Credit Suisse Banco Ita BBA Citi LEAD

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					                                   24,000,000 Common Shares




                                                MINERVA S.A.
                                  (incorporated in the Federative Republic of Brazil)

      We and the selling shareholders are offering a total of 24,000,000 common shares. We and the selling shareholders are
offering the common shares to (1) the public in Brazil, (2) certain qualified institutional buyers (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 registered this offering with the Brazilian Securities Commission (Comissão de Valores Mobiliários), or the
CVM. Currently, no public market exists for our common shares. Our common shares have been approved for listing on the
Novo Mercado segment of the São Paulo Stock Exchange (Bolsa de Valores de São Paulo), or the BOVESPA, under the
symbol “BEEF3”. The ISIN number for our common shares is BRBEEFACNOR6.
     We have granted to Banco de Investimentos Credit Suisse (Brasil) S.A., following consultation with Banco Itaú BBA
S.A., an option for a period of up to 30 days from the date following the date of the final offering circular to purchase up to
3,600,000 additional common shares to cover over-allotments, if any.
  Investing in the common shares involves risks. See “Risk Factors” beginning on page 15.

                                 Price: R$18.50 per common share
      The common shares have not been and will not be registered under the Securities Act or under any U.S. state
securities laws. The common shares 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 in reliance on Regulation S. By
purchasing our common shares 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 140 for a description of restrictions on transfers of our common shares.
     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
circular (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.
     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, or Law No. 4,131, dated September 3, 1962. 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 28.
    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 24, 2007.
                                                       Joint Bookrunners

            Credit Suisse                                                     Banco Itaú BBA
                                                            Selling Agent

                                                              Citi
                                  The date of this confidential offering circular is July 18, 2007
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                                                          __________________

                                                       TABLE OF CONTENTS

                                                           Page                                                                             Page
PRESENTATION OF FINANCIAL AND                                               BUSINESS ...........................................................72
  OTHER INFORMATION ......................................iv                MANAGEMENT .................................................102
SUMMARY ............................................................1       PRINCIPAL AND SELLING
RISK FACTORS ....................................................15           SHAREHOLDERS............................................106
FORWARD LOOKING STATEMENTS ......................25                         RELATED PARTY TRANSACTIONS ......................107
EXCHANGE RATES ..............................................26             DESCRIPTION OF CAPITAL STOCK .....................108
MARKET INFORMATION ......................................27                 DIVIDENDS .......................................................125
USE OF PROCEEDS ..............................................29            TAXATION ........................................................126
CAPITALIZATION ................................................30           PLAN OF DISTRIBUTION ....................................133
DILUTION ...........................................................31      NOTICE TO CANADIAN RESIDENTS ....................138
SELECTED FINANCIAL AND OTHER                                                TRANSFER RESTRICTIONS .................................140
  INFORMATION .................................................32           ENFORCEMENT OF JUDGMENTS AND
MANAGEMENT’S DISCUSSION AND                                                   SERVICE OF PROCESS ....................................142
  ANALYSIS OF FINANCIAL CONDITION                                           LEGAL MATTERS ..............................................143
  AND RESULTS OF OPERATIONS ........................35                      INDEPENDENT AUDITORS ..................................143
INDUSTRY ..........................................................57       INDEX TO FINANCIAL STATEMENTS .................. F-1
                                                               __________________

     In this offering circular, references to “Minerva,” “we,” “us” and “our” mean Minerva S.A. and its
subsidiaries, except where the context requires otherwise. When used in this offering circular, the term
“selling shareholders” refers to the following individuals: Edivar Vilela de Queiroz, Antonio Vilela de
Queiroz, Fernando Galletti de Queiroz, Izonel Vilela de Queiroz, Edvair Vilela de Queiroz, Ismael Vilela
de Queiroz and Izonel Vilela de Queiroz. The term “Brazil” refers to the Federative Republic of Brazil.
The phrase “Brazilian government” refers to the federal government of Brazil.
                                               __________________

     You should rely only on the information contained in this offering circular. None of Minerva, the
selling shareholders, the underwriters, the placement agents, or any of their respective affiliates have
authorized any other person to provide you with different or additional information. If anyone provides
you with different or additional information, you should not rely on it. None of Minerva, the selling
shareholders, the underwriters or the placement agents is making an offer to sell the common shares in any
jurisdiction where the offer or sale is not permitted. You should assume that the information in this
offering circular is accurate only as of the date on the front cover of this offering circular, regardless of the
time of delivery of this offering circular or any sale of our common shares. Our business, financial condition,
results of operations and prospects may change after the date on the front cover of this offering circular.
                                               __________________

                                                     NOTICE TO INVESTORS

     This offering circular is highly confidential, and we have prepared it for use solely in connection with the
proposed offering of our common shares outside Brazil. This offering circular is personal to the offeree to
whom it has been delivered by the placement agents and does not constitute an offer to any other person or to
the public in general to subscribe for our common shares. Distribution of this offering circular to any person
other than the offeree and those persons, if any, retained to advise that offeree with respect thereto 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 circular, agrees to the foregoing and agrees to make no
photocopies of this offering circular, in whole or in part.

     In connection with this offering, Banco de Investimentos Credit Suisse (Brasil) S.A. may over-allot or effect
transactions with a view to supporting the market price of our common shares at a level higher than that which
might otherwise prevail for a limited period after the issue date. However, there is no assurance that Banco de




                                                                        i
Investimentos Credit Suisse (Brasil) S.A. will engage in such transactions. Such stabilizing activities, if commenced,
may be discontinued at any time and must be discontinued after a limited period. See “Plan of Distribution.”

