Академический Документы
Профессиональный Документы
Культура Документы
Klabin S.A.
Individual and Consolidated Interim Financial Information for the Quarter Ended September 30, 2011 and Report on Review of Interim Financial Information
Deloitte Touche Tohmatsu Rua Jos Guerra, 127 04719-030 - So Paulo - SP Brasil Tel.: +55 (11) 5186-1000 Fax: +55 (11) 5181-2911 www.deloitte.com.br
(Convenience Translation into English from the Original Previously Issued in Portuguese) REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION To the Board of Directors and Shareholders of Klabin S.A. So Paulo - SP Introduction We have reviewed the accompanying individual and consolidated interim financial information of Klabin S.A. (the Company) and its subsidiaries, included in the Interim Financial Information Form (ITR), for the quarter ended September 30, 2011, which comprises the balance sheet and the related income statement, statement of comprehensive income, statement of changes in equity, and statement of cash flows for the quarter and nine-month period then ended, including the selected explanatory notes. Management is responsible for the preparation of the individual interim financial information in accordance with CPC 21 - Interim Financial Reporting and the consolidated interim financial information in accordance with CPC 21 and IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), as well as for the presentation of such information in accordance with the standards issued by the Brazilian Securities Commission (CVM), applicable to the preparation of Interim Financial Information (ITR). Our responsibility is to express a conclusion on this interim financial information based on our review. Scope of review We conducted our review in accordance with Brazilian and international standards on review of interim financial information (NBC TR 2410 and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the standards on auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion on the individual interim financial information Based on our review, nothing has come to our attention that causes us to believe that the accompanying individual interim financial information included in the ITR referred to above is not prepared, in all material respects, in accordance with CPC 21 applicable to the preparation of Interim Financial Information (ITR) and presented in accordance with the standards issued by the Brazilian Securities Commission.
Deloitte refere-se sociedade limitada estabelecida no Reino Unido Deloitte Touche Tohmatsu Limited e sua rede de firmas-membro, cada qual constituindo uma pessoa jurdica independente. Acesse www.deloitte.com/about para uma descrio detalhada da estrutura jurdica da Deloitte Touche Tohmatsu Limited e de suas firmas-membro. Deloitte Touche Tohmatsu. Todos os direitos reservados.
Version: 2
Table of Contents
Company Information
Capital Composition Proceeds in Cash 1 2
Version: 2
Page 1 of 63
Version: 2
Page 2 of 63
Version: 2
Page 3 of 63
Version: 2
Page 4 of 63
Version: 2
-0.25660 -0.28290
0.06370 0.07000
0.23530 0.25890
0.34890 0.38380
Page 5 of 63
Version: 2
Page 6 of 63
Version: 2
Individual Financial Statements / Cash Flow Statement - Indirect Method (Thousands of Brazilian Reais)
Account Code 6.01 6.01.01 6.01.01.01 6.01.01.02 6.01.01.03 6.01.01.04 6.01.01.05 6.01.01.06 6.01.01.07 6.01.01.08 6.01.01.09 6.01.01.10 6.01.01.11 6.01.01.12 6.01.01.13 6.01.02 6.01.02.01 6.01.02.02 6.01.02.03 6.01.02.04 6.01.02.05 6.01.02.06 6.01.02.07 6.01.02.08 6.01.02.09 6.01.02.10 6.02 6.02.01 6.02.02 6.02.03 6.02.04 6.02.05 6.02.06 6.03 6.03.01 6.03.02 6.03.03 6.03.04 6.05 6.05.01 6.05.02 Account Description Cash Flow from Operating Activities Cash Flow Provided by Operations Net income for the Period Depreciation and Amortization Changes in Fair Value of Biological Assets Biological Assets Depletion Deferred Income Tax and Social Contribution Interest and Exchange Variation on Loans and Financing Payment of Interest on Loans and Financing Interest Provision - REFIS Gains/losses on Disposal of Assets Equity in Subsidiaries Income Received from Subsidiaries Income Tax and Social Contribution Paid Others Changes in Assets and Liabilities Trade Accounts Receivable Inventories Recoverable Taxes Securities Available for Sale Prepaid Expenses Other Assets Trade Accounts Payable Taxes, Charges and Contributions Payable Salaries, Vacation and Payroll Charges Other Liabilities Cash Flow from Investing Activities Purchase of Property, Plant and Equipment Cost of Planting Biological Assets Sale of Property, Plant and Equipment Investments Acquisition and Payment of Capital in Subsidiaries Proceeds from Sale of Subsidiary Others Cash Flow from Financing Activities Loans and Financing Repayment of Loans Dividends Paid Acquisition of Treasury Shares Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents at Beginning of the Period Cash and Cash Equivalents at the End of the Period Accumulated Current Year Accumulated Prior Year 01/01/2011 to 09/30/2011 01/01/2010 to 09/30/2010 571,317 600,041 515,652 565,985 60,290 334,634 175,017 164,930 -109,738 -126,086 167,332 174,394 -111,808 98,707 562,459 -191,988 86,806 -11,116 -106,083 39,617 -42,933 -2,203 55,665 -17,705 -12,511 51,152 -17,264 11,346 -28,417 -66,005 54,634 7,545 72,890 -187,685 -178,308 -46,364 2,200 -14,795 49,582 -12,194 577,453 -424,524 -152,000 -13,123 371,438 2,268,816 2,640,254 91,944 -218,482 13,161 2,751 -67,927 123,116 -16,315 -8,842 34,056 -245,297 12,965 162,248 16,612 7,670 -13,591 57,801 45,030 25,024 -34,406 -208,496 -168,535 -37,563 665 -3,063 146,951 752,649 -498,696 -107,002 538,496 1,697,278 2,235,774
Page 7 of 63
Version: 2
Individual Financial Statements / Statement of Changes in Shareholders Equity / 01/01/2011 to 09/30/2011 (Thousands of Brazilian Reais)
Account Code 5.01 5.03 5.04 5.04.04 5.04.06 5.05 5.05.01 5.05.02 5.05.02.04 5.06 5.06.02 5.06.03 5.07 Capital Reserves, Granted Options and Treasury Shares 84,491 84,491 84,491 Earnings Reserve 2,326,171 2,326,171 -83,125 -13,123 -70,002 -533 808 275 2,242,513 Retained Earnings -137,000 -137,000 60,290 60,290 533 808 -275 -76,177 Other Comprehensive Income 1,083,423 1,083,423 1,978 1,978 1,978 1,085,401 Shareholders' Equity 4,994,085 4,994,085 -220,125 -13,123 -207,002 62,268 60,290 1,978 1,978 4,836,228
Account Description Opening Balance Adjusted Opening Balance Capital Transaction with Shareholders Acquisition of Treasury Shares Dividends Total Comprehensive Income Net Income for the Period Other Comprehensive Income Foreign Currency Translation Adjustments Internal Changes in Shareholders Equity Realization of Revaluation Reserve Income Tax on Realization of Revaluation Reserve Closing Balance
Page 8 of 63
Version: 2
Individual Financial Statements / Statement of Changes in Shareholders Equity / 01/01/2010 to 09/30/2010 (Thousands of Brazilian Reais)
Account Code 5.01 5.03 5.04 5.04.06 5.05 5.05.01 5.05.02 5.05.02.04 5.06 5.06.02 5.06.03 5.06.04 5.06.05 5.06.06 5.06.07 5.07 Capital Reserves, Granted Options and Treasury Shares 84,491 84,491 84,491 Earnings Reserve 1,973,331 1,973,331 -57,002 -57,002 -26,403 -809 275 -107,252 -117,284 83,217 115,450 1,889,926 Retained Earnings -120,003 -120,003 334,634 334,634 26,403 809 -275 107,252 117,284 -83,217 -115,450 241,034 Other Comprehensive Income 1,104,337 1,104,337 -2,099 -2,099 -2,099 1,102,238 Shareholders' Equity 4,662,159 4,662,159 -177,005 -177,005 332,353 334,634 -2,099 -2,099 4,817,689
Account Description Opening Balance Adjusted Opening Balance Capital Transaction with Shareholders Dividends Total Comprehensive Income Net Income for the Period Other Comprehensive Income Foreign Currency Translation Adjustment Internal Changes in Shareholders Equity Realization of Revaluation Reserve Income Tax on Realization of Revaluation Reserve Realization of Unrealized Earnings Reserve - Biological Assets Realization of Unrealized Earnings Reserve - Biological Assets (Subsidiaries) Transfer of Unrealized Income to Unrealized Earnings Reserve - Biological Assets Transfer of Unrealized Income to Unrealized Earnings Reserve - Biological Assets (Subsidiaries) Closing Balance
Page 9 of 63
Version: 2
Page 10 of 63
Version: 2
Page 11 of 63
Version: 2
Page 12 of 63
Version: 2
Page 13 of 63
Version: 2
Page 14 of 63
Version: 2
Consolidated Financial Statements / Cash Flow Statement - Indirect Method (Thousands of Brazilian Reais)
