid, mainly if we make the comparison between those
countries where there was a stronger preference for checks until recently, as was the case in Brazil.
In addition, according to data from ABECS, the financial volume from payments made using
payment cards reached the total of R$ 246 billion in 2006, which, according to forecasts by
Redecard, should represent penetration of 17.6% of total Family Consumption, but still
representing very low levels compared to those reported by countries such as the United States and
the European Community.
Company performance
Redecard recorded more than 1.5 billion transactions. Of this total, 1.2 billion refer to credit and
debit cards transactions using the banners MasterCard®, MasterCard Electronic® and Diners
Club International®, and debit cards from MasterCard Maestro®, RedeShop® and Maestro®,
promoting relationships with trade merchants and partnerships with banks and companies from a
variety of market segments.
The volume of transactions recorded during 2006 and the corresponding financial volume reported
growth in excess of that reported on the market, of 21% and 24% respectively, compared to that
recorded for 2005.
Redecard is the only authorizing entity in Brazil, for the banners MasterCard and Diners Club
International, which guarantee financial settlement with the merchants, for all of the transactions
undertaken using these cards.
The Company has developed state of the art technology in order to offer speed and security for
transactions undertaken at more than one million authorized establishments throughout the country,
located in all of the Brazilian municipals where the necessary technological resources exist for
recording transactions, such as electricity and telecommunications. Redecard has an information
technology structure appropriate for the company’s normal operations and also to cover
contingency plans and disasters.
The number of authorized trade merchants has grown at annual rates of 15% demonstrating the
Company’s commitment to enlarge the trade merchant base so that potential card holders are
interested in acquiring and using the cards.
We have invested significant sums in equipment for recording electronic transactions mainly for
cards with chips, thus participating with the Banners and the issuers to increase efficiency and
reduce the number of frauds to the electronic payment system. This equipment is acquire by
Redecard and then rented to the merchants, with Redecard guaranteeing installations and
maintenance.
These investments have been made using funds provided by Brazilian financial institutions, from
short term operations, without real guarantees, at normal market interest rates.
Of the total transactions processed, 99.9% are recorded electronically, with the majority,
approximately 62%, through equipment belonging to Redecard. Another important factor is that
90% of this equipment is capable of reading cards with chips, which has consequently resulted in
significant savings in the costs of recording transactions, as well as increasing security against
frauds.
During 2006, Redecard developed training programs to train its managers to develop skills aimed
at leadership, with the theoretical support from one of the most renown management teaching
institutions in Brazil, and has also continually provided specialization courses to improve the
technical skills of its employees.
Dividends are distributed quarterly from total net profit earned during the quarter, and distributed
based on the shareholder’s investment interest. These payments are made by the 15th of the first
month for each quarter, based on the results of the previous quarter, as anticipated distribution of
annual results, in accordance with Redecard’s Statutes.
The Independent Auditors of Redecard, KPMG Auditores Independentes, did not provide other
services during the year of 2006, besides those directly related to the independent audit work.
KPMG Auditores Independentes Central Tel 55 (11) 2183-3000
R. Dr. Renato Paes de Barros, 33 Fax Nacional 55 (11) 2183-3001
04530-904 - São Paulo, SP - Brasil Internacional 55 (11) 2183-3034
Caixa Postal 2467 Internet www.kpmg.com.br
01060-970 - São Paulo, SP - Brasil
Independent auditors’ report
To
The Shareholders and Board of Directors
Redecard S.A.
São Paulo - SP
We have examined the balance sheets of Redecard S.A. as of December 31, 2006 and 2005 and the
related statements of earnings, changes in shareholders’ equity and changes in financial position for
the years then ended, which are the responsibility of its management. Our responsibility is to
express an opinion on these financial statements.
Our examinations were conducted in accordance with auditing standards applied in Brazil and
included: (a) planning of the audit work, considering the materiality of the balances, the volume of
transactions and the accounting systems and internal accounting controls of the Company; (b)
verification, on a test basis, of the evidence and records which support the amounts and accounting
information which is disclosed; and (c) evaluation of the most significant accounting policies and
estimates adopted by Company management, as well as the presentation of the financial statements
taken as a whole.
In our opinion, the aforementioned financial statements present fairly, in all material respects, the
financial position of Redecard S.A. as of December 31, 2006 and 2005, and the results of its
operations, changes in its shareholders’ equity and changes in its financial position for the years
then ended, in conformity with accounting practices adopted in Brazil.
February 12, 2007, with the exception of the notes to the financial statements dated March 17,
2007, which were enlarged to better reflect the disclosures required by the Securities Commission
as reported in note 3.

CRC 2SP014428/O-6
Giuseppe Masi
KPMG Auditores Independentes, uma sociedade simples brasileira KPMG Auditores Independentes is a Brazilian entity and a member firm
e firma-membro da rede KPMG de firmas-membro independentes e of the KPMG network of independent member firms affiliated with
afiliadas à KPMG International, uma cooperativa suíça. KPMG International, a Swiss cooperative.
Redecard S.A.
Balance sheets
Assets Note 2006 2005 Liabilities Note 2006 2005
Cash and cash equivalents 4 215,369 13,891 Accounts payable to merchants 3f 9,420,451 7,313,320
Accounts receivable - Issuers 3f 9,940,542 8,006,121 Labor obligations 11,005 9,875
Other accounts receivable 56,767 35,284 Taxes payable 29,231 8,562
Deferred income and social 5 69,229 45,346 Borrowings 7 375,681 362,035
contribution taxes Other accounts payable 8 427,343 414,466
F-41
Non current assets Non current liabilities
Long-term assets 54,531 61,382 Long-term liabilities 183,744 195,770
Deferred income and social Provision for contingent liabilities 11 183,744 195,770
contribution taxes 5 40,697 48,947
Judicial deposits 13,834 12,435 Shareholders' equity 64,261 62,890
Permanent assets 175,278 204,894 Capital 9 53,552 53,552

Revenue reserve 10,709 9,338
Fixed assets 6 677,535 583,102
Accumulated depreciation 6 (502,257) (378,208)
10,511,716 8,366,918 10,511,716 8,366,918
See the accompanying notes to the financial statements.

0
Final_Redecard_e5
Redecard S.A.
Years ended December 31, 2006 and 2005
2006 2005
Result from Redecard Consortium Participation (Note 13) 442,763 285,808
(Operational profit from Consócio Redecard

in 2006 R$ 937,332 - R$ 654,872 in 2005)

Social contribution tax (39,675) (26,238)
Income tax (109,425) (72,816)
Net income for the year 293,663 186,754
Redecard S.A.