     The common shares offered through this offering circular 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. 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 possess or distribute this offering circular and must obtain any consent, approval
or permission required for your purchase, offer or sale of our common shares under the laws and regulations in
force in any jurisdiction to which you are subject or in which you make such purchases, offers or sales, and none of
us, the selling shareholders, the placement agents or the underwriters will have any responsibility therefor.

     We, the selling shareholders, the underwriters and the placement agents reserve the right to reject any
offer to purchase, in whole or in part, and for any reason, our common shares offered hereby. We, the selling
shareholders, the underwriters and the placement agents also reserve the right to sell or place less than all of
the common shares offered hereby.

     No representation or warranty, express or implied, is made by the placement agents as to the accuracy
or completeness of any of the information set out in this offering circular, and nothing contained herein is or
shall be relied upon as a promise or representation by the placement agents, whether as to the past or the
future. See “Forward—Looking Statements.”

     The offering of our common shares is also being made in Brazil by a prospectus in Portuguese that has
the same date as this offering circular. The Brazilian prospectus, which has been filed with the CVM, is in
a format different from that of this offering circular and contains information not generally included in
documents such as this one. This offering is being made in the United States and elsewhere outside Brazil
solely on the basis of the information contained in this offering circular. Investors should take this into
account when making investment decisions.

     Notwithstanding anything in this document to the contrary, except as reasonably necessary to comply
with applicable securities laws, you (and each of your employees, representatives or other agents) may
disclose to any and all persons, without limitation of any kind, the U.S. federal income tax treatment and tax
structure of the offering and all materials of any kind (including opinions or other tax analyses) that are
provided to you relating to such tax treatment and tax structure. For this purpose, “tax structure” is limited to
facts relevant to the U.S. federal income tax treatment of the offering. However, the foregoing does not
constitute an authorization to disclose the identity of Minerva, the selling shareholders or any of their
respective affiliates, agents or advisers or, except to the extent relating to such tax structure or tax treatment,
any specific pricing terms or commercial or financial information.
                                                 __________________

                                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 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 implies 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 of the State of New Hampshire
has passed in any way upon the merits or qualifications 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.




                                                           ii
                             __________________
            INTERNAL REVENUE SERVICE CIRCULAR 230 DISCLOSURE

   PURSUANT TO INTERNAL REVENUE SERVICE CIRCULAR 230, WE HEREBY INFORM
YOU THAT THE DESCRIPTION SET FORTH HEREIN WITH RESPECT TO U.S. FEDERAL
TAX ISSUES WAS NOT INTENDED OR WRITTEN TO BE USED, AND SUCH DESCRIPTION
CANNOT BE USED, BY ANY TAXPAYER FOR THE PURPOSE OF AVOIDING ANY PENALTIES
THAT MAY BE IMPOSED ON THE TAXPAYER UNDER THE U.S. INTERNAL REVENUE CODE.
SUCH DESCRIPTION WAS WRITTEN TO SUPPORT THE MARKETING OF THE COMMON
SHARES. TAXPAYERS SHOULD SEEK ADVICE BASED ON THE TAXPAYER’S PARTICULAR
CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.




                                   iii
                      PRESENTATION OF FINANCIAL AND OTHER INFORMATION

    All references in this offering circular to the “real,” “reais” or “R$” are to the Brazilian real, the official
currency of Brazil. All references to “U.S. dollars,” “dollars,” “U.S.$” are to U.S. dollars.

    The exchange rate of real amounts into U.S. dollars was R$2.1742 per U.S.$1.00 as of March 31, 2007,
R$2.1380 to U.S.$1.00 as of December 31, 2006, R$2.0504 to U.S.$1.00 as of December 31, 2005 and
R$2.6544 to U.S.$1.00 as of December 31, 2004, in each case based on the selling rate (the selling rate for
December 31, 2005, 2004 and 2003) as reported by the Central Bank. See “Exchange Rates” for information
regarding exchange rates for the Brazilian currency since January 1, 2001.

     Solely for the convenience of the reader, we have translated some amounts included in
“Summary—Summary Financial and Other Information,” “Capitalization,” “Selected Financial and
Other Information” and “Business” and elsewhere in this offering circular from reais into U.S. dollars using
the selling rate as reported by the Central Bank as of March 31, 2007 of R$2.0504 to U.S.$1.00. As a result
of fluctuations in the real/U.S. dollar exchange rate, the selling rate as of March 31, 2007 may not be
indicative of current or future exchange rates. These translations should not be considered representations
that any such amounts have been, could have been or could be converted into U.S. dollars at that or at
any other exchange rate or at that or any other date.

Corporate Reorganization

     We were originally incorporated as a limited liability company (sociedade empresária limitada)
called Indústria e Comércio de Carnes Minerva Ltda. The following chart shows the simplified corporate
structure of the Minerva Group as of November 30, 2005 (percentage numbers reflect the percentage
ownership of total share capital):

                                                Vilela de Queiroz Family(1)

                                                               100.0%

                                                  Minerva and Subsidiaries


(1) The Vilela de Queiros Family is comprised of Edivar Vilela de Queiroz, Antonio Vilela de Queiroz, Ibar Vilela
    de Queiroz, Fernando Galletti de Queiroz, Ismael Vilela de Queiroz, Izonel Vilela de Queiroz and Edvair Vilela de
    Queiroz. Collectively, the Vilela de Queiroz Family held all of the shares of our company.