Account Code 6.01 6.01.01 6.01.01.01 6.01.01.02 6.01.01.03 6.01.01.04 6.01.01.05 6.01.01.06 6.01.01.07 6.01.01.08 6.01.01.09 6.01.01.10 6.01.01.11 6.01.01.12 6.01.02 6.01.02.01 6.01.02.02 6.01.02.03 6.01.02.04 6.01.02.05 6.01.02.06 6.01.02.07 6.01.02.08 6.01.02.09 6.01.02.10 6.02 6.02.01 6.02.02 6.02.03 6.02.04 6.02.05 6.03 6.03.01 6.03.02 6.03.03 6.03.04 6.03.05 6.03.06 6.03.07 6.05 6.05.01 6.05.02 Account Description Cash Flow from Operating Activities Cash Flow Provided by Operations Net Income for the Period (Attributed to Owners of the Company) Depreciation and Amortization Changes in Fair Value of Biological Assets Biological Assets Depletion Deferred Income Tax and Social Contribution Interests and Exchange Variation on Loans and Financing Payment of Interests on Loans and Financing Accounts Payable - REFIS Gains/losses on Disposal of Assets Net Income for the Period (Attributed to Noncontrolling Interests) Income Tax and Social Contribution Paid Others Changes in Assets and Liabilities Trade Accounts Receivable Inventories Recoverable Taxes Securities Available for Sale Prepaid Expenses Other Assets Trade Accounts Payable Taxes, Charges and Contributions Payable Salaries, Vacation and Payroll Charges Other Payables Cash Flow from Investing Activities Purchase of Property, Plant and Equipment Cost of Planting Biological Assets Sale of Property, Plant and Equipment Proceeds from Sale of Subsidiary Others Cash Flow from Financing Activities Loans and Financing Repayment of Loans and Financing Capital Contribution in Subsidiaries by Noncontrolling Shareholders Acquisition of Noncontrolling Interests in Subsidiaries Dividends Paid Dividends Paid to Noncontrolling Shareholders Acquisition of Treasury Shares Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents at Beginning of the Period Cash and Cash Equivalents at the End of the Period Accumulated Current Year Accumulated Prior Year 01/01/2011 to 09/30/2011 01/01/2010 to 09/30/2010 543,967 724,446 533,160 527,202 60,290 175,887 -272,146 286,448 -105,193 562,529 -192,455 86,806 -11,116 22,049 -84,780 4,841 10,807 -29,378 -2,907 91,904 -17,264 13,191 -35,022 -65,408 49,576 7,782 -1,667 -223,051 -186,430 -88,403 2,200 49,582 -37,324 577,453 -461,033 13,002 -1,508 -152,000 -115 -13,123 283,592 2,531,105 2,814,697 334,634 165,359 -301,012 358,346 97,828 92,633 -219,881 13,161 2,751 13,259 -22,485 -7,391 197,244 -137,413 -15,046 163,716 16,612 7,772 -8,930 79,186 99,636 25,368 -33,657 -247,725 -169,296 -76,049 633 -3,013 219,662 759,162 -509,585 80,261 -2,436 -107,740 696,383 1,841,652 2,538,035
Page 15 of 63
Version: 2
Consolidated Financial Statements / Statement of Changes in Shareholders Equity / 01/01/2011 to 09/30/2011 (Thousands of Brazilian Reais)
Account Code 5.01 5.03 5.04 5.04.04 5.04.06 5.04.08 5.04.09 5.04.10 5.05 5.05.01 5.05.02 5.05.02.04 5.06 5.06.02 5.06.03 5.07 Capital Reserves, Granted Options and Capital Treasury Shares 1,500,000 84,491 1,500,000 84,491 1,500,000 84,491 Earnings Reserve 2,326,171 2,326,171 -83,125 -13,123 -70,002 -533 -808 275 2,242,513 Retained Earnings Other Consolidated Comprehensive Shareholders Noncontrolling Shareholders' Income Equity Interests Equity 1,083,423 4,994,085 160,417 5,154,502 1,083,423 4,994,085 160,417 5,154,502 1,978 1,978 1,978 1,085,401 -220,125 -13,123 -207,002 62,268 60,290 1,978 1,978 4,836,228 11,379 13,002 -1,508 -115 22,049 22.049 193,845 -208,746 -13,123 -207,002 13,002 -1,508 -115 84,317 82,339 1,978 1,978 5,030,073
Account Description Opening Balance Adjusted Opening Balance Capital Transactions with Shareholders Treasury Shares Acquired Dividends Capital Contribution in Subsidiaries by Noncontrolling Shareholders Acquisition of Noncontrolling Interests in Subsidiaries Dividend to Noncontrolling Shareholders Total Comprehensive Income Net Income for the Period Other Comprehensive Income Foreign Currency Translation Adjustments Internal Changes in Shareholders Equity Realization of Revaluation Reserve Income Tax on Realization of Revaluation Reserve Closing Balance
Page 16 of 63
Version: 2
Consolidated Financial Statements / Statement of Changes in Shareholders Equity / 01/01/2010 to 09/30/2010 (Thousands of Brazilian Reais)
Account Code 5.01 5.03 5.04 5.04.06 5.04.08 5.04.09 5.05 5.05.01 5.05.02 5.05.02.04 Capital Reserves, Granted Options and Capital Treasury Shares 1,500,000 84,491 1,500,000 84,491 Earnings Reserve 1,973,331 1,973,331 -57,002 -57,002 -26,403 -809 275 -224,536 Retained Earnings Other Consolidated Comprehensive Shareholders' Noncontrolling Shareholders' Income Equity Interests Equity 1,104,337 4,662,159 56,665 4,718,824 1,104,337 4,662,159 56,665 4,718,824 -2,099 -2,099 -2,099 -177,005 -177,005 332,535 334,634 -2,099 -2,099 77,087 91,284 -14,197 13,259 13,259 -99,918 -177,005 91,284 -14,197 345,794 347,893 -2,099 -2,099 -
5.07
Account Description Opening Balance Adjusted Opening Balance Capital Transactions with Shareholders Dividends Capital Contribution in Subsidiaries by Noncontrolling Shareholders Acquisition of Noncontrolling Interests in Subsidiaries Total Comprehensive Income Net income for the Period Other Comprehensive Income Foreign Currency Translation Adjustments Internal Changes in Shareholders Equity Realization of Revaluation Reserve Income Tax on Realization of Revaluation Reserve Realization of Unrealized Earnings Reserve - Biological Assets Transfer of Unrealized Income to Unrealized Earnings Reserve Biological Assets Closing Balance
1,500,000
84,491
198,667 1,889,926
-198,667 241,034
1,102,238
4,817,689
147,011
4,964,700
Page 17 of 63
Version: 2
Page 18 of 63
Version: 2
(Convenience Translation into English from the Original Previously Issued in Portuguese)
Interim Financial Information for the Three and Nine-month Periods Ended September 30, 2011
Page 19 of 63
Version: 2
INDEX TO THE NOTES TO THE INTERIM FINANCIAL STATEMENTS 1 GENERAL INFORMATION 2 BASIS OF PRESENTATION OF THE INTERIM FINANCIAL INFORMATION AND SIGNIFICANT ACCOUNTING PRACTICES 3 CONSOLIDATION OF INTERIM FINANCIAL INFORMATION 4 CASH AND CASH EQUIVALENTS 5 SECURITIES 6 TRADE ACCOUNTS RECEIVABLE 7 RELATED-PARTY TRANSACTIONS 8 INVENTORIES 9 RECOVERABLE TAXES 10 INCOME TAX AND SOCIAL CONTRIBUTION 11 INVESTMENTS IN SUBSIDIARIES 12 PROPERTY, PLANT AND EQUIPMENT 13 BIOLOGICAL ASSETS 14 LOANS AND FINANCING 15 TRADE ACCOUNTS PAYABLE 16 RESERVE FOR TAX, SOCIAL SECURITY, CIVIL AND LABOR CONTINGENCIES 17 SHAREHOLDERS' EQUITY 18 NET REVENUE FROM SALES 19 EXPENSES/REVENUES BY NATURE 20 FINANCIAL INCOME (EXPENSES) 21 EARNINGS PER SHARE 22 OPERATING SEGMENTS 23 RISK MANAGEMENT AND FINANCIAL INSTRUMENTS 24 EMPLOYEE BENEFITS AND PENSION PLAN 25 INSURANCE 26 EVENTS AFTER THE REPORTING PERIOD
Page 21 21 26 27 27 27 28 30 30 31 34 35 36 38 40 40 42 44 44 45 46 48 52 56 56 56
Page 20 of 63
Version: 2
GENERAL INFORMATION
Klabin S.A. (the Company) and its subsidiaries are engaged in the following sectors of the pulp and paper industry to serve the domestic and foreign markets: wood supply, packaging paper, paper sacks, and corrugated cardboard boxes. Their operations are integrated from forestation to production of final products. Klabin is a publicly-held corporation whose shares are traded on So Paulo Stock Exchange (BM&FBovespa). The Company is domiciled in Brazil and headquartered in So Paulo. The Company also has investments in Special Purposes Entities (SCPs) for the specific purpose of raising funds from third parties to support reforestation projects. The Company, as an ostensible partner, has contributed with forest assets, composed basically of forests and land, by means of the granting of use, while the other investing shareholders have contributed cash to these companies. These SCPs entitle Klabin S.A. a preemptive right to acquire forestry products at market price and conditions. The Company also has ownership interests in other companies (notes 3 and 11), whose operational activities are related to the Companys business objectives.
BASIS OF PRESENTATION OF THE INTERIM FINANCIAL INFORMATION AND SIGNIFICANT ACCOUNTING PRACTICES
2.1 Basis of presentation of Interim Financial Information The Company presents the individual Interim Financial Information in conformity with CPC 21 Interim Financial Information, issued by the Accounting Pronouncements Committee (CPC) and consolidated Interim Financial Information in conformity with CPC 21 and IAS 34 Interim Financial Reporting, issued by the International Accounting Standards Board IASB and the standards established by the Brazilian Securities and Exchange Commission (CVM). The individual Interim Financial Information (Company) were prepared based on accounting practices adopted in Brazil, which differ from the accounting practices used to prepare the consolidated Interim Financial Information prepared in conformity with IAS 34 only with respect to the valuation of investments in subsidiaries under the equity method, instead of valuation at cost or fair value. 2.2 Summary of significant accounting practices The significant accounting practices adopted by the Company and its subsidiaries can be summarized as follows: a) Functional currency and translation of foreign currencies The Interim Financial Information are presented in Brazilian reais (R$), which is the Company and its subsidiaries functional and presentation currency. (i) Transactions and balances Foreign currency transactions are originally recorded at the exchange rate prevailing on the transaction date. Gains and losses resulting from the difference between the translation of assets and liabilities in foreign currency at the balance sheet date are recognized in the Companys income statement. (ii) Foreign subsidiaries Assets and liabilities of foreign subsidiaries are translated based on the exchange rate of the reporting currency set by the Company at the balance sheet date and the corresponding income statements are translated based on the exchange rate on the transaction dates. Investment translation gains or losses are recognized in the income statement.