Revenue
reserve
Legal Retained
Capital reserve earnings Total
Balances at January 1, 2005 45,199 8,353 - 53,552
Capital increase 8,353 (8,353) - -
Net income for the year - - 186,754 186,754
Distributions:
Legal reserve - 9,338 (9,338) -
Dividends to be distributed - - (56,903) (56,903)
Balances at December 31, 2005 53,552 9,338 - 62,890
Distributions:
Legal reserve - 1,371 (1,371) -
Redecard S.A.

2006 2005
Sources of funds
From operations
Depreciation and amortization 134,195 153,587

Income/(expense) on sale of fixed assets (1,111) 110
(Gain)/loss on investments (28,313) 116
Decrease in long-term assets 6,851 -
405,285 340,567
From third parties

Disposal of fixed assets 4,097 903
Disposal of investments 28,313 -
Incrase in long-term liabilities - 46,482
32,410 47,385
437,695 387,952
Application of funds
Investments in
Fixed assets 107,565 124,293
Increase in long-term assets - 15,417
Decrease in long-term liabilities 12,026 -
Dividends distributed 292,292 177,416
411,883 317,126
Increase in net working capital 25,812 70,826
Changes in net working capital
2006 2005
Current assets 8,100,642 10,281,907 2,181,265 2,081,796

Current liabilities 8,108,258 10,263,711 2,155,453 2,010,970
Net working capital (7,616) 18,196 25,812 70,826
Redecard S.A.

Years ending December 31, 2006 and 2005
1 Operations
Redecard S.A. was constituted on November 1, 1996, and its main activity is to act as a trader for
transactions using the credit cards under the banners MasterCard®, MasterCard Electronic® and
Diners Club International®, and with the debit cards MasterCard Maestro®, RedeShop® and
Maestro®, through registering and approving trade merchants.
The business model for Redecard’s trading activities consists of registering and approving trade
and service entities, and also capturing, transmitting, processing and settling transactions that use
the aforementioned credit and debit cards.
Redecard’s operations are organized between the following businesses:
a. Credit and Debit cards: through capturing, processing and settling trade and financial
transactions using the aforementioned cards. For the services provided, Redecard charges
these establishments an administration fee, which comprises the issuer’s remuneration, referred
to as interchange and remuneration for the services provided by Redecard;
b. Anticipated financial settlement to registered trade merchants for amounts receivable from the
credit cards MasterCard and Diners Club International, through requests made by these
establishments and only for those transactions made using these cards. Redecard earns
financial income from these operations;
c. Hire of equipment to register the electronic transactions, referred to as POS. The Company
earns monthly income from hiring this equipment;
d. Services provided to partner companies through capturing, routing and transmitting

transactions made using benefit cards (called vouchers), such as: food, meals, fuel, etc, as well
as Private Label cards, usually issued by financial companies. The income earned by
Redecard consists of the fees charged to the voucher and financial companies;
e. Services provided to trade merchants by means of consulting checks using the POS equipment,
together with the SERASA data base. The income earned by Redecard consists of the fees
charged directly to these establishments and a small margin on the costs from SERASA.
Redecard S.A.

Redecard is the leader of a consortium (Consórcio Redecard), constituted on November 1,

1996, the date the Company started operating, which consists of the following consortium
members, besides Redecard S.A.: Banco Itaucard S.A., Unibanco - União de Bancos
Brasileiros S.A. and Banco Citibank S.A.
Consórcio Redecard is not a corporate legal entity; and operated as a common enterprise to
provide services related to the use of credit and debit cards and other means of payment, at
establishments registered and approved by Redecard in Brazil, and its activities included
developing promotional and publicity activities aimed to encourage the use of the
aforementioned cards.
Redecard S.A., as the leader of Consórcio Redecard, performs all acts necessary in order for it
to operate through its legal representatives and/or attorneys-in-fact, including active and
passive representation before third parties (see Note 13 - Equity in income of Consórcio
Redecard).
2 Distribution of net income to the consortium members
Consórcio Redecard Organization Agreement, consisting basically of the allocation of income and
expenses.
3 Presentation of significant accounting policies
The financial statements were prepared based on Corporate Legislation and accounting practices
adopted in Brazil, observing the rulings including in Corporate Law. These financial statements
include the alterations introduced by the following accounting norms: Accounting Norms and
Procedures, number 27 - NPC 27, “Presentation and Disclosures”, Accounting Norms and
Procedures, number 22 - NPC 22, “Provisions, Liabilities, Contingent liabilities and Contingent
Assets”, both issued by IBRACON - Institute of Independent Auditors in Brazil, on October 3,
2005.
Redecard S.A.

These financial statements were prepared as part of the process to register the Company with the
Securities Commission (CVM), and therefore the figures for the same period from the previous
year have been presented for comparison purposes, as required by the CVM.
a. Statement of income
Income and expenses are recognized in the income statement on an accruals basis. Income
earned from credit and debit card transactions is appropriated to results on the dates the
transactions are processed. Income from services provided to partners and to trade merchants
is recognized to results based on the realization of such.
Consórcio Redecard income and expenses (Note 13) are recorded for the consortium members
and for Redecard S.A. according to their respective shares in the consortium, based on the
criteria stated in the Contract for Constituting the Consórcio Redecard.
b. Accounting estimates
The preparation of the financial statements in accordance with accounting practices adopted in
Brazil requires that management uses its judgment in determining and recording accounting
estimates. Significant assets and liabilities subject to these estimates and assumptions include
the residual value of property, plant and equipment, the provision for doubtful accounts,
deferred income tax and social contribution and the provision for contingencies. The settlement
of transactions involving these estimates may result in significantly different amounts due to
the inaccurates inherent to determining such. The Company reviews the estimates and
assumptions at least annually.
c. Foreign currency
Monetary assets and liabilities denominated in foreign currencies were translated into reais at
the foreign exchange rate ruling at the balance sheet date. Foreign exchange variations arising
on translation are recognized in the income statement. These balances originate mainly from
transactions undertaken at establishments using credit and debit cards issued by foreign
institutions, licenced to use MasterCard and Diners Club International cards.
Redecard S.A.

d. Fixed assets
Fixed assets are recorded at acquisition cost and depreciated using the straight-line method at
rates accepted for tax purposes and which take into account the estimated useful lives of the
assets. The costs incurred from replacing a fixed asset component are not capitalized given the
difficulty in estimating the future economic benefit from such.
e. Income and social contribution taxes
The income and social contribution taxes, both current and deferred, are calculated based on
the rates of 15% plus a surcharge of 10% on taxable income in excess of R$ 240 thousand for
income tax and 9% on taxable income for social contribution on net income.
The provision for these taxes is recorded to “Tax liabilities”. The deferred tax assets arising
from temporary differences have been recorded in accordance with CVM Instruction 371 of
June 27, 2002, and take into consideration past profitability and the expectation of future
taxable profits based on a technical viability study (Note 5).
f. Accounts receivable - Issuers and accounts payable to merchants
These amounts refer to the values of transactions undertaken by holders of credit cards issued
by financial institutions licensed to use MasterCard and Diners Club International cards; the
balances for accounts receivable from issuers are net of interchange fees and the balances for
accounts payable to merchants are net of administration fees (discount), with recovery from
the issuers and payment to the merchants falling due within one year.
g. Borrowings
Borrowings are stated at the amounts borrowed from financial institutions, plus contractual
charges up to the financial statements closing date.
Redecard S.A.