                                                          iv
     In December 2005, certain members of the Vilela de Queiroz Family contributed to a capital increase in
our company by contributing quotas of Agropecuária Vilela de Queiroz Ltda., which is the owner of several
farms. On that same date, we contributed to the capital increase of Transportadora Minerva Ltda. with quotas
representing 99.99% of the capital stock of Agropecuária Vilela de Queiroz Ltda. The following chart shows
the simplified corporate structure of the Minerva Group after each of these capital increases (percentage
numbers reflect the percentage ownership of total share capital):

                                                 Vilela de Queiroz Family

                                                                 100.00%


                                                Minerva and its subsidiaries

                                                                 99.99%(1)

                                                  Transportadora Minerva

                                                                 99.99%(1)

                                              Agropecuária Vilela de Queiroz


(1) 0.01% of the quotas were held by Edivar Vilela de Queiroz.

     On April 30, 2007, we transferred our equity interests in Transportadora Minerva Ltda., or
Transportadora, (and indirectly to Agropecuária Vilela de Queiroz Ltda.) to Mutuca Participações Ltda., an
entity owned by the Vilela de Queiroz Family, or Mutuca. As a result of the transfer of the assets and
liabilities of Transportadora, we retained only the assets and have liabilities solely related to our core beef
production business. Transportadora represented 0.8% of our net sales revenue in 2006 and 1.6% of our net
sales revenues for the three months ended March 31, 2007. On May 23, 2007, we received consents and
waivers from holders representing at least 66 2/3% of the outstanding U.S.$200,000,000 9.50% Senior Notes
due 2017, or the notes, issued by Minerva Overseas Limited and guaranteed by us of certain restrictive
covenants contained in the Indenture dated as of January 26, 2007, among Minerva Overseas Limited,
Minerva and the other parties thereto. The consents and waivers allowed us to transfer all of our equity
interest in Transportadora Minerva Ltda. This transfer is intended to streamline our corporate structure and
allow us to focus on our core beef production business. In connection with the transfer of our interests in
Transportadora, we, Minerva Overseas Limited, Transportadora and the other parties entered into a
supplemental indenture under which Transportadora, jointly and severally with us, guaranteed all of Minerva
Overseas Limited’s obligations in respect of the notes and Transportadora is bound by certain restrictive
covenants. The following chart shows the simplified corporate structure of the Minerva Group after the
transfer of assets (percentage numbers reflect the percentage ownership of total share capital):

                                               Vilela de Queiroz Family

                                                              100.00%

                                              Minerva and its subsidiaries




                                                          v
     On May 2, 2007, our company became a corporation (sociedade anônima) and changed its name to
Minerva S.A. On June 14, 2007, the members of the Vilela de Queiroz Family transferred a significant part
of their equity interest in our company to VDQ Holdings S.A., a holding company controlled by the Vilela de
Queiroz Family. The following chart shows the current simplified corporate structure of the Minerva Group
(percentage numbers reflect the percentage ownership of total share capital):

                                                                Vilela de Queiroz
                                                                    Family(1)
                                                                100.0%


                                                  7.28%           VDQ Holdings

                                                                           92.72%

                                                                  Minerva and its
                                                                   subsidiaries




  99.00%(2)                            100.00%                                      98.00%(3)                               50.00%(4)



      Redi Neto                         Minerva                               Minerva Indústria e Comércio                 Euro Minerva
      Construções Ltda.                 Overseas Ltd.                         de Alimentos Ltda.                           Comércio e Exp. Ltda.



(1)   The ownership of VDQ Holdings by the Vilela de Queiroz Family is as follows: Edivar Vilela de Queiroz, 44.0%; Antonio Vilela
      de Queiroz, 21.0%; Ibar Vilela de Queiroz, 15.0%; Fernando Galetti de Queiroz, 5.0%; Ismael Vilela de Queiroz, 5.0%; Izonel
      Vilela de Queiroz, 5.0% and Edvair Vilela de Queiroz, 5.0%.
(2)   1.0% of the outstanding quotas are held by Mr. Edvair Vilela de Queiroz.
(3)   2.0% of the outstanding quotas are held by the Vilela de Queiroz Family.
(4)   50.0% of the outstanding quotas are held by Eurofrance SAS.

Recent Developments

     In April 2007, we purchased a slaughtering plant and the land on which it is located in the city of
Araguaína, in the State of Tocantins, with a daily slaughtering capacity of 700 head of cattle, for a total
purchase price of R$20.0 million. We expect to invest approximately R$20.0 million in order to (1) expand
the daily slaughtering capacity of this plant to 850 head of cattle, (2) build and install a beef processing unit in
this plant with a capacity of 140 tons of beef per day and (3) obtain the certifications required to export
products from this plant. We also purchased a slaughtering plant that is currently under construction and the
land on which it is located in the city of Redenção, in the State of Pará, which when constructed is expected to
have a daily slaughtering capacity of 1,700 head of cattle and a daily processing capacity of 250 tons of beef,
for a total purchase price of R$10.0 million. We expect to invest approximately R$60.0 million to finalize the
construction of this slaughtering plant and processing unit through the end of the first quarter of 2008.

Financial Statements

    The financial information included in this offering circular was prepared based on the consolidated
financial statements audited by Terco Grant Thornton Auditores Independentes Sociedade Simples, or Terco
Grant Thornton, as stated in their reports included elsewhere in this offering circular.




                                                                 vi
     The financial information contained in this offering circular includes our financial statements as of and
for each of the three-month periods ended March 31, 2007 and 2006 and the years ended December 31, 2006,
2005 and 2004, all expressed in reais. The financial statements as of and for the three-month periods ended
March 31, 2007 and 2006 have been audited by Terco Grant Thornton as stated in their report included
elsewhere in this offering circular and the financial statements as of and for the three years ended December
31, 2006, 2005 and 2004 have been audited by Terco Grant Thornton, as stated in their report included
elsewhere in this offering circular.