Page 21 of 63
Version: 2
Page 22 of 63
Version: 2
Page 23 of 63
Version: 2
Page 24 of 63
Version: 2
New accounting pronouncements were approved and issued or under approval, as well as reviews of previously issued pronouncements and new interpretations of CPC, during the year 2011. Management is assessing the impact of pronouncements. Listed below are the new and revised standards and interpretations issued or under approval:
Pronouncement CPC 15 (R1) Business Combinations CPC 18 (R1) Investments in Subsidiaries and Associates CPC 19 (R1) Interest in Joint Ventures CPC 20 (R1) Borrowing Costs CPC 21 (R1) Interim Financial Statements CPC 35 (R1) Separate Financial Statements CPC 36 (R2) Consolidated Financial Statements CPC 44 Combined Financial Statements OCPC 6 Presentation of Pro Forma Financial Information IFRS 7 Financial Instruments: Disclosures IAS 1 Presentation of Financial Statements IAS 12 Income Taxes IAS 24 Related-party Disclosures Summary Amendments to IFRS 3 made by IASB and revision of the wording, without changing its substance. Amendments to IAS 28 made by IASB and revision of the wording, without changing its substance. Amendments to IAS 31 made by IASB and revision of the wording, without changing its substance. Amendments to IAS 23 made by IASB and revision of the wording, without changing its substance. Amendments to IAS 34 made by IASB and revision of the wording, without changing its substance. Amendments to IAS 27 made by IASB and revision of the wording, without changing its substance. Amendments to IAS 27 made by IASB and revision of the wording, without changing its substance. New pronouncement addressing the criteria for preparation and presentation of the combined financial statements of entities under common control or management but that do not represent a legal entity. New instruction addressing criteria for aggregation, preparation and presentation of pro forma financial information, used in corporate restructurings, business acquisitions, disposals or spin-offs. Inclusion of procedures on the disclosure of transfer of financial assets. Amendment to the standard to include new guidelines for the presentation of other comprehensive income (loss). Inclusion of procedures on the recovery of underlying assets when the asset is measured under the IAS 40 fair value framework Inclusion of procedures on related party disclosures.
Page 25 of 63
Version: 2
The subsidiaries are fully consolidated as of the acquisition date of the shareholding control, and continue to be consolidated until the date in which such control ceases. The Interim Financial Information of the subsidiaries are prepared for the same reporting period as the Company, using accounting practices consistent with the practices adopted by the Company. The following criteria are adopted for consolidation purposes: (i) elimination of investments in subsidiaries and equity in subsidiaries; (ii) the profits from intercompany transactions and the assets and liabilities are equally eliminated and (iii) the noncontrolling interest is calculated and disclosed separately. The consolidated Interim Financial Information comprises Klabin S.A. and its subsidiaries as at September 30, 2011 and December 31, 2010, as follows:
Head office Subsidiaries: Klabin Argentina S.A. Klabin Ltd. Klabin Trade Argentina Cayman Islands England United States of America Brazil Brazil Brazil Brazil Brazil Brazil Brazil Activity Industrial sacks Interest in other companies Sale of products in the foreign market Sale of products in the foreign market Hotel services Manufacture of phytotherapic products Forestry Interest in other companies Interest in other companies Reforesting Reforesting Ownership Direct/indirect Direct Indirect Ownership interest (%) 9/30/11 12/31/10 9/30/10 100 100 100 100 100 100 100 100 100
Klabin Forest Products Company IKAP Empreendimentos Ltda. Klabin do Paran Produtos Florestais Ltda. Antas Servios Florestais S/C Ltda. Centaurus Holdings S.A. Timber Holdings S.A. (*) Silent partnerships: Paran Santa Catarina
Page 26 of 63
Version: 2
In order to comply with its policy for the use of funds, the Company has maintained its short-term investments in low-risk investments at financial institutions considered by Management as prime banks both in Brazil and abroad, based on the rating disclosed by risk rating agencies. The Management has considered those financial assets as cash and cash equivalents due to its immediate liquidity in financial institutions.
Cash and banks Short-term investments in local currency Short-term investments in foreign currency
Short-term financial investments in local currency, corresponding to Bank Certificates of Deposit (CDBs) and financial securities, indexed based on the variation of the interbank deposit rate (CDI), at an annual average rate of 11.63% (10.00% as at December 31, 2010), and investments in foreign currency correspond to Time Deposits in US dollar, with maturity up to 90 days and annual average rate of 1.20% (0.05% as at December 31, 2010). Short-term investments have daily liquidity.
SECURITIES
Comprise Brazilian National Treasury Bills (LFTs), whose yield is linked to fluctuations in the SELIC interest rate. The balance for these securities, which Management classified as available-for-sale, was R$215,486 as at September 30, 2011 (R$198,222 as at December 31, 2010). Original maturities are through 2013 However, there is an active market for these securities and their fair value is basically the principal plus the interest originally established therein.
09/30/2011 Trade accounts receivable . Local . Foreign Total trade accounts receivable Allowance for doubtful accounts 631,469 3,343 634,812 (32,507) 602,305 63,939 10.07% 7,149 12,165 9,401 1,446 33,778 570,873 634,812
Past-due % on total portfolio From 4 to 10 days From 11 to 30 days From 31 to 60 days From 61 to 90 days Over 90 days Current Total portfolio
The average collection term of trade receivables is approximately 60 days for domestic market sales and approximately 120 days foreign market sales, and interest is collected after the contractual payment term.
Page 27 of 63
Version: 2
Balance as at December 31, 2009 Current year provision Reversal provision Balance as at December 31, 2010 Current year provision Reversal provision Balance as at September 30, 2011
The balance of the allowance for doubtful accounts recorded by the Company corresponds mainly to trade accounts receivable past due over 90 days. The expense on the recognition of the allowance for doubtful accounts is recorded in Selling expenses in the income statement.
RELATED-PARTY TRANSACTIONS
Other (vii)
Total
Total
Total
Balance receivable for product sales transactions entered into under terms and conditions established by the parties; Purchase of timber made under usual market price, terms and conditions; Licensing for use of brand; Prepaid expense for guarantee commission on balance of BNDES financing due at the rate of 1% semiannually; Supply of seedlings, seeds and services under usual market prices, terms and conditions; Borrowings raised at usual market conditions; Others
Page 28 of 63
Version: 2
09/30/2011 M onteiro Aranha S.A. (i) Type of relationship Balances Current assets Noncurrent assets Current liabilities Noncurrent liabilities Transactions Interest expenses on borrowings Guarantee commission - expense Expenses on royalties
Shareholder
12/31/2010
BNDES (iii)
Shareholder
Outras (iv)
Total
Total
Total
412 -
351,132 1,191,725
323 -
3,462
19,128 16,896
96,404 -
2,717
(i) Licensing for use of brand; (ii) Prepaid expense for guarantee commission on balance of BNDES financing due at the rate of 1% semiannually; (iii) Borrowings raised at usual market conditions; (iv) Others
b) Management compensation and benefits Management compensation should be established by the Annual Shareholders Meeting, in accordance with Brazilian corporate law and the Companys bylaws. Accordingly, the Annual Shareholders Meeting held on April 4, 2011 established the overall amount of the annual compensation payable to the Board of Directors and management at up to R$29.7 million in 2011. The compensation approved for 2010 amounted to R$24.6 million. The table below shows the compensation payable to the Board of Directors and Management in the period:
Short-term 09/30/2011 (*) 09/30/2010 Salary and benefits of Board of Directors and Directors Long-term 09/30/2011 09/30/2010 Total 09/30/2011 09/30/2010
14,247
17,645
439
304
14,686
17,949
(*) Includes an adjustment of the provision for variable compensation made in 2010. Management compensation includes the fees of the Companys Directors, and the fees and variable compensation of the Companys Officers. Long-term benefits relate to contributions made by the Company to the pension plan. Said amounts are mostly recorded in General and Administrative expenses/income. The Company has no stock-based payment.
Page 29 of 63
Version: 2
Finished products Raw materials Timber and logs Fuel and lubricants Maintenance supplies Provision for losses Other
Raw material inventories include paper rolls transferred from paper to packaging units. The expense on the recognition of the allowance for inventory losses is recorded in the income statement under Cost of sales. For the nine-month period ended September 30, 2011, an additional provision for inventory losses in the amount of R$865 was recognized. The Company has no inventories pledged as collateral.
RECOVERABLE TAXES
09/30/2011 Noncurrent assets 52,591 9,164 52,297 20,720 134,772 134,772 12/31/2010 Noncurrent assets 63,480 9,599 53,949 4,593 131,621 131,621
State VAT (ICMS) Tax on revenue (PIS) Tax on revenue (COFINS) Income tax and social contribution Other Company Subsidiaries Consolidated
Current assets 49,618 3,619 16,644 53,324 7,626 130,831 6,223 137,054
Current assets 57,726 7,654 34,707 17,149 8,738 125,974 5,128 131,102
In view of the expansion plan (MA 1100 project, performed over the last years), the Company recorded credits from tax and contributions levied on purchases of property, plant and equipment, as permitted by legislation for future offset against taxes payable of the same nature or other taxes. Based on its budget analyses and projections, the Companys management does not foresee any risks related to the realization of these tax credits. Taxes on revenue (PIS/COFINS) and State VAT (ICMS) shown in the current group are expected to be offset against these same taxes payable for the next 12 months, in accordance with managements projections.