h. Provision for doubtful debts
The provision for doubtful debts is recorded based on an analysis of risks from recovering
credits receivable from issuers and merchants, mainly based on the past history of recovery,
default and inactivity of issuers and merchants, and is recorded for an amount considered
sufficient to cover possible losses. At December 31, 2006 and 2005, it was not necessary to
record a provision for accounts receivable from issuers. A provision has been recorded for the
rental of equipment for capturing transactions (POS) installed at merchants considered to be
inactive by the Company, and for amounts claimed by credit-card holders against merchants
that had not been registered and approved by the Company, at the time of the complaint or that
do not have credits receivable from transactions undertaken using MasterCard and Diners
Club International credit cards.
i. Contingent liabilities
These arise from legal processes inherent to the normal course of business, filed by third
parties and ex-employees, through civil and labor claims. These contingencies are evaluated
by legal advisors and are quantified using models and criteria that enable the amounts to be
adequately determined, despite the uncertainty inherent to the period and amount. The
contingencies are classified between probable, for which a provision is recorded; possible,
which are disclosed but for which no provision is recorded; and remote, for which disclosure or
a provision is not required. The provisions that involve tax processes are recorded for an
amount equivalent to the total value of the taxes being legally disputed, plus monetary
correction and interest for late payment, as if due, to the balance sheet date.
j. Provisions
A provision is recognized in the balance sheet when the Company has a legal obligation or is
constituted as a result of a past event, and it is probable that economic resources will be
required to settle the obligation. Provisions are recorded considering the best estimates of the
risk involved.
Redecard S.A.

k. Other current and non current assets and liabilities
Stated at net realizable values, at known or calculated amounts, plus, when applicable, the
related charges, monetary and/or exchange variations incurred to the balance sheet date.
4 Cash and cash equivalents
Consist of amounts available in the Company’s bank accounts, represented by amounts deposited
with financial institutions that issue credit cards, with these amounts used to settle transactions
with merchants on the first business day of the month subsequent to the balance sheet date.
5 Tax credits
a. Tax credits held at the balance sheet date are recorded as assets, as deferred income tax and
social contribution, and calculated on the temporary differences arising from the following non
deductible provisions at December 31, 2006:
Social
Income tax contribution
Temporary differences
Provision for tax contingencies 32,308 3,772
Provision for civil contingencies 1,541 556
Provision for labor contingencies 1,853 668
Provision for other expenses 50,554 18,199
475 -
Total
86,731 23,195
Redecard S.A.

b. Expected realization, which takes into consideration the nature of the non deductible provisions
and future taxable profits being generated, is presented below:
Social
Year of realization Income tax contribution
2007 46,203 16,072

2008 19,141 1,532
2009 5,215 1,820
2010 16,172 3,771
Total 86,731 23,195
Deferred income tax and social contribution are recorded to reflect the future tax effects
attributable to temporary differences between the tax base for assets and liabilities and the
respective book values.
The book value of the deferred tax asset is periodically revised and the forecasts are reviewed
annually, in the event of significant factors that alter the forecasts, they are revised by the
Company during the year.
Management considers that the deferred assets arising from temporary differences will be
realized at the time of the final resolution of the contingencies and events. At December 31,
2006 and 2005, the Company did not have balances for tax losses and negative taxable base.
Redecard S.A.

6 Fixed assets
Annual
depreciation
rate
% 2006 2005
Equipment for recording transactions (POS) (a) 33.33 581,223 499,946

Equipment 20.00 48,888 40,504
Systems 20.00 25,647 23,738
Vehicles 20.00 4,974 4,573
Fixed assets in progress - 4,741 3,643
Fixtures and fittings 10.00 3,077 2,836
Other - 8,985 7,862
Total 677,535 583,102
175,278 204,894
(a) During 2005, based on a technical report issued by a specialized company and consistent with
legislation in force, the depreciation rate for POS equipment was altered from 20.00% to
33.33% per annum in order to better reflect the economic useful life of the assets. The impact
on results for that period, of R$ 62,660, is due to the difference in the depreciation rate in
previous years adjusted to reflect the new useful life of the asset.
7 Borrowings
Comprises to funding from financial institutions in the total amount of R$ 375,681

(R$ 362,035 in 2005), which mature in up to 148 days and carry interest rates of 103.53% (2005 -
103.32%) of the variation in the Interbank deposit rate (DI) CETIP. The amounts reported under
this heading are monetarily corrected based on the contractual rates. There are no restrictive
clauses or reciprocal clauses in the contracts with the financial institutions.
Redecard S.A.


2006 2005
Payable to suppliers and provisions for expenses 220,659 198,277
Participation in the consortium payable 137,255 159,286
Dividends to be distributed 69,429 56,903
Total 427,343 414,466
9 Capital
Capital stock comprises 1,878,329 shares, of which 626,110 are common shares and 1,252,219
preferred shares, all nominative, with no par value, distributed as follows:
Banco Citibank S.A. 31.9433

Banco Itaucard S.A. 31.9433
Unibanco - União de Bancos Brasileiros S.A. 31.9433
Mastercard International Incorporated 4.1701
As from 2006, the shares of right of FNC - Comercio e Participações Ltda. were transferred to
Banco Citibank S.A., and the shares of right of Unicard Banco Múltiplo S.A., were transferred to
Unibanco - União de Bancos Brasileiros S.A.
Revenue reserves represent the amounts recorded to the Legal Reserve, at the rate of 5% of net
profit, determined each financial year, under the terms of article 193 of Law 6404/76, up to a limit
of 20% of capital.
The preference shares do not have voting rights, but have priority in the distribution of dividends
as provided in Law 6404/76, with the new text provided under Law 9457/97 to the Company’s
bylaws call for a minimum dividend equal to 25% of adjusted net income for the year. The
dividends for the fourth quarter of 2006 were transferred to current liabilities, and will be
distributed in January 2007. Of the total dividends for 2006, R$ 292,292 (R$ 177,416 in 2005),
R$ 222,863 (R$ 120,513 in 2005) were distributed during the financial year.
Redecard S.A.