     We included the balance sheets of our company, unconsolidated and consolidated, for the three-month
periods ended March 31, 2007 and 2006, and respective statements of income, changes in quotaholders’
equity, and changes in financial position. In light of the corporate reorganization described above and in order
to facilitate an analysis of our financial information, our management has prepared a “pro forma” balance
sheet at March 31, 2007 and 2006 and the respective statements of income.

    We prepare our financial statements in accordance with accounting practices adopted in Brazil, or
Brazilian GAAP, which are based on:

    •    Brazilian Law No. 6,404/76, as amended, which we refer to collectively as the Brazilian Corporation Law;

    •    the accounting standards issued by the Brazilian Institute of Independent Accountants (Instituto dos
         Auditores Independentes do Brasil), or IBRACON; and

    •    the rules of the CVM.

Rounding

     We have made rounding adjustments to reach some of the figures included in this offering circular. As a
result, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures
that preceded them.

Market Share

     We have obtained the market and competitive position data, including market forecasts, used throughout
this offering circular from internal surveys, market research, publicly available information and industry
publications. We include data from reports prepared by ourselves; the Brazilian Association of Beef
Exporting Industries (Associação Brasileira das Indústrias Exportadoras de Carnes) or ABIEC; the Central
Bank; the United States Department of Agriculture, or the USDA; FNP Consultoria e Comercio Ltda., a
Brazilian consulting firm that specializes in the agricultural industry, or FNP; the Brazilian National
Economic and Social Development Bank (Banco Nacional de Desenvolvimento Econômico e Social), or
BNDES; the Brazilian Secretary of External Commerce (Secretaria de Comércio Exterior), or SECEX; Gira
Research & Consultancy, or Gira, a consulting and market research company; and the Brazilian Agriculture
Confederation (Confederação da Agricultura e da Pecuária do Brasil), or CAPB. Industry publications,
including those referenced here, generally state that the information presented therein has been obtained from
sources believed by us to be reliable, but that the accuracy and completeness of such information is not
guaranteed. Similarly, internal surveys, industry forecasts and market research, while believed by us to be
reliable, have not been independently verified, and neither we nor the placement agents make any
representations as to the accuracy of such information.




                                                       vii
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                                                                            SUMMARY

        This summary highlights information presented in greater detail elsewhere in this offering circular. This
    summary is not complete and does not contain all the information you should consider before investing in our
    common shares. You should carefully read this entire offering circular before investing, including “Risk
    Factors,” “Management’s Discussion and Analysis of Financial Position and Results of Operations” and our
    financial statements and notes to those statements, included elsewhere in this offering circular.

    Overview

        We are one of the market leaders in Brazil in the production and sale of fresh beef, processed beef and
    beef byproducts, with a daily slaughtering capacity of 5,000 head of cattle and daily processing capacity of
    1,200 tons, or approximately 7,500 head of cattle. In 2006, we were among the three largest Brazilian
    exporters of beef, processed beef and beef byproducts based on our gross export sales revenue, according to
    SECEX data in 2006. Our export sales totaled US$426 million, and we sold our products to approximately
    600 customers in approximately 80 countries. We also export wet blue hides and live cattle in addition to beef
    byproducts. In 2006, export sales accounted for approximately 76.8% of our gross sales revenue, while our
    domestic sales accounted for approximately 23.2% of our gross sales revenue.

         We have flexibility in our production process resulting from the advanced technology that we employ and
    health standards that we maintain at our production facilities, enabling us to adjust our product offerings to
    take advantage of changes in demand and prices in the international and domestic markets, and consequently
    allowing us to increase our sales of higher margin products. We believe that our leading position in the
    international and domestic markets is mainly due to a combination of the following factors: (1) modern
    production facilities that are licensed to export beef products and comply with diverse customer and
    regulatory requirements; (2) a diversified product portfolio; (3) our ability to customize our products; (4)
    reputation and recognition of the “Minerva” brand; and (5) efficient distribution logistics that enable us to
    monitor the quality of our products until they are delivered to our customers.

            The following table summarizes our main financial and operating information for the periods indicated:
Financial Information                           For the year ended December 31,           Variation             For the three months ended March 31,          Variation
                                         2004           2005       2006        2006      2004 to 2006             2006           2007        2007             2006/2007
(in millions)                                         (in reais)           (in U.S.$)(1)      %                        (in reais)        (in U.S.$)(1)           %
Gross sales revenue .............        939.2       1,050.6     1,312.3         640.0           39.7             251.5         347.4          169.4            38.1
 Domestic market ...............         214.5         235.3       304.7         148.6           42.1              64.6          75.6           36.9            17.0
 % of gross sales revenue ....            22.8          22.4        23.2          23.2            1.8              25.7          21.8           21.8           (15.3)
 International market ...........        724.7         815.3     1,007.6         491.4           39.0             186.9         271.8          132.6            45.4
 % of gross sales revenue ....            77.2          77.6        76.8          76.8           (0.4)             74.3          78.2           78.2             5.3
Net sales revenue..................      820.4         940.3     1,192.4         581.5           45.3             229.0         305.7          149.1            33.5
Net income ...........................     5.4          14.2        53.6          26.1          892.6               5.6          10.9            5.3            94.6
EBITDA(2)...........................      65.4          57.5       121.9          59.5           86.4              14.1          27.1           13.2            92.2
EBITDA margin (%)(3) .......               8.0           6.1        10.2          10.2           27.5               6.2           8.9            8.9            36.9
Short-term debt.....................     192.2         213.4       253.3         123.5           31.8             230.2          97.7           47.6           (57.6)
Long-term debt.....................       65.0         110.6       192.9          94.1          196.8              84.1         592.4          289.0           604.4
Total loans and financing ..             257.2         324.0       446.2         217.6           73.5             314.3         690.1          336.6           119.6
Cash and bank deposits ........          (38.2)        (29.1)      (93.0)        (45.4)         143.5             (30.0)       (314.9)        (153.6)          949.7
Net debt(4)...........................   219.0         294.9       353.2         172.2           61.3             284.3         375.2          183.0            32.0