Page 30 of 63
Version: 2
a) Nature and expected realization of deferred taxes As at September 30, 2011 and December 31, 2010, the effects of deferred tax assets and liabilities are as follows:
Reserve for civil,tax and labor provision Interest from enrollment with REFIS (note 16) Write-off of deferred charges (adoption of RTT) Tax loss carryforwards Deferred exchange rate change (*) Temporarily nondeductible provisions Noncurrent assets Deferred exchange rate change (*) Fair value of biological assets Reassessment of useful lives of PP&E (adoption of RTT) Deemed cost of property, plant and equipment Asset revaluation reserve Other temporary differences Noncurrent liabilities Net amount in the financial statements (liabilities)
Company Consolidated 09/30/2011 12/31/2010 09/30/2011 12/31/2010 30,593 29,169 30,593 29,169 69,227 39,134 69,227 39,134 19,617 22,436 19,617 22,436 95 90 60,370 60,370 39,344 27,429 39,344 27,430 219,151 118,168 219,246 118,259 326,411 107,927 263,954 26,207 27,477 751,976 532,825 53,549 341,394 64,095 263,954 26,481 13,604 763,077 644,909 627,733 107,927 565,742 26,207 28,392 1,356,001 1,136,755 53,549 628,904 64,095 565,742 26,481 15,123 1,353,894 1,235,635
(*) Management opted for tax recognition criteria of exchange rate of their rights and obligations based on a cash basis, generating foreign exchange temporary differences, which will be taxed according to the settlement of receivables and payables denominated in foreign currency. The Company adopted the Transitional Tax Regime (RTT) established by Law 11941/09, for the tax treatment of income tax and social contribution on the effects arising from the adoption of accounting pronouncements (CPCs). Management, based on the budget, business plan and budget projection approved by the Board of Directors expects that tax credits derived from temporary differences and tax loss carryforwards will be realized as follows:
The projected realization may not materialize if the estimates used reflected in the preparation of these financial statements are different when the balances are realized. The Companys information on the taxes challenged in the courts is disclosed in note 16.
Page 31 of 63
Version: 2
Income tax and social contribution expense Prior year adjustment Current income tax and social contribution Tax effects on temporary differences Reassessment of useful lives of PP&E Change in fair value - biological assets Deferred income tax and social contribution
Income tax and social contribution expense Prior year adjustment Current income tax and social contribution Tax effects on temporary differences Reassessment of useful lives of PP&E Change in fair value - biological assets Deferred income tax and social contribution
c) Reconciliation of income tax and social contribution to the amounts resulting from directly applying related tax rates to corporate results
Company 01/01 to 09/30/2010 473,958 (161,146)
07/01 to 09/30/2011 Income (Loss) before income tax and social contribution Income tax and social contribution at the rate of 34% Tax effects on permanent differences: Equity in subsidiaries Other effects Income tax and social contribution . Current . Deferred Income tax and social contribution (expense) credit in statements of income (371,187) 126,204
Page 32 of 63
Version: 2
07/01 to 09/30/2011 Income (Loss) before income tax and social contribution Income tax and social contribution at the rate of 34% Tax effects on permanent differences: Equity in subsidiaries Other effects Income tax and social contribution . Current . Deferred Income tax and social contribution (expense) credit in statements of income (370,503)
125,971
(38,301)
(118,054)
(178,044)
Page 33 of 63
11
Klabin Argentina S.A. Silent Partnership "Paran" Silent Partnership "Santa Catarina"
Total
INVESTMENTS IN SUBSIDIARIES
4,545
27,520
1,121,657
408,919
42,466
16,007 (2,304) 20,552 31,228 156,573 8,014 12,767 (25,206) 78,721 1,126,862 415,799
6,012
Balance as of December 31, 2009 Acquisition and capital payment Proceeds Equity in subsidiaries (**) Exchange differences on translating foreign operations Transfers Balance as of December 31, 2010 Acquisition and capital payment Proceeds Equity in subsidiaries (**) Sale of Subsidiaries (****) Exchange differences on translating foreign operations Balance as of S eptember 30, 2011
15,790
3,033
(14,411) (1,443)
(2,785) (39,431)
36,342
1,180,377
399,945
7,509
1,978 1,837,766
(**) Includes the effects of changes in and realization of the fair value of biological assets (note 13). (***) Includes fair value recognized on the acquisitions of the Company investments.
Page 34 of 63
Version: 2
Version: 2
(271,479) (2,811,483)
(169,369) (3,252,331) -
(274,108) (2,825,537)
(170,576) (3,270,221)
(*) Refer to leaseholder improvements, vehicles, furniture and fixtures and IT equipment.
The information on property, plant and equipment pledged as collateral in transactions conducted by the Company is disclosed in note 14, and information on insurance coverage of assets is disclosed in note 25. b) Summary of changes in property, plant and equipment:
Company Land 970,465 31 970,496 213 (1,687) 969,022 Buildings and construction 446,791 1,094 (93) (19,345) 1,937 12 430,396 (42) (15,822) 2,655 (5,842) 411,345 Machinery, equipment and fixtures 2,259,288 3 (2,446) (183,807) 106,713 (1,683) 2,178,068 (1,020) (144,842) 161,952 (5,815) 2,188,343 Construction and facilities in progress 103,823 183,852 (105,112) (4,512) 178,051 192,711 (164,297) (1,741) 204,724 Other 124,963 73,782 (181) (16,091) (3,569) (3,567) 175,337 15,501 (1,712) (12,938) (523) (62) 175,603 Total 3,905,330 258,731 (2,720) (219,243) (9,750) 3,932,348 208,212 (2,774) (173,602) (15,147) 3,949,037
Amount on December 31, 2009 Additions Write-off Depreciation Internal transfers Others Amount on December 31, 2010 Additions Write-off Depreciation Internal transfers Others Amount on September 30, 2011
Page 35 of 63
Version: 2
Amount on December 31, 2009 Additions Write-off Depreciation Reversal of deemed cost Internal transfers Others Amount on December 31, 2010 Additions Write-off Depreciation Internal transfers Others Amount on September 30, 2011
Depreciation for the period was substantially allocated to cost of production. c) Depreciation method The table below shows the annual depreciation rates calculated under the straight-line method, which were applicable to the nine-month period ended September 30, 2011 and 2010, defined based on the economic useful lives of assets: Rate - % 2.86 to 3.33 2.86 to 10 (*) 4 to 20
As of December 31, 2010, management conducted a reassessment of the useful lives of the Companys property, plant and equipment, but no adjustments to the depreciation rates used was considered necessary. d) Construction and facilities in progress As at September 30, 2011, the balance of construction and facilities in progress relates to the following major projects: (i) installation of transmission lines of high voltage electricity of the Monte Alegre; (ii) technological upgrading of packaging segment plants; (iii) biomass boiler and expansion of the evaporation system in the Otaclio unit; (iv) biomass boiler in the Correia Pinto unit; and (v) current investments in continuing operations of the Company. e) Impairment of assets The Company did not identify any indicators that as at December 31, 2010 its assets might be impaired, based on its analysis of discounted cash flows prepared in accordance with the budget plan approved by Management.
13
BIOLOGICAL ASSETS
The Companys biological assets comprise the planting and growing of pine and eucalyptus trees for the supply of raw material to produce the pulp used in the paper production process and sales of timber to third parties. As at September 30, 2011, the Company had 212 thousand hectare (213 thousand hectare as at December 31, 2010) of planted areas (information not reviewed by independent auditors), not considering the permanent preservation areas and legal reserve to be maintained to comply with the Brazilian environmental law. The balance of the Companys biological assets consists of the cost to grow forests and the fair value difference on the growing cost, less costs necessary to prepare the assets for use or sale in order to the total balance of biological assets is recorded at fair value, as follows:
Page 36 of 63
Version: 2
Growing cost of biological assets Fair value of biological assets Noncurrent assets
Measurement of biological assets at their fair values takes into consideration certain estimates, such as: wood price, discount rate, forest harvesting planning, and productivity, which are subject to uncertainties, as any variation would have an impact on actual results. The information on assets pledged as collateral in transactions conducted by the Company is disclosed in note 14, and information on insurance coverage of biological assets and financial risks of forestry operations is disclosed in note 25. a) Assumptions for recognition of the fair value of biological assets Under CPC 29 (IAS 41) - Biological Assets and Agricultural Product, the Company recognizes its biological assets at fair value in accordance with the following assumptions: (i) Eucalyptus forests are recorded at historical cost through their third year and pine forests through their fifth year, based on the Managements understanding that during these periods the historical cost of biological assets approximates their fair values; (ii) After the third and fifth year, eucalyptus and pine forests, respectively, are measured at fair value, which reflects the sales price of the assets less the costs of necessary to prepare the assets for the intended use or sale; (iii) The methodology used to measure the fair value of biological assets corresponds to future cash flows discounted estimated according to the projected productivity cycle of forests, taking into consideration the pricing changes and growth of biological assets; (iv) The discount rate used in cash flows corresponds to the Companys WACC, which is periodically reviewed by Management; (v) The estimated productivity volumes of forests are defined using a stratification method based on the type, genetic material, forest management system, productive potential, rotation and age of forests. This set of characteristics forms an index called Average Annual Growth (AAG), expressed in cubic meters per hectare/year used as a basis to estimate productivity. The harvesting plan of Company forests varies from 6 to 7 years for eucalyptus trees and 14 to 15 years for pine trees; (vi) The prices of biological assets, denominated in R$/cubic meter, are obtained using market price surveys disclosed by specialized firms, and the prices charged by the Company on sales to third parties. The prices are adjusted by deducting the capital costs relating to land, since they refer to assets used to plant forests and other costs to adjust the assets to sale or consumption conditions; (vii) Planting expenses refer to the costs on development of biological assets; (viii) Depletion of biological assets is calculated based on the fair value of biological assets harvested in the period; (ix) The Company decided to revalue the fair value of its biological assets on a quarterly basis since it understands that this time interval is sufficient to prevent any significant gap in the fair value of the biological assets recoded in its financial statements.