Dividends were calculated as follows:
2006 2005
Net profit for the year 293,663 186,754

(-)Legal reserve ( 1,371) ( 9,338)
Calculation base 292,292 177,416
(-) dividends anticipated from profit for the period (222,863) (120,513)
(=) Dividends payable 69,429 56,903
Related party transactions at December 31, 2006 refer to the values from transactions undertaken
by credit card holders through intermediary by the issuer banks in accordance with the rules
established by MasterCard and Diners, recorded to the heading “Accounts receivable from Issuers”
and expenses related to services, as presented below:
2006 2005
Accounts receivable - Issuers:
Credicard Banco S.A. - 3,016,508
Banco Citibank S.A. 2,208,104 231,272
Banco Itaucard S A (in2005 - Itaucard Financeira S.A. -
Crédito, Financiamento e Investimento). 3,597,681 1,564,588
Unibanco - União de Bancos Brasileiros (in 2005 - Unicard
Banco Múltiplo S.A.) 755,929 627,636
Service expenses - Orbitall -

subsidiary of Itaú Holding Financeira S.A 48,942 63,447
Redecard S.A.

In 2005 Credicard Banco was at the stage of determining the credit card base between the issuers
Citibank and Itaú for the spin off and effective separation between the two shareholders, at the
time, Itaucard and Citibank, consequently it is not possible to separate the information on related
parties base on the same criteria adopted at the end of 2006. Thus, Management believes it is
more appropriate not to separate or assume any balance receivable from Credicard Banco different
from that disclosed in the financial statements for the year ended December 31, 2005.
Redecard S.A. is party to administrative processes and legal claims with various courts and
government bodies, arising from its normal operations, which involve tax, labor, civil and other
questions.
The balances in the financial statements refer to the provisions which, according to Company’s
management opinion, and based on the opinion of its legal advisors, have been recorded for
amounts considered adequate to cover possible losses. These provisions are periodically reviewed
by Company management and consist of: provisions for tax contingencies - 170,164 (in 2005-R$
184,918) and civil and labor contingencies - R$ 13,580 (in 2005 - R$ 10,852). The corresponding
judicial deposits in guarantee are corrected according to the regulation in force and are reported as
non current assets - R$ 13,761 (in 2005 R$ 12,369).
a. Composition of provisions
Management, based on information from its legal advisors, analyses of pending legal claims
and, with respect to labor claims, based on prior experience from amounts claimed, has
recorded a provision for an amount considered sufficient to cover losses estimated from the
outstanding claims, as follows:
Nature 2006 2005
Civil 6,168 5,617
Labor 7,412 5,235
Tax 170,164 184,918
Total 183,744 195,770
Redecard S.A.

b. Movement of provisions
Nature 2005 2006
Addition
Opening s to Closing
balance provision Used Reversals balance
Civil 5,617 1,197 ( 646) - 6,168

Labor 5,235 2,416 ( 239) - 7,412
Tax 184,918 33,350 (2,207) (45,897) 170,164
Total 195,770 36,963 (3,092) (45,897) 183,744
c. Total risk
Nature 2006 2005
Civil 6,355 5,617

Labor 7,412 5,235
Tax 170,164 184,918
Total 183,744 195,770
The value of the total risk from contingencies reported above was calculated considering the
claims filed by plaintiffs for each of the processes. Provisions for the legal processes which
refer to tax issues have been recorded for the total value of the risk.
12 Financial instruments
The estimated realizable values of the Company’s financial assets and liabilities were determined
based on information available on the market and appropriate evaluation methodologies. However,
considerable judgment was required in interpreting market data to arrive at the most appropriate
estimated realizable values. Consequently, the following estimates do not necessary reflect the
amounts that could be realized on a current exchange market. The use of different market
methodologies could have a material effect on the estimated realizable values.
Redecard S.A.

These instruments are managed by means of operational strategies aimed at liquidity, profitability
and security. The control policy consists of permanently accompanying the rates contracted
compared to market rates in force. The Company does not make speculative investments in
derivatives or any other high risk assets.
a. Composition of balances
In compliance with CVM Instruction 235/95, the book balances and the market values of
financial instruments included in the balance sheet as at December 31, 2006, are presented
below:
Book
Description balance Market value
Borrowings - domestic currency 375,681 375,681
b. Criteria, premises and limitations adopted to calculate market values
x Borrowings - domestic currency
The market values of borrowings were calculated based on the principal value plus interest
incurred from the start of the contract to the balance sheet date, based on contractual rates
in force. Given that the contracts do not have restrictive clauses and since it is not
possible to calculate the market values under risk conditions different from those which the
Company has or maintains with financial institutions, management understands that the
market value is the same as that reported at the balance sheet date.
x Limitations
The market values were estimated at the balance sheet date, based on ‘relevant market
information”. Management understands that changes in the premises would not
significantly affect the estimates reported.
Redecard S.A.

c. Credit risk
The values for accounts receivable from issuers represent the values of transactions undertaken
by cardholders issued by financial institutions licensed by the banners MasterCard and Diners
Club International and are guaranteed by these banner institutions in the event of default.
These guarantees are stipulated in the regulations issued by these two credit card systems. In
addition, MasterCard stipulates the requirement for effective guarantees (real or bank
guarantees) for each participant in the system, without which it is not possible to obtain a
license, or the license could be lost if this requirement is not fulfilled.
The company is the only registering entity in Brazil for the banners MasterCard and Diners
Club International and has a specific policy defining the guidelines and procedures for
analyzing risks for registering and approving trade merchants, for them to accept these two
credit cards for their commercial and financial activities.
This policy defines the criteria for approving trade merchants, which considers, amongst other
factors, the type of trade activity and the time they have been trading, and also specifies the
documents required and the investigation method to enable the Company to register the trade
merchant.
The Company has operational systems and a portfolio management area that accompanies the
sales performance recorded daily by the approved merchants, and any deviations in
performance are monitored and measures are taken to mitigate losses being incurred by any of
the participants in the credit card system.
For those authorized merchants that do not have their own systems for recording transactions,
the Company can deliver equipment for registering electronic transactions (POS), under rental
contract. The rental value is deducted, on the due date, from the value of the transactions
settled with the merchants. However, it is possible that the rent is not received on the due date
in the event balances payable by the merchants do not exist. In such cases, the Company
charges the amount using firms specialized in recovering credits, and significant losses from
rents may exist.
Redecard S.A.