    (1)     Solely for the convenience of the reader, Brazilian real amounts 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 selling rate at March 31, 2007 of R$2.0504 to U.S.$1.00.
            See “Exchange Rates” for further information about recent fluctuations in exchange rates.
    (2)     EBITDA, a performance measure used by our management, is defined as net income, plus income and social contribution taxes, financial income
            (expense), net, non-operating income and depreciation and amortization. EBITDA is useful because it is frequently used by securities analysts,
            investors and other interested parties in the evaluation of companies in the beef industry. EBITDA is not a recognized term under Brazilian GAAP and
            does not purport to be an alternative to net income as a measure of operating performance or to cash flows from operating activities as a measure of
            liquidity. Because not all companies use identical calculations, this presentation of EBITDA may not be comparable to other similarly titled measures or to
            free cash flow for discretionary use, as they do not consider certain cash requirements such as interest payments, tax payments and debt amortization.
    (3)     EBITDA Margin is calculated by dividing EBITDA by net operating sales revenue.
    (4)     Net debt is calculated as follows: our short- and long-term debt minus cash, bank deposits and marketable securities.




                                                                                     1
      The following table sets forth our main operating data:

                                                                                            For the Year            For the three months
Operating Information                                                                    ended December 31,          ended March 31,
                                                                                      2004      2005     2006         2006        2007
Number of cattle slaughtered (in thousands of head of cattle) .....                    539      595        791        169        220
Sales Volume (in thousands of tons) ............................................       143      178        213         46         56
Equivalent head of cattle (in thousands of head of cattle)............                 785      918      1,114        272        323
Wet blue hide sales volume(1) .....................................................   30.2     21.6       32.4        7.2        9.9
Live cattle sales volume (in thousands of tons)............................              –     12.0       27.2        2.4        9.4

(1) In millions of square feet.

     Our processing capacity is approximately one and a half times our slaughtering capacity, which we
believe provides us with flexibility in our production process and allows us to process both cattle and cattle
quarters purchased from third parties. We believe this processing flexibility enables us to maximize our
profitability levels as processing is the activity that adds additional value to the beef.

     Our five plants and one processing unit are strategically located in the States of Mato Grosso do Sul,
Goiás, São Paulo and Tocantins, in close proximity to the ports from which our products are exported, as well
as to the main domestic markets. We are also located near our cattle suppliers (located within an average
distance of 250 to 300 kilometers from our plants). The strategic location of our plants in four states in Brazil
helps to mitigate the risks that we face from outbreaks of cattle diseases and provides us with flexibility for
our exports.

     In the beginning of 2007, we began construction of a new plant in the State of Rondônia and in April
2007, we purchased two new plants, one in the State of Tocantins (operating) and one in the State of Pará
(under construction). We believe that if these plants operate at full capacity, our daily slaughtering capacity
will increase by 57.0%, from 5,000 head of cattle as of the date of this offering circular to 7,850 head of cattle
by the end of 2008. In addition, we believe that during the same period, our daily processing capacity will
increase by 58.3%, from 1,200 tons (equivalent to approximately 7,500 head of cattle) in 2007 to 1,900 tons
(equivalent to approximately 11,600 head of cattle).

     The following map shows the location of our current plants, distribution centers and our office for exports
of live cattle in the State of Pará:
                                                                                               New industrial
                                                                Belém Unit, exports            complex opened
                                                                of live cattle.                in May in the city
                                                                                               of Redenção.


                                                                                                       Project for a new
                                                                                                       industrial complex in
                                                                                                       the city of Araguaina.




                                  Project for a new
                                  industrial complex
                                  in the city of Rolim
                                  de Moura.

                          Legenda
                          Legend
                     Distribution Center
                                      ç
                     Centro de Distribui
                    Sales Office
                        ó
                    Plants




                                                                              2
     Our high quality products are a direct result of the quality of the cattle we slaughter, a strict tracking system
that enables us to trace our cattle’s origins and our emphasis on offering products that have been thoroughly
inspected and certified. Moreover, we have technology and know-how that allows us to offer a range of
approximately 4,000 different products.

     We manage our logistics network for domestic and export markets in a very efficient manner, which, we believe,
allows us to offer superior logistic services to our customers, such as ship chartering and our own storage facility, as
well as delivery flexibility to diverse locations in domestic and export markets. In export markets, we obtain
economies of scale in negotiating our shipping costs due to our logistics structure and the volume of our shipments.
We have a large customer base of approximately 600 customers in 80 countries to which we distribute our products to
developed markets, mainly to food service customers, retail customers (supermarkets and large food chains) and other
food companies. We also distribute our products in markets that have poor logistics infrastructure. In these markets,
our economies of scale are particularly significant given that our ability to provide logistics services is even more
important in these regions. In addition, we export live cattle from the port of Belém, in the State of Pará, through a
special logistics network that utilizes both road and water transportation to transport the cattle to the port of Belém and
special charter ships to transport the live cattle overseas.

     Our diversified customer base has allowed us to manage the import restrictions imposed in May 2007 by
Russia on products from 11 Brazilian slaughtering plants, including four of our plants. We were able to reallocate our
exports to other countries to which we had been exporting our products, including Algeria, Egypt and Israel. In light of
our belief that the application of these import restrictions on our four plants is baseless, combined with efforts by
us and the Brazilian governmental authorities to contest these restrictions, we believe that we will be authorized
again to export our products to Russia in the near future. For more information on this matter, see “Risk Factors—
Our exports are subject to numerous risks related to international operations and regulations.”