Page 37 of 63
Version: 2
Balance as of December 31, 2009 Planting Transfers Depletion: . Historical cost . Fair value Change in fair value due to: . Price . Growth Balance as of December 31, 2010 Planting Depletion: . Historical cost . Fair value Change in fair value due to: . Price . Growth Sale of Subsidiary Transfers Balance as of September 30, 2011
Company 1,326,757 65,084 3,134 (16,495) (204,152) 45,499 175,111 1,394,938 46,364 (13,525) (153,807) 64,138 45,600 (14,354) 1,369,354
Consolidated 2,491,169 119,108 41,077 (28,844) (308,256) 75,455 373,170 2,762,879 88,403 (28,985) (257,463) 155,182 116,964 (3,122) (32,484) 2,801,374
The depletion of biological assets in the periods was mainly recognized as production costs after allocating inventories as forests are harvested either to use in production or sale to third parties.
14
09/30/2011 Total 1,144,044 398,813 150,423 95,216 68,157 1,856,653 55,434 2,898,495 533,009 3,486,938 5,343,591
Page 38 of 63
Version: 2
12/31/2010 Total 1,324,230 367,490 150,452 100,765 58,796 2,001,733 41,407 2,247,404 529,647 2,818,458 4,820,191 26,278 10,628 4,857,097
The Company has agreements with BNDES for the financing of industrial development projects, such as project MA 1100, repayable through January 2017. These loans are amortized on a monthly basis, including the corresponding interest. Export prepayments and export credit notes Export prepayments and credit notes were raised with banks in order to manage working capital and promote the Companys activities. The agreements will be settled up to May 2021. b) Maturities of long-term loans The maturity of the Companys loans as at September 30, 2011, classified in noncurrent liabilities, is as follows:
2020 and thereafter 410,707
Year Amount
2012 319,727
2013 919,346
2014 775,489
2015 736,192
2016 340,132
2017 232,735
2018 282,649
2019 396,905
Total 4,413,882
Page 39 of 63
Version: 2
Balances as of December 31, 2009 Borrowings Accrued interest Exchange rate change Amortization and payment of interest Balances as of December 31, 2010 Borrowings Accrued interest Exchange rate change Amortization and payment of interest Balances as of September 30, 2011
d) Guarantees
Company 4,598,227 1,016,656 251,240 (143,467) (902,465) 4,820,191 577,453 194,563 367,896 (616,512) 5,343,591
Consolidated 4,727,949 1,042,934 252,410 (143,958) (1,022,238) 4,857,097 577,453 194,791 367,738 (653,488) 5,343,591
BNDES loans are guaranteed by land, buildings, improvements, machinery, equipment, and plants in Correia Pinto, Santa Catarina state, and Monte Alegre, Paran state, whose carrying amount as at September 30, 2011, net of depreciation is R$2,099,592, the financed assets, in addition to escrow deposits and sureties of controlling shareholders. Export credit, export prepayment, and working capital loans are not collateralized. e) Restrictive covenants At the end of the reporting period, the Company and its subsidiaries did not have any financing agreements that contain restrictive covenants requiring the maintenance of certain financial ratios on the transactions under the agreements or the debt payment acceleration.
15
16
a) Accrued contingencies Based on the individual analysis of the lawsuits and the opinion of their legal counsel, the Company and its subsidiaries recorded, in noncurrent liabilities, reserves for probable losses, as shown below:
Page 40 of 63
Version: 2
Company: Tax: . PIS/COFINS (taxes on revenue) . CPMF (tax on banking transactions) . Income tax and social contribution . OTHER Labor Civil
Accrued amount (13,729) (8,646) (13,532) (1,614) (37,521) (60,615) (5,374) (103,510) (103,510)
Escrow deposits 13,729 8,646 9,480 1,703 33,558 14,435 1,416 49,409 49,409
Company: Tax: . PIS/COFINS (taxes on revenue) . CPMF (tax on banking transactions) . Income tax and social contribution . OTHER Labor Civil
Accrued amount (13,466) (8,646) (16,357) (1,508) (39,977) (55,996) (6,174) (102,147) (102,147)
Related escrow deposits 13,466 8,646 9,480 1,508 33,100 14,587 47,687 47,687
As at September 30, 2011, the Companys accrued contingencies related to tax lawsuits related mainly to challenges regarding the payment of PIS/COFINS on the sale of shares and income tax and social contribution on the inflation adjustments under Law 8200/91, labor lawsuits comprising mostly lawsuits filed by former employees of the Companys plants claiming the payment of labor rights (severance pay, overtime, hazardous duty and health hazard premiums), compensations and joint liability, as well as civil lawsuits related mainly to compensation claims due to property damage and/or pain and suffering resulting from accidents. b) Summary of changes in reserve for civil, tax and labor provisions
Company / Consolidated Civil Net exposure (9,021) (94,032) (312) 1,775 3,159 37,797 (6,174) (54,460) (4,771) 2,216 5,130 (3,958) (54,101)
Balances as of December 31, 2009 New lawsuits/increases and inflation adjustments (Recognitions)/reversals (*) Balance as of December 31, 2010 New lawsuits/increases and inflation adjustments (Recognitions)/reversals Balance as of September 30, 2011
(*) Substantially due to the update process and according to representatives of business, still under approval.
Page 41 of 63
Version: 2
17
SHAREHOLDERS EQUITY
a) Capital As at September 30, 2011 and December 31, 2010, the Companys subscribed and paid-in capital in the amount of R$1,500,000 is represented by 917,683,296 shares, without par value. Preferred shares are nonvoting but have priority in capital reimbursement in case of Company liquidation and are paid dividends 10% higher than those paid on common shares. b) Treasury shares The Extraordinary Board of Directors Meeting held on October 13, 2010 approved the buyback of up to 45,278,818 preferred shares of the Company (equivalent to 10% of the outstanding shares of this class on that date) over a 365-day period, to be held in treasury and be subsequently sold or cancelled with no capital reduction.
Page 42 of 63
Version: 2
R$58.22 per thousand registered common shares - ON, and R$64.04 per thousand registered preferred shares PN, actually paid on October 11, 2011.
Page 43 of 63
Version: 2
The Companys net revenue includes only the sales of its products and is broken down as follows:
Company 01/01 to 09/30/2010 3,217,496 (15,012) (544,043) 2,658,441 2,111,404 547,037 2,658,441 Consolidated 01/01 to 09/30/2010 3,305,865 (16,982) (556,506) 2,732,377 2,120,206 612,171 2,732,377
19
EXPENSES/REVENUES BY NATURE
Company 01/01 to 09/30/2010 (1,343,833) (394,936) (339,324) (105,747) (136,255) (74,646) (2,394,741)
07/01 to 09/30/2011 Variable costs (raw materials and consumption supplies) Personnel expenses Depreciation, amortization and depletion Freight Services received Proceeds from sale of subsidiary Investment balance of subsidiary sold Other (487,103) (158,662) (112,695) (38,404) (48,249) 49,582 (40,613) (11,296) (847,440)
01/01 to 09/30/2011 (1,439,741) (450,175) (342,349) (110,359) (161,435) 49,582 (40,613) (76,901) (2,571,991)
Page 44 of 63
Version: 2
07/01 to 09/30/2011 Variable costs (raw materials and consumption supplies) Personnel expenses Depreciation, amortization and depletion Freight Services received Proceeds from sale of subsidiary Investment balance of subsidiary sold Other (439,337) (160,388) (149,811) (47,135) (54,083) 49,582 (40,613) (21,243) (863,028)
01/01 to 09/30/2011 (1,308,519) (455,354) (462,335) (139,033) (171,372) 49,582 (40,613) (112,607) (2,640,251)
20
07/01 to 09/30/2011 Financial income . Income from short-term investments . Other . Exchange variation on assets Financial expenses . Interest on financing . Interests Provision - REFIS (note 16) . Other . Exchange variation on liabilities Financial income (expenses), net 83,553 2,655 42,395 128,603 (74,544) (12,758) (17,876) (543,719) (648,897) (520,294)
01/01 to 09/30/2011 217,185 17,151 22,313 256,649 (194,428) (86,806) (33,311) (365,890) (680,435) (423,786)
07/01 to 09/30/2010 59,266 4,944 (20,467) 43,743 (62,836) (7,802) (1,952) 172,561 99,971 143,714
07/01 to 09/30/2011 Financial income . Income from short-term investments . Other . Exchange variation on assets Financial expenses . Interest on financing . Interests Provision - REFIS (note 16) . Other . Exchange variation on liabilities Financial income (expenses), net 86,471 2,664 42,358 131,493 (70,135) (12,758) (22,640) (543,313) (648,846) (517,353)
01/01 to 09/30/2011 224,797 17,181 22,360 264,338 (195,385) (86,806) (34,153) (362,314) (678,658) (414,320)
07/01 to 09/30/2010 61,256 4,947 (20,434) 45,769 (63,133) (7,802) (3,045) 172,133 98,153 143,922
Page 45 of 63
Version: 2
Basic earnings per share are calculated by dividing net income attributable to the holders of Company common and preferred shares by the weighted average number of common and preferred shares outstanding in the year. Diluted earnings per share correspond to basic earnings per share as the Company has no potentially dilutive common or preferred shares. As mentioned in Note 17, in August 2011 the Company bought back 2,803,200 own preferred shares, increasing the number of shares held in treasury to 30,000,000 from 27,196,800. This transaction affects the weighted average number of preferred shares held in treasury for the three- and nine-month period ended September 30, 2011. The weighted average used in calculating earnings (loss) per share for 2011 was calculated as follows:
Jan to Jul 27,196,800 x 7/9 Jul 27,196,800 x 1/3 Number of treasury shares - 2011 Ago to Set 9 months 2011 + 30,000,000 x 2/9 = 27,819,733 Ago to Set 30,000,000 x 2/3 Third Quarter 2011 29,065,600
The table below, presented in Brazilian reais, reconciles net income (loss) for the three and nine-month period ended September 30, 2011 and 2010 to the amounts used for the calculation of basic and diluted earnings per share:
Company / Consolidated 07/01 to 09/30/2011 Preferred shares (*) Total 600,855,733 (29,065,600) 571,790,133 66.50% 917,683,296 (29,065,600) 888,617,696 100.00%
Common shares Denominator Weighted average number of shares Treasury shares Weighted average number of shares % of shares Numerator Profit (Loss) attributable to each class of shares (R$) Weighted average number of shares Earnings per share - basic and diluted (R$) 316,827,563 316,827,563 33.50%
(243,055,000) 888,617,696
Page 46 of 63
Version: 2
Common shares Denominator Weighted average number of shares Treasury shares Weighted average number of shares % of shares Numerator Profit (Loss) attributable to each class of shares (R$) Weighted average number of shares Earnings per share - basic and diluted (R$) 316,827,563 316,827,563 33.45%
60,290,000 889,863,563
Common shares Denominator Weighted average number of shares Treasury shares Weighted average number of shares % of shares Numerator Profit (Loss) attributable to each class of shares (R$) Weighted average number of shares Earnings per share - basic and diluted (R$) 316,827,563 316,827,563 33.03%
Company / Consolidated 07/01 to 09/30/2010 Preferred shares (*) Total 600,855,733 (16,907,900) 583,947,833 66.97% 917,683,296 (16,907,900) 900,775,396 100.00%
225,706,000 900,775,396
Common shares Denominator Weighted average number of shares Treasury shares Weighted average number of shares % of shares Numerator Profit (Loss) attributable to each class of shares (R$) Weighted average number of shares Earnings per share - basic and diluted (R$) 316,827,563 316,827,563 33.03%
Company / Consolidated 01/01 to 09/30/2010 Preferred shares (*) Total 600,855,733 (16,907,900) 583,947,833 66.97% 917,683,296 (16,907,900) 900,775,396 100.00%
334,634,000 900,775,396
(*) Preferred shares are entitled to dividends 10% higher than those paid to common shares.