The systems used by the credit card companies also provide for the possibility that transactions
undertaken using credit cards are questioned by the titleholders, within a certain period as from
the date of performing the transaction. If the merchant is not authorized on the date of the
complaint or there are no amounts receivable from the Company, collection is made through
firms specialized in recovering credits, with the possibility of losses being incurred by the
Company.
The Company also has a provision for doubtful debts, for the amount of R$ 17,020 thousand
(2005 - R$ 14,960 thousand) representing 30.3% of the balance for other accounts receivable
outstanding (2005 - 42.4%), to cover credit risks.
d. Foreign exchange risk
The Company’s income is not subject to significant variations from the effects of foreign
exchange variations on liabilities tied to foreign currencies, mainly the North American dollar
(the Brazilian Real reported a valuation of 8.7% in 2006), given the reduced volume of
operations indexed to the dollar in relation to the Company’s total operations.
e. Interest rate risk
The Company’s results are susceptible to significant variations from borrowings contracted
based on variable exchange rates.
In accordance with its financial policies, the Company has not undertaken operations involving
financial instruments of a speculative nature.
Redecard S.A.

The net income of Consórcio Redecard, for the years ended December 31, 2006 and 2005 is
composed of the following:
2006 2005
Net revenue
Operating revenue 1,600,378 1,315,027
Service tax ( 58,776) ( 50,715)
PIS tax ( 12,265) ( 9,350)
COFINS tax ( 68,526) ( 61,193)
Financial revenue 561,968 541,120
Financial expenses ( 213,330) ( 217,302)
1,809,449 1,517,587
Operating expenses
Administrative and general ( 242,692) ( 283,158)
Depreciation and amortization ( 134,188) ( 153,587)
Other operating expenses ( 495,237) ( 425,970)
( 872,117) ( 862,715)
Operating income 937,332 654,872
Distribution of operating income

Redecard S.A. 442,763 285,808
Other consortium members 494,569 369,064
Total 937,332 654,872
Redecard S.A.

14 Social responsibility
Redecard S.A. has supported a series of non profit making institutions as part of its objective to
make a social contribution. During 2006, it made contributions amounting R$ 1,285 (R$ 1,418 in
2005).
15 Additional information
a. Redecard, as the authorizer of the MasterCard banner, contracted a guarantee letter with
financial institutions in Brazil, for significant amounts, with the beneficiary being MasterCard
International Incorporated. This guarantee, unconditionally and irrevocably, guarantees the
beneficiary immediate payment for all amounts due by Redecard and not settled to merchants,
from transactions undertaken using credit and debit cards that were issued by companies
licensed from MasterCard. At the same time, MasterCard, as established in its regulations,
guarantees the Company financial settlement of the transactions approved by companies
issuers of MasterCard credit cards.
b. The Company, despite the low level of risk from claims, has a policy to contract insurance
coverage for the electronic payment equipment (POS), and for vehicles, both at market values.
c. The Company does not provide guarantees, sureties or bonds, without previous authorization
from the Board of Directors, under the terms of article 16, letter “f” of the Company’s
Statutes.
d. Employee participation in Company income was calculated based on the goals established by
Management and approved by the board of directors.
e. The Company makes monthly contributions to the Retirement plan, CitiPrevi, a closed private
pension plan, for all of its employees, and incurred expenditure of R$ 3,750 in 2006 (R$ 823
in 2005), from the Plan.
Final_Redecard_e5

Redecard S.A.
(A translation of the original report in Portuguese as
published in Brazil containing financial statements prepared
in accordance with accounting practices adopted in Brazil)
Final_Redecard_e5

Redecard S.A.
Contents
Independent auditors’ report F-67
Balance sheets F-68
Statements of income F-69
Final_Redecard_e5
R. Dr. Renato Paes de Barros, 33 Fax Nacional 55 (11) 2183-3001
04530-904 - São Paulo, SP - Brasil Internacional 55 (11) 2183-3034
Caixa Postal 2467 Internet www.kpmg.com.br
To
The Shareholders and Board of Directors
Redecard S.A.
São Paulo - SP
We have examined the balance sheets of Redecard S.A. as of December 31, 2005 and 2004 and the
related statements of income, changes in shareholders’ equity and changes in financial position for
the years then ended, which are the responsibility of its management. Our responsibility is to
express an opinion on these financial statements.
Our examinations were conducted in accordance with auditing standards applied in Brazil and
included: (a) planning of the audit work, considering the materiality of the balances, the volume of
transactions and the accounting systems and internal accounting controls of the Company; (b)
verification, on a test basis, of the evidence and records which support the amounts and accounting
information disclosed; and (c) evaluation of the most significant accounting policies and estimates
adopted by management of the Company, as well as the presentation of the financial statements
taken as a whole.
operations, changes in shareholders’ equity and changes in financial position for the years then
ended, in conformity with accounting practices adopted in Brazil.
February 3, 2006

CRC 2SP014428/O-6
Giuseppe Masi
KPMG Auditores Independentes, uma sociedade simples brasileira KPMG Auditores Independentes is a Brazilian entity and a member firm
e firma-membro da rede KPMG de firmas-membro independentes e of the KPMG network of independent member firms affiliated with
afiliadas à KPMG International, uma cooperativa suíça. KPMG International, a Swiss cooperative.
Redecard S.A.
Balance sheets
Assets 2005 2004 Liabilities 2005 2004
Cash and cash equivalents 13,891 13,411 Accounts payable to merchants 7,313,320 5,390,718
Accounts receivable - Issuers 8,006,121 5,938,975 Labor obligations 9,875 8,624
Deferred income and social 45,346 33,170 Borrowings 362,035 393,206
contribution taxes Other accounts payable 414,466 293,261
Deferred income and social Provision for contingent liabilities 195,771 149,288
contribution taxes 48,947 36,589
Judicial deposits 12,435 9,376 Shareholders' equity 62,889 53,552
Permanent assets 204,894 235,317 Capital 53,551 45,199

Revenue reserve 9,338 8,353
Fixed assets 583,102 475,141
Investments - 116
8,366,918 6,300,128 8,366,918 6,300,128
Redecard S.A.
2005 2004
Result from Redecard Consortium Participation (Note 10) 285,808 226,424
(Operational profit of Consórcio Redecard

in 2005 R$ 654.872 - R$ 479.487 in 2004)

Income tax (72,816) (57,371)
Redecard S.A.

Revenue
reserve
Legal Retained
Capital reserve earnings Total
Balances at January 1, 2004 45,199 916 - 46,115
Distributions:
Legal reserve - 7,437 (7,437) -
Capital increase 8,353 (8,353) - -
Distributions:
Legal reserve - 9,338 (9,338) -
Redecard S.A.

2005 2004
Sources of funds
From operations
Income/(expenses) not affecting working capital
Income/(expense) on sale of fixed assets 110 (63)
(Gain)/loss on investments 116 -
340,567 223,662
From third parties

Disposal of fixed assets 903 830
Increase in long-term liabilities 46,482 46,117
47,385 46,947
387,952 270,609
Investments in
Fixed assets 124,293 127,934
Increase in long-term assets 15,417 19,458
317,126 288,695
Increase/(decrease) in net working capital 70,826 (18,086)

2005 2004
Current assets 6,018,846 8,100,642 2,081,796 1,318,819

Net working capital (78,442) (7,616) 70,826 (18,086)
Redecard S.A.