     In the domestic market, we operate through a wholesale division to service large customers (food companies
operating in Brazil, meat distributors, supermarkets and supermarket chains) and a retail division, with two distribution
centers in the State of São Paulo. We have approximately 12,500 medium and small customers in approximately
600 cities in the States of São Paulo, Minas Gerais and Paraná. We use the one-stop-shop concept to offer several types
of frozen or cool perishable products to our customers, including products supplied by us or third parties (products for
resale). As a result, we are able to maximize our deliveries through a larger distribution of products. Moreover, as of
May 2007, we started to service customers in the Mid-West region of Brazil through our distribution center located at
our plant in the City of Palmeiras de Goiás, State of Goiás, where we also use the one-stop-shop concept.

Brazil’s Competitive Advantages in the World Beef Industry

     We believe that the continuous growth of Brazilian GDP, the increase of foreign direct investments in
Brazil, economic and political stability, inflation control and the gradual decrease in domestic interest rates
have created a favorable economic environment in Brazil during the past few years. The preliminary
macroeconomic indicators of 2007 show an upward trend in Brazil’s economic growth and monetary stability.
Brazil’s basic interest rate is expected to continue to gradually decrease and credit availability is expected to
increase, contributing to significant further economic growth in 2007. In addition, the Brazilian beef industry,
as one of the world’s leaders, offers several competitive advantages, including:

     Scale and Competitive Positioning.

     In 2006, Brazil was ranked as follows according to data published by the USDA in 2006: (1) the largest beef
exporter, even after taking into account that Brazil exported fresh beef to less than 52.0% of the international
markets that import fresh beef in total volume; (2) the largest commercial cattle herd; (3) the second largest
producer of beef; and (4) the third largest consumer of beef in total volume. In addition, Brazil’s ratio of the
number of cattle slaughtered in a given year to the total size of the cattle herd during such year, or offtake rate,
is low, 22.4% in 2006, according to a report published by FNP, Anualpec 2007, in comparison to 28.0% in
Argentina and 36.0% in the United States during the same year. This low offtake rate represents a good opportunity
to improve production. Additionally, Brazil is well-positioned to benefit from the expected increase in beef
demand from emerging countries, which is expected to represent 70.0% of the total growth of the world beef
market in 2007 as compared to the total volume in 2006, according to the USDA.




                                                             3
    Historic Growth and High Potential for Production Growth.

     According to a report published by the USDA in April 2007, Brazilian production of beef and beef
byproducts has increased by 24.5% during the last five years, in comparison to a total increase in production
of 5.0% in the international market. According to reports published by the USDA, in October 2006 and April
2007, total exports, production and domestic consumption of Brazilian beef had an annual average increase of
24.4%, 5.6% and 1.9%, respectively, during the five years ended December 31, 2006. The growth of Brazilian
beef exports in recent years is a result of the general improvement in industrial and health conditions, genetic
improvement of cattle and the growing specialization of this industry, which has lead to the opening of new
markets. One example was the opening of the Russian and Eastern European markets to Brazilian beef after
the bovine spongiform encephalopathy, or BSE, outbreak in Europe in 2001 and 2002. In addition, despite
this impressive growth, Brazil is one of the few countries that still has large reserves of available land at low
costs, allowing it to expand with relatively low environmental impact and a low concentration of animals per
hectare. According to information published by the Brazilian Ministry of Agriculture (Ministério da
Agricultura, Pecuária e Abastecimento), or MAPA, in April 2007, Brazil utilized only 90 million hectares of the
388 million hectares of available land for agriculture and livestock, with another 105 million additional
hectares available. In 2004, according to MAPA, Brazil had a market share of only 3.9% of the world’s
agribusiness market (in terms of revenue from exports). In addition, exports of beef and beef byproducts are
growing as a percentage of total Brazilian exports, from 1.5% of total exports in 2005 to 2.1% of total exports
in 2006. We believe that our main competitors in Brazil do not have an adequate combination of available
land, adequate weather conditions, human and economic resources and ownership and the technology
expertise that we have to raise cattle.

    Low Production Cost.

     The production cost of beef and beef byproducts in Brazil is low when compared to Brazil’s main
competitors principally due to: (1) favorable climate conditions and availability of land at low prices, directly
affecting cattle prices; (2) strong levels of technology development compared to Brazil’s main competitors in
Latin America; (3) economies of scale generated by high production volume; (4) generally low operating
costs and availability of skilled labor, contributing to the competitiveness of Brazilian producers in the
international market; and (5) optimal use of cattle, creating economies of scale. According to a report from
ABIEC, the average purchase price of cattle in Brazil in 2006 was US$0.80/kilogram compared to US$1.40/kilogram
in Australia, US$1.90/kilogram in the United States and US$1.30/kilogram in Argentina.

    Grass-Fed Cattle and High Quality of Products.

     In Brazil, cattle is mainly grass fed. Unlike most of the leading international beef producing countries
(including the United States and the European Union), Brazilian cattle is grass fed or receives a plant based
feed, eliminating the risk of an outbreak of BSE in Brazilian cattle. In addition, the diversity of cattle breeds
in Brazil makes it easier to service diversified international markets and meet their specific demands.
Furthermore, Brazilian beef has no growth hormones, which are used in cattle raising in other countries.

     These competitive advantages and the fact that the Brazilian government imposes no significant
restrictions on the beef industry, unlike Argentina that charges a surtax over fresh beef exports, result in an
excellent opportunity to meet higher world demand for beef. Brazil is supplying the increase in beef demand
due to the growth of the global population, increased income per capita, increased foreign trade and decreased
local production in several countries.