Page 47 of 63
Version: 2
a) Criteria for identification of operating segments The Company segmented its operating structure taking into consideration the way Management manages the business. Management defined the following operating segments: (i) Forestry segment: includes planting and growing pine and eucalyptus trees to supply of the Companys paper plants and sell timber (logs) to third parties in the domestic market. (ii) Paper segment: substantially includes the production and sale of cardboard, kraftliner and recycled paper rolls in the domestic and foreign markets. (iii) Conversion segment: includes the production and sale of corrugated cardboard boxes and boards, and industrial bags in the domestic and foreign markets. b) Consolidated information on operating segments for the three and nine-month period ended September, 30 2011 and 2010
Consolidated 07/01 to 09/30/2011 Forestry Sales, net: .Domestic market .Foreign market Revenue from sales to third parties Intersegment revenue Total sales, net Change in fair value of biological assets Cost of sales Gross profit Operating expenses Income from operations before financial income (expenses) Sale of products (tonne) .Domestic market .Foreign market .Intersegment Sale of timber (tonne) .Domestic market .Intersegment 72,242 72,242 120,546 192,788 19,255 (213,809) (1,766) (6,918) (8,684) Papers 305,213 166,595 471,808 228,362 700,170 (508,441) 191,729 (67,599) 124,130 Conversion 425,902 20,738 446,640 3,464 450,104 (362,406) 87,698 (47,392) 40,306 Corporate/ eliminations (67) (67) (352,372) (352,439) 355,174 2,735 (11,637) (8,902) Total 803,290 187,333 990,623 990,623 19,255 (729,482) 280,396 (133,546) 146,850
Page 48 of 63
Version: 2
864,535 441,768 1,306,303 2,090,549 2,090,549 304,737 (462,335) 12,683,341 7,653,268 5,030,073
Investments in the current period Depreciation, depletion and amortization Total assets Total liabilities Shareholders equity
1/7 30/09/2010 Sales, net: .Domestic market .Foreign market Revenue from sales to third parties Intersegment revenue Total sales, net Change in fair value of biological assets Cost of sales Gross profit Operating expenses Income from operations before financial income (expenses) Sale of products (tonne) .Domestic market .Foreign market .Intersegment Forestry 75,167 75,167 113,846 189,013 124,461 (222,318) 91,156 (14,640) 76,516 Papers 285,062 178,193 463,255 228,618 691,873 Conversion 418,262 25,764 444,026 2,035 446,061 Corporate/ eliminations 145 145 (344,499) (344,354) Total 778,636 203,957 982,593 982,593 124,461 (767,347) 339,707 (136,411) 203,296
(183,603) (183,603)
67,974 (47,454)
10,742 (6,817)
Page 49 of 63
Version: 2
(528,278) (528,278)
129,793 (132,318)
34,016 (20,980)
Corporate refers basically to the corporate units expenses not apportioned among the other segments, and eliminations refer to adjustments of intersegment transactions. The information related to financial income (expenses) and income tax and social contribution was not disclosed in segment reporting because the Companys management does not use said data on a segmented basis, which is managed and analyzed on a consolidated basis. c) Information on net revenues from sales The Companys net revenues generated by sales to foreign market customers, in the consolidated balance sheet for the three and nine-month period ended September 30, 2011, amount to R$638 million and R$187 million respectively (R$612 million and R$204 million for the three and nine-month period ended September 30, 2010). The table below shows the distribution of net revenues from sale for the periods indicated by country:
Page 50 of 63
Version: 2
Country Argentina China Spain Ecuador Singapore Philippines Germany Italy South Africa Nigeria Turkey Sundry others
07/01 to 09/30/2011 Total revenue % of revenue (R$ million) Total net 63 6.4% 20 2.0% 9 0.9% 2 0.2% 15 1.5% 10 1.00% 6 0.60% 8 0.80% 3 0.30% 6 0.60% 5 0.50% 40 4.0% 187 19%
Country Argentina China Spain Ecuador Singapore Philippines Germany Italy South Africa Nigeria Turkey Sundry others
07/01 to 09/30/2010 % na Receita Lquida Total 9.0% 2.1% 2.4% 0.1% 0.9% 1.1% 0.7% 0.1% 0.4% 0.4% 0.3% 3.2% 21%
The Companys net sales revenue arising from domestic customers in the consolidated balance sheet for the three- and nine-month periods ended September 30, 2011, amounts to R$2,257 million and R$803 million, respectively (R$2,120 million and R$779 million in the three- and nine-month periods ended September 30, 2010).
For the nine-month period ended September 30, 2011, in the papers segment, a single customer of cardboards accounted for approximately 20% of the Companys net revenue, corresponding to approximately R$572 million (R$553 million in the ninemonth period ended September 30, 2010). The remaining customer base is diluted as none of the other customers individually accounts for a material share of the Company's net operating revenue (above 10%).
Page 51 of 63
Version: 2
a) Risk management The Company and its subsidiaries conduct transactions with financial instruments, all recorded in balance sheet accounts, that are intended to meet their operational needs and reduce exposure to financial risks, mainly credit and investment of funds, market risks (foreign exchange and interest rates) and liquidity risks, to which the Company understands that it is exposed based on the nature of its business and corporate structure. Management of these risks is implemented through strategies defined and approved by the Companys management in conjunction with control systems and specific limits. Transactions are not conducted with financial instruments for speculative purposes. In addition, Management assesses on a timely basis the Companys consolidated position and monitors the financial income (expenses) obtained based on the analysis of future projections to ensure that the business plan is fulfilled and the risks to which the Company is exposed are monitored. The mainly risks to which the Company is exposed are described below: Market risk Market risk is the risk that the fair value of future cash flows of a financial instrument fluctuates due to changes in market prices. Market prices are affected by two types of risks: interest rate risk and currency risk. The financial instruments affected by market risks are short-term investments, trade receivables, trade payables, loans and financing, available-for-sale instruments, and derivatives. (i) Currency risk The Company has transactions denominated in foreign currencies, which are exposed to market risks arising from fluctuations in foreign exchange rates. Any change in the exchange rate can increase or reduce these balances. Breakdown of this exposure is as follows:
Cash and short-term investments Trade accounts receivable (net of allowance for doubtful accounts) and other assets Trade accounts payable Export prepayments (financing) Net exposure
As at September 30, 2011, the balance by maturity for this net exposure is as follows:
2018 thereafter (994,109)
Year amount
2011 107,340
2012 (505,170)
2013 (591,140)
2014 (453,085)
2015 (367,417)
2016 (250,719)
2017 (189,738)
Total (3,244,038)
As of September 30, 2011, the Company has not entered into derivative contracts to hedge against long-term currency exposure. However, in order to hedge against this net liability exposure, the Company has a plan for projected exports sales of approximately US$500 million receivable annually that, if realized, would exceed the flow of payments for the respective liabilities, thus offsetting the effect of this currency exposure in the future.