1 Operations
Redecard S.A. operations comprise the registration and approval of merchants, as well as the
administration of payments to the network affiliated merchants due to the use of credit and debit
cards.
Redecard is the leader of a consortium (Consórcio Redecard), which is not a corporate legal entity
and administers the merchants’ network and the funding, transmission, processing and settlement
of transactions generated through credit and debit cards use. Redecard S.A., as leader of
Consórcio Redecard, performs all acts necessary in order for it to operate through its legal
representatives and/or attorneys-in-fact, including active and passive representation before third
parties (see Note 10 - Equity in income of Consórcio Redecard).
2 Distribution of net income to consortium members
Consórcio Redecard Organization Agreement, that takes into consideration the volume of
transactions made with credit and debit cards issued by consortium members, and each member’s
share in Redecard S.A.
3 Description of significant accounting policies
The financial statements were prepared in accordance with accounting practices adopted in Brazil.
a. Recognition of income and expenses
Income and expenses are recognized in the income statement on the accrual basis.
Redecard S.A.

Discount rates for payments to merchants were recorded on the books of Consórcio Redecard,
and allocated to the income statement on the validation date for processing of the respective
sales invoices.
Consórcio Redecard income and expenses (Note 10) are transferred to consortium members
and Redecard S.A. according to their respective shares in the consortium.
b. Fixed assets
Fixed assets are recorded at acquisition cost and the depreciation is provided by using the
straight-line method at rates, which take into account the estimated useful lives of the assets.
c. Income and social contribution taxes
Income tax was calculated at the rate of 15% plus surtaxes of 10% provided for in current
laws. Social contribution tax was calculated at the rate of 9%. The provision for these taxes is
stated under “Taxes payable”. The deferred income and social contribution taxes were
calculated at the rate of 34% (25% for income tax and 9% for social contribution) on
expenses, which will be deductible in the future. These tax credits will be realized within five
years.
d. Accounts receivable - Issuers and accounts payable to merchants
These amounts refer to the values of transactions made by cardholders, which are transferred
by the issuers (Accounts receivable - Issuers) to Redecard, the leader of Consórcio Redecard,
so that it can pay the merchants (Accounts payable to merchants) in accordance with
contractual terms.
e. Borrowings
Borrowings are stated at the amounts borrowed, plus contractual charges up to the financial
statement closing date.
Redecard S.A.

4 Fixed assets
Annual
depreciation
rate
% 2005 2004
Equipment for recording transactions (POS) (a) 33.33 499,946 399,969

Equipments 20.00 40,504 39,233
Systems 20.00 23,738 19,262
Vehicles 20.00 4,573 4,613
Construction in progress - 3,643 2,158
Fixtures and fittings 10.00 2,836 2,701
Others - 7,862 7,205
Total 583,102 475,141
204,894 235,201
(a) During 2005, based on a technical report issued by a specialized company and consistent with
legislation in force, the depreciation rate for POS equipment was altered from 20.00% to
33.33% per annum in order to better reflect the economic useful life of the assets.
5 Borrowings
Comprises funding from financial institutions in the total amount of R$ 362,035

(R$ 393,206 in 2004), which mature in up to 145 days and carry interest rates of 103.32%
(2004 - 103.17%) of the variation of the Interbank Deposit Certificate (CDI) CETIP.
Redecard S.A.

Represented by the following liabilities:

2005 2004
Payable to suppliers and provisions for expenses 198,277 134,557
Participation in the consortium payable 159,286 108,350
Total 414,466 293,261
7 Capital
Capital stock comprises 1,878,329 shares, of which 626,110 are common shares and 1,252,219
preferred shares, all nominative and without par value, with the number of shares unaltered since
2003, and distributed as follows:
FNC - Comércio e Participações Ltda. 31.9433

Itaucard Financeira S.A. Crédito, Financiamento e Investimento 31.9433
Unicard Banco Múltiplo S.A. 31.9433
As from 2005 the shares of right of Unibanco União de Bancos Brasileiros S.A. were transferred
to Unicard Banco Múltiplo S.A. The Company’s bylaws call for a minimum dividend equal to
25% of adjusted net income for the year. The dividends for the fourth quarter of 2005 were
transferred to Current liabilities and will be distributed in January 2006. Of the total dividends for
2005, R$ 177,416 (R$ 141,303 in 2004), R$ 120,513 (R$ 90,949 in 2004) were distributed during
the financial year.
Redecard S.A.

The related party transactions at December 31, 2005, refer to credit card transactions and expenses
related to services, as demonstrated below:

Credicard Banco S A 3,016,508
FNC - Comércio e Participações Ltda. 231,272
Itaucard Financeira S A Crédito, Financiamento e Investimento 1,564,588
Unibanco - Representação e Participação Ltda. 627,636
Service expenses - Orbitall 63,447
Refer to provisions that, according to Company’s management opinion, and based on the opinion
of its legal advisors, were constituted in amounts considered sufficient to cover possible losses.
These provisions are periodically reviewed by Company management and consist of: provisions for
tax contingencies - R$ 184,918 (in 2004 - R$ 139,998) and civil and labor contingencies -
R$ 10,853 (in 2004 - R$ 9,290).
Redecard S.A.


The net income of Consórcio Redecard, for the years ended December 31, 2005 and 2004, is
2005 2004
Net revenue:
Operating revenue 1,315,026 1,005,642
Service tax ( 50,715) ( 39,841)
PIS tax ( 9,350) ( 13,416)
COFINS tax ( 61,194) ( 58,299)
Financial revenue 541,120 408,997
Financial expenses ( 217,302) ( 145,659)
1,517,586 1,157,424
Operating expenses:
Administrative and general ( 283,158) ( 237,656)
Other operating expenses ( 425,969) ( 365,297)
( 862,715) ( 677,937)
Distribution of operating income:

Redecard S.A. 285,808 226,424
Total 654,872 479,487
Redecard S.A.

Redecard S.A., has supported a series of non profit making institutions as part of its objective to
make a social contribution. During 2005, it made contributions amounting to R$ 1,418 (R$ 1,224
in 2004).