                                                         4
Our Strengths

    We believe our success as one of the largest exporters of Brazilian beef and beef byproducts is mainly
due to the following competitive strengths:

    Presence in Most Profitable Markets.

     We are well-positioned to meet the needs of the most demanding markets, which allow us to obtain
higher margins for our beef and beef byproducts. Currently, the export market presents more consistent
growth rates and higher margins than the domestic market. We focus on the export market, which has allowed
us to grow at a higher rate than our competitors as shown in the SECEX data for 2006. Our exports increased
by 39.0% from 2004 to 2006, more than the 25.0% average growth rate for Brazilian beef exports during the
period. During the corresponding period, we exported our products to approximately 80 countries, including
Russia, Italy, United Kingdom, the Netherlands, and many countries in the Middle East, North Africa and
Asia. We were pioneers in the export of: (1) products to the Russian retail market, currently the largest export
market for Brazilian beef products; (2) live cattle to the Middle East; and (3) salted kosher beef products to
Israel and halal products to Muslim countries.

    Modern Plants and a Large, Customized and High Quality Portfolio of Products.

     Our modern plants use advanced technology to process beef, maintain high standards for productivity,
quality and food safety, are certified to sell in many international markets, and meet the quality standards of the
most demanding markets. We believe our plant in the city of Palmeiras de Goiás in the State of Goiás is one of
the most modern slaughtering and processing facilities in Latin America. This plant has numerous efficiency
enhancing features, including advanced processing technology and sanitary equipment, integrated logistics, a
modern freezing system and automated packaging equipment. Our product portfolio is comprised of approximately
4,000 different items. We also have the ability to highly customize our product offering (special cuts at different
sizes), with a focus on chilled meats that compete with domestically produced products in international markets.
We also have a line of processed beef (cubed beef, roast beef and cooked frozen beginning in 2008). These
features help us obtain and maintain loyal customers, meet our customers’ demand and use our production
flexibility to adjust our product mix to take advantage of changes in demand and prices in the international and
domestic markets, which allows us to increase our sales of higher margin products.

    Efficient and Integrated Distribution Logistics.

     Our efficient and integrated distribution logistics allows us to focus on the most attractive markets, and as
a result, maintain relatively high margins. Moreover, our strategically located operations allow us to reduce
costs in connection with our purchase of cattle, our exports and our domestic distribution of products:

    •    Export Market. Our logistics network for exports via storage, transportation, cost effective insurance
         and strong cooperation with shipowners and ports in Brazil give us the necessary operating
         efficiency to ensure that our high quality products are delivered on a timely basis. We export most
         of our products on a CIF basis, utilizing breakbulk (charters) and containers that enable us to obtain
         economies of scale in negotiating our freight, storage and insurance costs. In addition, our highly
         efficient and rapid logistics network allows us to sell fresh chilled beef products to the European
         market. As a result, we are able to directly compete with European producers.

    •    Domestic Market. We use third-party services to efficiently transport cattle from farms to our plants.
         We have an outstanding logistics system in the domestic market to supply the wholesale market
         directly from our plants and the retail market through our two distribution centers located in the State
         of São Paulo. Through our two distribution centers, we distribute our products and third party
         products to small and medium-sized retail customers with at least twice weekly deliveries to small
         and medium-sized customers in the countryside of the States of São Paulo, Minas Gerais and Paraná.
         Our plants are located near the principal domestic consumer markets in Brazil, which allows for
         significant gains in logistical efficiency.




                                                         5
    Customer Diversification.

   Our distribution channels in the international and domestic markets have been structured to efficiently
meet the demands of these markets and to maintain a diversified customer base:

    •    Export market. Our exports are distributed to approximately 600 customers in approximately
         80 countries. In each market, we usually use two or three strong regional distributors. In addition,
         in order to ensure close proximity to our final end consumers, our sales in developed countries are
         carried out through three different channels: (1) processed food companies; (2) companies in the
         food service industry, such as catering services, fast-food chains, restaurants and hotels; and (3) retail
         customers, such as supermarkets and retail chains. In emerging markets, we focus on geographical
         and ethnic coverage. For instance, we export kosher beef products to Israel and halal products to
         Muslim countries. In order to further consolidate our market share in important markets and provide
         better customer service, we maintain sales offices in Russia (Moscow) and in Lebanon (Beirut). We
         are in the process of opening a sales office in Algeria.

    •    Domestic Market. We direct our domestic sales through two channels: (1) our wholesale division, which
         sells products to wholesalers and supermarkets directly from our slaughterhouses and processing facilities;
         and (2) our retail division, which sells our products and products from third parties to approximately
         12,500 small and medium-sized retail customers located in approximately 600 cities in Brazil. We seek to
         obtain customer loyalty through the concept of a one-stop-shop for the sale of perishable products
         supplied by us and third parties. We deliver products directly to our customers at least twice weekly and
         seek to become the major supplier of certain customers. The diversification of our distribution channels,
         especially in the domestic market, and our focus on small and medium-sized customers allows us to obtain
         higher margins than for our sales to supermarket chains and other large customers. It also allows us to
         expand our activities and achieve economies of scale for logistics through the resale of products from
         third-parties. In addition to the two distribution centers in the cities of São Bernardo do Campo and
         Olímpia, both in the State of São Paulo, in the second quarter of 2007, we began distribution operations at
         our Palmeiras de Goiás plant, in the State of Goiás. We estimate that we will service customers in
         approximately 50 cities in the State of Goiás and the Federal District of Brazil through these new
         distribution operations, reaching 1,500 new retail customers.

    Experienced Management and Successful Acquisitions.