Page 52 of 63
Version: 2
financial instrument), in order to reduce the effective interest rate along with an export prepayment transaction. The transaction carried by the Company is as follows: (a) Export prepayment contracted with Banco Ita BBA S.A. in the amount of USD25 million, subject to interest corresponding to the 6-month Libor plus a fixed rate of 1.36%. Interest is paid semiannually and principal is repaid in nine installments, beginning October 2011 and ending October 2015. (b) In order to reduce the fixed interest rate of such prepayment, the Company contracted an interest rate swap transaction, corresponding to a synthetic financial instrument, with the same counterparty of the prepayment, i.e. Banco Ita BBA S.A. The swap was contracted based on the following conditions: (a) asset position in the same amount (notional amount) in US dollar of the prepayment above and same maturity dates, adjusted based on the 6-month Libor plus 1.40% p.a., and (b) passive position in the same amount in US dollar of the prepayment above, adjusted based on the 6-month Libor plus 1.15% p.a. Repayments are made on the dates set forth in the prepayment agreement described above. Accordingly, in case of same variables in the long and short positions (US$ and Libor), such swap is intended only to reduce the effective interest rate of the prepayment transaction by 0.25% p.a., resulting in a revenue of approximately R$66 for the nine-month period ended September 30, 2011. The transaction will mature by 2015. Despite the interest rate swap transaction mentioned above, the Companys policy is to continuously monitor market interest rates in order to assess the potential need of contracting derivatives to hedge against the risk of volatility of these rates. Additionally, the Company understands that the high cost associated with entering into transactions at fixed interest rates in the Brazilian macroeconomic scenario justifies its option for floating rates.
Breakdown of exposure to interest rate risk:
Short-term investments - CDI Short-term investments - Selic Asset exposure Financing - CDI Financing - TJLP Financing - Libor Liability exposure
Credit risk and investment of funds
Credit risk is the risk that the counterparty of a business does not meet an obligation established by a financial instruments or contract with a customer, thus resulting in a financial loss. The Companys operating activities (mainly those related to trade accounts receivable) and investment, including deposits in banks and financial institutions, foreign exchange transactions, short-term investments and other contracted financial instruments, are exposed to credit risks. As at September 30, 2011, the maximum amount exposed to credit risks is the carrying amount of trade accounts receivable stated in note 6. The investment amount exposed to credit risks corresponds substantially to the amounts of short-term investments and securities, described in notes 4 and 5.
Page 53 of 63
Version: 2
2011 2012 2013 234,335 450,337 1,094,119 1,132,564 684,672 1,094,119 1,132,564
2014
-
2015
-
2016
-
934,255 934,255
848,726 848,726
392,329 392,329
The projection for the following years, which was approved by the Board of Directors, shows the Companys ability to meet the obligations, if required. The Companys equity structure consists of its net debt, consisting of loans and financing (note 14) less the cash, cash equivalents, and securities (notes 4 and 5), and shareholders equity, including the balance of issued capital and all recognized reserves. The Companys net indebtedness is broken down as follows:
Cash, cash equivalents and securities Loans and financing Net indebtedness Shareholders equity Debt to asset ratio
b) Financial instruments
The Companys main financial instruments are classified as follows: Loans and receivables and other financial liabilities The financial instruments included in this group comprise balances arising from transactions related to the Companys activities, such as accounts receivable, trade accounts payable, loans and financing, short-term investments and cash and cash equivalents. All of them are recognized at their notional value plus, when applicable, contractual charges and interest, expenses and income from which are recognized in income (loss) for the year. Available-for-sale financial assets The Company classified its securities that comprise National Treasury Bills (LFT) (note 5) as financial assets available for sale, because they can be traded in the future. These securities are recorded at fair value. Due to this assets liquidity, its fair value approximates its amortized cost, and thus it has no impact on the Companys shareholders equity. As at September 30, 2011, the balance of these securities on a consolidated basis is R$215,486.
Page 54 of 63
Version: 2
(ii) Interest rate exposure Short-term investments and loans, except those linked to the TJLP and Libor, are linked to fixed CDI rate. For sensitivity analysis purposes, for the projection of scenario I the Company used the same rates prevailing on dates close to the end of the reporting period for Selic, Libor and CDI, given their proximity. These rates were adjusted by 25% and 50% for the projection of scenarios II and III, respectively. Accordingly, the table below simulates the effects of interest rate fluctuations on income (loss) for 12 months:
Balance as of 09/30/2011 Scenario I R$ Short-term investments Bank Certificates of Deposit (CDBs) Treasury Bills (LTFs) Borrowings Working capital BNDES Export prepayments (financing) Total effect on net income - R$ CDI Selic CDI TJLP Libor 2,740,829 215,486 95,216 1,542,857 2,898,495 Rate 11.78% 11.78% 11.78% 6.00% 0,62% R$ income (loss) 322,870 25,384 (11,216) (92,571) (17,971) 226,496 Scenario II Rate 14.73% 14.73% 14.73% 7.50% 0,78% R$ income (loss) 403,587 31,730 (14,021) (115,714) (22,463) 283,119 Scenario III Rate 17.67% 17.67% 17.67% 9.00% 0,93% R$ income (loss) 484,304 38,076 (16,825) (138,857) (26,956) 339,742
Page 55 of 63
Version: 2
The Company and its subsidiaries offer their employees life insurance, healthcare, and pension plan benefits. These benefits are accounted for on an accrual basis and stop being granted after severance. a) Pension Plan Klabins pension fund Plano Prever, administered by Ita Vida e Previdncia S.A., was created in 1986 as a defined benefit plan. Beginning 1998, the plan was restructured, resulting in the transformation of the plan into a defined contribution plan. In November 2001, a new pension plan was created, the Plano de Aposentadoria Complementar Klabin - PACK, also administered by Ita Vida e Previdncia S.A. and structured as a PGBL (plan/life insurance plan). The participants of the Prever Plan were offered the option to migrate to the new plan. The Company does not assume any responsibility to pay minimum benefits to retirees in either of the plans. b) Healthcare Pursuant to the agreement entered into the Union of the So Paulo State Pulp and Paper Workers, the Company pays for a lifetime healthcare plan (Hospital SEPACO, principal plan) for its former employees who retired up to 2001, and their dependents (spouses and children until they reach majority age), while no new beneficiaries are allowed. The Company understands that said healthcare benefit is a defined benefit plan in accordance with accounting practices adopted in Brazil and thus recognizes a provision for the estimated actuarial liability in the amount of R$35,505 (R$32,805 as at December 31, 2010), in noncurrent liabilities, in line item Other payables and provisions. As at December 31, 2010, the actuarial appraisal considered the following economic and biometrical assumptions: nominal discount rate of 10.75% per year nominal growth rate of variable medical costs of 12.5% per year in 2011, reaching 6.5% per year in 2023, long-term inflation of 4.5% per year and biometrical mortality table RP 2000. The amount recognized as expense for the three and nine-month period ended September 30, 2011 were R$2,100 and R$900 respectively. . The increase or decrease of one percentage point in the rates used in actuarial calculations does not bring significant effects on the Company's financial statements. This plan does not assets for disclosure.
25
As at September 30, 2011, the Company has insurance against fire, lightening, explosion, electrical damages, and windstorm covering all its industrial, administrative, and storage facilities. The Company also has general civil liability and D&O, auto, and multiperils insurance for its chattels, amounting to R$1,958,666. In view of the nature of its activities, the location of forests in different areas, and the preventive actions taken against fire and other risks, the Company, rather than contracting insurance against damage caused to forests, opted to adopt protection policies that, historically, have proven to be highly effective and caused no harm to the Companys activities or financial position. Management understands that the Companys structure of management of the financial risks related to forest activities is appropriate to guarantee its continuity as a going concern.
26
The Extraordinary Board of Directors Meeting held on October 13, 2011 approved the buyback of up to 41,954,318 preferred shares of the Company (equivalent to 10% of the outstanding shares of this class on that date) within 365 days, to be held in treasury and be subsequently sold or cancelled with no capital reduction. On October 13, 2011, the Company entered into a forward currency swap transactions with Banco HSBC, maturing on November 16, 2011, in order to hedge against US dollar fluctuations, with notional acquisition amount equivalent to USD242 million. If the US dollar rate on the transaction date is above or below R$1.7685, the Company will recognize a gain or loss, respectively, which will be calculated based on the difference between the closing rate and the contracted rate, multiplied by the notional amount of the swap. The issuance of this interim financial information of Klabin S.A. (Company) and its subsidiaries was approved by Management on October 28, 2011.
Page 56 of 63
Version: 2
IN ACCORDANCE WITH THE DIFFERENTIATED CORPORATE GOVERNANCE PRACTICES REGULATION - LEVEL 1, WE PRESENT BELOW ADDITIONAL DISCLOSURES ON THE COMPANY AS AT SEPTEMBER 30, 2011. 1 COMPANYS OWNERSHIP INTEREST INCLUDING SHAREHOLDERS WITH MORE THAN 5% OF VOTING CAPITAL, DETAILED UP TO THE LEVEL OF INDIVIDUALS
(*) Foreign shareholders. (**) Shareholders with less than 5% of voting capital.
SHARES Number % of capital 1 12.52 1 6.26 1 6.26 1 12.52 1 12.52 1 11.07 1 11.07 1 11.07 1 8.36 1 8.35 10 100.00
General partnership, with capital in the amount of R$1,000,000.00, represented by shares of various amounts.