Redecard S.A.
(A free translation of the original report in Portuguese containing
financial statements prepared in accordance with accounting
practices adopted in Brazil)
Final_Redecard_e5

Redecard S.A.
Contents
Independent auditors’ report F-83
Balance sheets F-84
Statements of earnings F-85
Final_Redecard_e5
R. Dr. Renato Paes de Barros, 33 Fax National 55 (11) 3079-3752
04530-904 - São Paulo, SP - Brasil International 55 (11) 3079-2916
Caixa Postal / P.O.Box 2467 Internet www.kpmg.com.br
The Administrative Council and Shareholders

Redecard S.A.
São Paulo - SP
We have examined the balance sheets of Redecard S.A. as of December 31, 2004 and 2003 and
the related statements of earnings, changes in shareholders’ equity and changes in financial
position for the years then ended, which are the responsibility of its management. Our
responsibility is to express an opinion on these financial statements.
Our examinations were conducted in accordance with auditing standards generally accepted in
Brazil and included: (a) planning of the audit work, considering the materiality of the balances,
the volume of transactions and the accounting systems and internal accounting controls of the
Company; (b) verification, on a test basis, of the evidence and records which support the amounts
and accounting information which is disclosed; and (c) evaluation of the most significant
accounting policies and estimates adopted by Company management, as well as the presentation
of the financial statements taken as a whole.
operations, changes in its shareholders’ equity and changes in its financial position for the years
then ended, in conformity with accounting practices adopted in Brazil.
February 11, 2005

CRC 2SP014428/O-6
Original Report in Portuguese signed by

Giuseppe Masi
KPMG Auditores Independentes é uma sociedade brasileira, KPMG Auditores Independentes is a Brazilian entity, member firm of
simples, membro da KPMG International, uma cooperativa suíça. KPMG International, a Swiss cooperative.
Redecard S.A.
Balance sheets
Assets 2004 2003 Liabilities 2004 2003
Cash and cash equivalents 13,411 11,460 Accounts payable to merchants 5,390,718 3,782,094
Accounts receivable - Issuers 5,938,975 4,635,137 Labor obligations 8,624 6,722
Deferred income and social 33,170 22,282 Borrowings 393,206 758,967
contribution taxes Other accounts payable 293,261 191,348
Deferred income and social Provision for contingencies 149,288 103,171

contribution taxes 36,589 25,665
Judicial deposits 9,376 842 Shareholders' equity 53,552 46,115
Permanent assets 235,317 183,135 Capital 45,199 45,199

Revenue reserve 8,353 916
Fixed assets 475,141 359,386
Investments 116 116
6,300,128 4,909,669 6,300,128 4,909,669
Redecard S.A.
Statements of earnings
2004 2003
Equity in earnings of
Redecard S.A. in the consortium (Note 10) 226,424 183,039
(Net operating income of Redecard consortium

in 2004 R$ 479,487 and R$ 403,089 in 2003)

Income tax (57,371) (45,200)
Redecard S.A.

Revenue
reserve
Capital Legal Retained

reserve earnings Total
Balances at January 1st , 2003 34,632 5,410 - 40,042
Capital increase with reserves 10,567 (10,567) - -
Distributions:
Legal reserve - 6,073 (6,073) -
Dividends distributed (76,847) (76,847)
Balances at December 31st, 2003 45,199 916 - 46,115
Balances at January 1st , 2004 45,199 916 - 46,115

-
Distributions: -
Legal reserve - 7,437 (7,437) -
Balances at December 31st, 2004 45,199 8,353 - 53,552
Redecard S.A.

2004 2003
Sources of funds
From operations
Expenses not affecting working capital
Income on sale of fixed assets (63) 1,645
223,662 173,938
From third parties

Income on sale of fixed assets 830 891
Increase in long-term liabilities 46,117 39,772
46,947 40,663
270,609 214,601
Investments in
Fixed assets 127,934 87,455
Increase in long-term assets 19,458 13,522

288,695 216,364
Decrease in net working capital (18,086) (1,763)

2004 2003
Current assets 4,700,027 6,018,846 1,318,819 1,253,818

Net working capital (60,356) (78,442) (18,086) (1,763)
Redecard S.A.

1 Operations
Redecard S.A. operations comprise the registration and approval of merchants, as well as the
administration of payments to the network of affiliated merchants due to the use of credit and
debit cards.
Redecard is the leader of a consortium (Consórcio Redecard), which is not a legal entity and
which administers the merchants’ network and the funding, transmission, processing and
settlement of transactions generated through use credit and debit cards. Redecard S.A., as leader
of Consórcio Redecard, performs all acts necessary in order for it to operate through its legal
representatives and/or attorneys-in-fact, including active and passive representation before third
parties (see Note 10 - Equity in income of Consórcio Redecard).
2 Distribution of net income to consortium members

Consórcio Redecard Organization Agreement, which takes into consideration the volume of
transactions made with credit and debit cards issued by consortium members, and each member’s
share in Redecard S.A.
3 Description of significant accounting policies

The financial statements were prepared in accordance with accounting practices derived from the
Brazilian Corporation Law.
a. Recognition of revenues
Income and expenses are allocated to the income statement on the accrual basis.
Discount rates for payments to merchants were recorded in the books of Consórcio Redecard,
and allocated to the income statement on the validation date for processing of the respective
sales invoices.
The income and expenses of Consórcio Redecard (Note 10) are transferred to consortium
members and Redecard S.A. according to their respective shares in the consortium.
Redecard S.A.

b. Fixed assets
Fixed assets are recorded at the cost of acquisition and depreciation is provided using the
straight-line method at rates, which take into account the estimated useful lives of the assets.
c. Income and social contribution taxes
Income tax was calculated at the rate of 15% plus surtaxes of 10% provided for in current
laws. Social contribution tax was calculated at the rate of 9%. The provision for these taxes
is stated under “Taxes payable”. The deferred income and social contribution taxes were
calculated at the rate of 34% (25% for income tax and 9% for social contribution) on
expenses, which will be deductible in the future. These tax credits will be realized in up to 5
years.
d. Accounts receivable - Issuers and accounts payable to merchants
These amounts refer to the transactions made by cardholders, which are transferred by the
issuers (Accounts receivable - Issuers) to Redecard, the leader of Consórcio Redecard, so that
it can pay the merchants (Accounts payable to merchants) in accordance with contractual
terms.
e. Borrowings
Borrowings are stated at the amounts borrowed, plus contractual charges up to the financial
statement closing date.
Redecard S.A.

4 Fixed assets
Annual
depreciation
rate
% 2004 2003
Equipment 20 439,202 322,490

Systems 20 19,262 16,353
Vehicles 20 4,613 3,884
Construction in progress - 2,158 12,298
Other - 9,906 4,361
Total 475,141 359,386
235,201 183,019
5 Borrowings
Comprises funding from financial institutions in the total amount of R$ 393,206 (R$ 758,967 in
2003) which mature in up to 178 days and carry average interest rates of 103.17% (103.08% in
2003) of the variation of the Interbank Deposit Certificate (CDI) CETIP.

2004 2003
Amounts payable to suppliers and provisions for expenses 134,557 86,705
Interest in the Consortium payable 108,350 66,103
Total 293,261 191,348
Redecard S.A.