Page 57 of 63
Version: 2
CONTROLLING SHAREHOLDER/INVESTOR: Jacob Klabin Lafer Adm. Partic. S.A. SHAREHOLDERS Miguel Lafer Vera Lafer TOTAL CONTROLLING SHAREHOLDER/INVESTOR: Miguel Lafer Participaes S.A. SHAREHOLDERS Miguel Lafer Vera Lafer TOTAL CONTROLLING SHAREHOLDER/INVESTOR: VFV Participaes S.A. SHAREHOLDERS Vera Lafer Other TOTAL CONTROLLING SHAREHOLDER/INVESTOR: PRESH S.A. SHAREHOLDERS Sylvia Lafer Piva Pedro Franco Piva Horcio Lafer Piva Eduardo Lafer Piva Regina Piva Coelho Magalhes TOTAL ON % SHARES PN % TOTAL 17,658,895 99.99993 17,658,895 12 0.00007 12 33.33 2,943,151 33.33 2,943,151 % 66.66662 0.00005 11.11111 11.11111 SHARES ON % Total 981,094,312 99.9999 688 0.0001 981,095,000 100.0000 SHARES ON % Total 223,510,726 99.9999 344 0.0001 223,511,070 100.0000 SHARES ON % Total 215,059,063 50.00 215,059,063 50.00 430,118,126 100.00
CONTROLLING SHAREHOLDER/INVESTOR: GL Holdings S.A. SHAREHOLDERS Graziela Lafer Galvo Other TOTAL ON % 4,233,864 99.99991 4 0.00009 4,233,868 100.00000 SHARES PN % TOTAL % 8,467,726 99.99993 12,701,590 99.99992 6 0.00007 10 0.00008 8,467,732 100.00000 12,701,600 100.00000
Page 58 of 63
Version: 2
CONTROLLING SHAREHOLDER/INVESTOR: GLIMDAS Participaes S.A. SHARES SHAREHOLDERS ON % PN % TOTAL % Israel Klabin 1,756,611 92.5090 1,756,611 45.747 Alberto Klabin (*) 323,502 16.6664 23,707 1.2485 347,209 9.042 Leonardo Klabin (*) 323,502 16.6664 23,707 1.2485 347,209 9.042 Stela Klabin (*) 323,502 16.6664 23,707 1.2485 347,209 9.042 Maria Klabin (*) 323,502 16.6664 23,707 1.2485 347,209 9.042 Dan Klabin (*) 323,502 16.6664 23.707 1.2485 347,209 9.042 Gabriel Klabin (*) 323,502 16.6664 23,707 1.2485 347,209 9.042 Esplio Maurcio Klabin (*) 32 0.0017 32 0.001 1,941,044 100.0000 1,898,853 100.0000 3,839,897 100.0000 TOTAL (*) Shares subject to usufruct, with the usufructuary Israel Klabin having voting right. CONTROLLING SHAREHOLDER/INVESTOR: DARO Participaes S.A. SHARES SHAREHOLDERS ON % Total Daniel Miguel Klabin 1,627,732 53.065 Rose Klabin (*) 479,900 15.645 Amanda Klabin (*) 479,900 15.645 David Klabin (*) 479,900 15.645 3,067,432 100.000 TOTAL (*) Shares subject to usufruct, with the usufructuary Daniel Miguel Klabin having voting right. CONTROLLING SHAREHOLDER/INVESTOR: DAWOJOBE Participaes S.A. SHARES SHAREHOLDERS ON % Armando Klabin 4 0.20 Wolff Klabin (*) 516 24.95 Daniela Klabin (*) 516 24.95 Bernardo Klabin (*) 516 24.95 Jos Klabin (*) 516 24.95 2,068 100.00 TOTAL (*) Shares subject to usufruct, with the usufructuary Armando Klabin having voting right. CONTROLLING SHAREHOLDER/INVESTOR: ESLI Participaes S.A. SHAREHOLDERS Cristina Levine Martins Xavier Regina Klabin Xavier Roberto Klabin Martins Xavier TOTAL CONTROLLING SHAREHOLDER/INVESTOR: LKL Participaes S.A. SHAREHOLDERS Cristina Levine Martins Xavier Regina Klabin Xavier Roberto Klabin Martins Xavier TOTAL SHARES ON % Total 5,977,833 33,3333 5,977,833 33.3333 5,977,834 33.3334 17,933,500 100.000
SHARES ON % Total 5,891,253 33.3333 5,891,253 33.3333 5,891,254 33.3334 17,673,760 100.0000
Page 59 of 63
Version: 2
CONTROLLING SHAREHOLDER/INVESTOR: NIBLAK PARTICIPAES S.A. SHAREHOLDERS Miguel Lafer Part. S.A. VFV Participaes S.A. GL Holdings S.A. Glimdas Participaes S.A. Daro Participaes S.A. Dawojobe Partic. S.A. Armando Klabin Esli Participaes S.A. Pedro Franco Piva TOTAL SHARES ON % Total 3,038,036 12.521 3,038,035 12.521 3,038,061 12.521 2,686,869 11.074 2,686,869 11.074 2,562,686 10.562 124,183 0.511 4,050,722 16.695 3,038,061 12.521 24,263,522 100.000
Type
Sale
ON PN
202,093,755 113,240,647
63.79 18.85
12,700 9,472,240
(12,778,941)
2,000,000
(2,000,000)
202,106,455 109,933,946
63.79 18.30
0.00 -2.92
Members of Board of Directors Members of Executive Board Members of Supervisory Board Treasury shares Other Shareholders Total
ON PN ON PN
33,273,244 14,999,350
10.50 2.50
23,320 3,709,978
(8,015,888)
33,296,564 10,693,440
10.51 1.78
0.07 -28.71
91,738
0.02
203,100
(6,000)
400,000
(7,100)
681,738
0.11
643.14
ON PN ON PN ON PN ON PN
1,000 3,420
0.00 0.00
1,000 3,420
0.00 0.00
0.00 0.00
20,800,829 0 0
(2,400,000) 0 0
2,007,100 0 0
Page 60 of 63
Version: 2
NUMBER OF COMPANYS SHARES DIRECTLY OR INDIRECTLY HELD BY CONTROLLING SHAREHOLDERS, MEMBERS OF THE EXECUTIVE BOARD AND MEMBERS OF THE BOARD OF DIRECTORS AND NUMBER OF SHARES OUTSTANDING
As at September 30, 2010 SHAREHOLDERS Controlling shareholders Members of Board of Directors Members of Executive Board Members of Supervisory Board Treasury shares Other shareholders Total Number of shares outstanding As at September 30, 2011 SHAREHOLDERS Controlling shareholders Members of Board of Directors Members of Executive Board Members of Supervisory Board Treasury shares Other shareholders Total Number of shares outstanding 81,423,544 81,424,544 25.70 25.70 316,827,563 100.00 1,000 0.00 ON 202,106,455 33,296,564 % 63.79 10.51 81,459,564 81,460,564 25.71 25.71 316,827,563 100.00 1,000 0.00 ON 202,093,755 33,273,244 % 63.79 10.50 SHARES PN 113,240,647 14,999,350 91,738 3,420 16,907,900 455,612,678 455,616,098 % 2.50 0.02 0.00 2.81 Total 48,272,594 91,738 4,420 16,907,900 % 34.36 5.26 0.01 0.00 1.84 58.52 58.53 18.85 315,334,402
SHARES PN 109,933,946 10,693,440 681,738 3,420 30,000,000 449,543,189 449,546,609 % 1.78 0.11 0.00 4.99 Total 43,990,004 681,738 4,420 30,000,000 % 34.00 4.79 0.07 0.00 3.27 57.86 57.86 18.30 312,040,401
OTHER INFORMATION Relationship with Independent Auditors In conformity with CVM Instruction 381/03, the auditing firm Deloitte Touche Tohmatsu Auditores Independentes did not provide non-audit services accounting for more than 5% of its total fees. The Companys policy for non-audit services contracted from its independent auditors is based on principles designed to ensure the independence of the auditors. Those principles, which follow internationally accepted standards, consist of the following: (a) the auditor must not audit his own work; (b) the auditor must not perform managerial jobs at his client; and (c) the auditor must not promote his clients interests.
Page 61 of 63
Version: 2
OPINIONS AND DECLARATIONS/INDEPENDENT ACCOUNTANTS REVIEW REPORT (Convenience Translation into English from the Original Previously Issued in Portuguese) REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION To the Board of Directors and Shareholders of Klabin S.A. So Paulo - SP Introduction We have reviewed the accompanying individual and consolidated interim financial information of Klabin S.A. (the Company) and its subsidiaries, included in the Interim Financial Information Form (ITR), for the quarter ended September 30, 2011, which comprises the balance sheet and the related income statement, statement of comprehensive income, statement of changes in equity, and statement of cash flows for the quarter and nine-month period then ended, including the selected explanatory notes. Management is responsible for the preparation of the individual interim financial information in accordance with CPC 21 - Interim Financial Reporting and the consolidated interim financial information in accordance with CPC 21 and IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), as well as for the presentation of such information in accordance with the standards issued by the Brazilian Securities Commission (CVM), applicable to the preparation of Interim Financial Information (ITR). Our responsibility is to express a conclusion on this interim financial information based on our review. Scope of review We conducted our review in accordance with Brazilian and international standards on review of interim financial information (NBC TR 2410 and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the standards on auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion on the individual interim financial information Based on our review, nothing has come to our attention that causes us to believe that the accompanying individual interim financial information included in the ITR referred to above is not prepared, in all material respects, in accordance with CPC 21 applicable to the preparation of Interim Financial Information (ITR) and presented in accordance with the standards issued by the Brazilian Securities Commission.
Page 62 of 63
Version: 2
Conclusion on the consolidated interim financial information Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated interim financial information included in the ITR referred to above is not prepared, in all material respects, in accordance with CPC 21 and IAS 34 applicable to the preparation of Interim Financial Information (ITR) and presented in accordance with the standards issued by the Brazilian Securities Commission. Emphasis of matter As described in note 2, the individual financial statements have been prepared in accordance with accounting practices adopted in Brazil. In the case of Klabin S.A., these practices differ from IFRSs, applicable to the individual financial statements, only with respect to the valuation of investments in subsidiaries under the equity method of accounting, while for IFRS purposes these investments would be measured at cost or fair value. Other matters Interim statements of value added We have also reviewed the individual and consolidated interim statements of value added (DVA), for the nine-month period ended September 30, 2011, the presentation of which is required by the standards issued by the Brazilian Securities Commission (CVM) applicable to the preparation of Interim Financial Information (ITR), and is considered as supplemental information for IFRS that does not require the presentation of DVA. These statements were subject to the same review procedures described above and, based on our review, nothing has come to our attention that causes us to believe that they are not prepared, in all material respects, in relation to the individual and consolidated interim financial information taken as a whole. The accompanying interim financial information has been translated into English for the convenience of readers outside Brazil. So Paulo, October 28, 2011
2011-1716
Page 63 of 63