7 Capital
Capital comprises 1,878,329 shares, of which 626,110 are common shares and 1,252,219 are
preferred shares, all nominative and with no par value. The number of shares in the year 2003 is
the same as in 2004, and is distributed as follows:
%
FNC - Comércio e Participações Ltda. 31.9433

Itaucard Financeira S.A. Crédito, Financiamento e Investimento 31.9433
Unibanco União de Bancos Brasileiros S.A. 31.9433
As from 2004 the shares which were the rights of Unibanco - Representação e Participação Ltda.
were transferred to Unibanco União de Bancos Brasileiros S.A.
The Company’s bylaws call for a minimum dividend equal to 25% of adjusted net income for the
year. The dividends referring to the 4th quarter of 2004 were transferred to Current Liabilities
and will be distributed in January 2005. Of the total dividends for 2004 of
R$ 141,303 (R$ 115,387 in 2003), R$ 90,949 (R$ 76,847 in 2003) was distributed in the fiscal
year.
8 Transactions with related parties

On December 31, 2004 transactions with related parties refer to credit card electronic transactions
and expenses with services rendered, as shown below:

Credicard Banco S.A. 2,143,876
FNC - Comércio e Participações Ltda. 186,553
Itaucard Financeira S.A. Crédito, Financiamento e Investimento 1,210,716
Unibanco União de Bancos Brasileiros S.A. 402,060
Expenses with services rendered by Orbitall 57,735
Redecard S.A.

Refer to provisions that, according to Company’s Management Judgments and based on the
opinion of its legal counsel, were recorded in amounts considered sufficient to cover possible
losses. These provisions are periodically evaluated by Company Management and are composed
of provisions for fiscal contingencies - R$ 139,998 (in 2003 - R$ 94,364) and civil and labor
contingencies - R$ 9,290 (in 2003 - R$ 8,807).
10 Equity in income of Consórcio Redecard

The net income of Consórcio Redecard, for the years ended December 31, 2004 and 2003, is
2004 2003
Net operating income:
Operating income 1,005,642 821,498
Service tax ( 39,841) ( 31,587)
PIS ( 13,416) ( 16,936)
COFINS ( 58,299) ( 36,634)
Financial income 408,997 391,754
Financial expenses ( 145,659) (171,098)
1,157,424 956,997
Operating expenses:
Administrative and general ( 237,656) (210,940)
Other operating expenses ( 365,297) (292,135)
( 677,937) (553,908)
Distribution of operating income:

Redecard S.A. 226,424 183,039
Total 479,487 403,089
Redecard S.A.

Redecard S.A., focusing on making a contribution to society, has been supporting a number of
nonprofit institutions. In 2004 it contributed the amount of R$ 1,224 (R$ 1,500 in 2003).
12 Derivative financial instruments

At December 31, 2004 and 2003, Redecard had no operations involving derivative financial
instruments.
Final_Redecard_e5
HEAD OFFICE OF THE COMPANY
Redecard S.A.
Av. Pres. Juscelino Kubitschek, 1400
CEP 04545-000-São Paulo, São Paulo, Brazil
LEGAL ADVISORS TO THE COMPANY AND TO THE SELLING SHAREHOLDERS
As to U.S. Law As to Brazilian Law

Shearman & Sterling LLP Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados
Av. Brig. Faria Lima, 3400 Al. Joaquim Eugênio de Lima, 447
04538-132 – São Paulo, São Paulo, Brazil 01403-001 – São Paulo, São Paulo, Brazil
LEGAL ADVISORS TO THE JOINT BOOKRUNNERS
As to U.S. Law As to Brazilian Law

Cleary Gottlieb Steen & Hamilton LLP Souza, Cescon Avedissian, Barrieu e Flesch – Advogados
One Liberty Plaza, New York, New York 10006 Rua Funchal, 418, 11th floor
04551-060 – São Paulo, São Paulo, Brazil
AUDITORS
Final_Redecard_e5
150,827,527 Common Shares
(Including Common Shares in the Form of Global
Depositary Shares)
REDECARD S.A.
OFFERING
MEMORANDUM
July 11, 2007
Citi
Itaú BBA
Unibanco
Final_Redecard_e5

Redecard Prospectus

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OFFERING MEMORANDUM STRICTLY CONFIDENTIAL

150,827,527 Common Shares

(Including Common Shares in the Form of Global Depositary Shares)

Citi Itaú BBA Unibanco

Presentation of Financial and Other Information iv Our Management ................................................78

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A

(1) Tax on Services (Imposto sobre Serviços), or ISS tax.

Adjusted EBITDA Reconciliation

Year ended Three-month period

• general economic, political, and business conditions in Brazil;

Characteristics of the Merchant Acquiring and Payment Processing Industry in Brazil

5. Issuers 2. Merchant Acquirers and

Issuer ........................................... Redecard S.A.

Offering....................................... We and the selling shareholders are offering a total of 150,827,527

Distribution Period .................... Up to six months following publication of the announcement of

According to the rules of the Novo Mercado, the controlling

On June 20, 2007, Itaucard, Unibanco, Citibank and MasterCard International

Year ended Three-month period

(1) Tax on Services (Imposto sobre Serviços), or ISS tax.

Year ended Three-month period

Result from Redecard Consortium

Risks Relating to Brazil

We depend upon the merchant acquirer license granted to us by MasterCard International.

Trading on the BOVESPA

Corporate Governance Practices and the Novo Mercado

Investment in Our Common Shares by Non-residents of Brazil

Amounts Available for Distribution

Payment of Dividends and Interest on Shareholders' Equity

Interest on Shareholders' Equity

As of December 31, 2006, we had not distributed interest on shareholders' equity.

Source: Central Bank.

As of March 31, 2007

Long-term indebtedness ..................................................... – – – –

Total indebtedness.............................................................. 361.9 176.5 361.9 176.5

The table below illustrates this dilution:

As of March 31, 2007

The table below illustrates this dilution:

As of March 31, 2007

(1) Tax on Services (Imposto sobre Serviços), or ISS tax.

Result from Redecard Consortium

Brazilian Economic Situation

Factors that Affect Our Results of Operations

Presentation of Financial Statements

(1) Tax on Services (Imposto sobre Serviços), or ISS tax.

Critical Accounting Policies

Description of the Main Line Items in Our Results of Operations

Service Tax (ISS tax)

Net Financial Income

Cost of Services Rendered

Depreciation and Amortization

Other Operating Expenses

Discussion and Analysis of the Results of Operations

Service Tax (ISS tax)

PIS and COFINS

Net Financial Income

Cost of Services Rendered

Depreciation and Amortization

This increase was mainly due to the following factors:

ProForma Net Income

Service Tax (ISS tax)

PIS and COFINS

Net Financial Income

Cost of Services Rendered