     We are managed by an experienced team of reputable professionals in the beef industry. In 1957, the
Vilela de Queiroz family started cattle raising and cattle transportation services, creating long-standing
relationships in the beef industry, positioning themselves as a solid and outstanding player in this segment
of the industry. We believe our continued growth is sustainable in the long term and we are prepared to
participate in the consolidation of the Brazilian market of slaughterhouses because of (1) our ability to
successfully implement our strategy; (2) our successful integration of plants that we purchased or leased;
(3) successful partnerships with foreign, multinational companies; and (4) our experienced management.

Our Strategy

     Our business strategy is to capitalize on our strengths and competitive advantages and enhance our
activities by focusing on the most profitable markets in order to create value for our shareholders. The
principal components of our strategy include:

    Continued Focus on the Most Profitable Markets.

     We will continue to focus on production for and sales to the most profitable markets, benefiting from our
flexible, rapid and high quality production capacity, which allows us to customize our products and develop
new markets. We currently believe that the international market will remain more profitable than the domestic
market. However, we intend to use our flexibility to adjust our product offerings to take advantage of changes
in demand and prices in both the international and domestic markets, following market trends.




                                                         6
    Expand Our Production Capacity to Consolidate the Market.

     We intend to use our successful experience in acquisitions and our financial strength to participate in the
consolidation of the Brazilian slaughterhouse market. We intend to increase our slaughtering and processing
capabilities either through organic growth or by purchasing or leasing other plants. In addition, we intend to
grow and further diversify our operations by expanding to additional locations in Brazil. In 2007, we began
construction of a plant in the city of Rolim de Moura in the State of Rondônia. In April 2007, we purchased a
plant in the city of Araguaína in the State of Tocantins and a plant under construction in the city of Redenção
in the State of Pará.

    Enhance Operating Efficiencies and Lower Operating Costs.

     We are committed to maintaining our position as a low cost producer of beef products and beef byproducts.
We will continue to focus on maintaining higher profit margins by improving our operating efficiencies, modernizing
our plants, reducing our operating costs, increasing our economies of scale and integrating our logistics network.
We intend to apply our internal controls and state-of-the-art software systems at our Palmeiras de Goiás plant
to each of our other facilities in order to increase our operating efficiency.

    Increase Sales of Value Added Products.

     We intend to increase sales of value added products, by continuing to introduce new customized products
to our customers, acquire companies or lease protein processing plants pursuant to the following strategies:

    •    Export Market. We plan to continue to invest in value-added and customized beef products,
         increasing the sales of fresh and frozen beef and processed beef, such as cubed beef, roast beef and
         cooked and frozen beef. We are building a plant to produce cooked and frozen meat, in the City of
         Barretos, State of São Paulo, through a joint-venture with the Dawn Farms Group, an Irish group and
         one of the largest producers of processed meat in Europe. In order to consolidate our market share in
         important markets and provide customized customer service, we maintain sales offices in Moscow,
         Russia and in Beirut, Lebanon.

    •    Domestic Market. We intend to continue to increase sales of value added products and are increasing
         our sales of fresh beef cuts, products sold in small portions and different types of processed beef
         byproducts to be used in cooked meals by fast-food chains, restaurants and catering companies. We
         also plan to increase our sales to medium-sized and small retail companies through our efficient
         logistics structure.

     By increasing our sales of value added products, we believe that we will meet our customers’ needs in
domestic and international markets. As a result, we believe we will continue to build strong relationships and
strategic partnerships with our customers, contributing to increase our sales volume and profitability. In
addition, we believe that we can improve the use of our distribution network to strengthen the “Minerva” brand.

History and Corporate Structure

    We have been maintaining consistent and sustainable growth throughout the years, and our history
highlights our experience in purchasing and transporting cattle and the beginning of our operations in the beef
industry. Below are some highlights of our history:

1957      The Vilela de Queiroz family began raising cattle and providing logistical services to transport
          cattle from ranches to slaughterhouses;

1992      The Vilela de Queiroz family purchased our first slaughterhouse and processing facility located in
          the City of Barretos, State of São Paulo (our current headquarters) from Frigorífico Minerva do
          Brasil S.A. In addition, on March 9, 1992, we established Indústria e Comércio de Carnes Minerva Ltda.;

1999      We leased and later acquired a slaughterhouse and processing facility in the City of José Bonifácio,
          State of São Paulo;




                                                         7
2001           We leased a processing facility in the City of Cajamar, State of São Paulo;

2004           We constructed a new slaughterhouse and processing facility in the City of Palmeiras de Goiás,
               State of Goiás, which we believe is one of the most modern beef processing facilities in Latin America;

2006           We entered into a lease agreement for a slaughterhouse and processing facility in the City of
               Batayporã, State of Mato Grosso do Sul. See “Business—Overview”; and

2007           We began the construction of our plant in the City of Rolim de Moura, State of Rondônia. In
               April 2007, we purchased a plant in the City of Araguaína, State of Tocantins and a plant under
               construction in the City of Redenção, State of Pará. Moreover, in January 2007, we began constructing
               a plant to produce cooked and frozen meat, in the City of Barretos, State of São Paulo, through a
               joint-venture with the Dawn Farms Group of Ireland.

The chart below shows our corporate structure:

                                                             Vilela de Queiroz
                                                                 Family(1)
                                                             100.0%


                                                              VDQ Holdings
                                                7.28%

                                                                         92.72%

                                                              Minerva and its
                                                               subsidiaries



99.00%(2)                           100.00%                             98.00%(3)                         50.00%(4)




      Redi Neto                       Minerva                       Minerva Indústria e Comércio         Euro Minerva
      Construções Ltda                Overseas Ltd.                 de Alimentos Ltda                    Comércio e Exp. Ltda.



(1)     The ownership of VDQ Holdings by the Vilela de Queiroz Family is as follows: Edivar Vilela de Queiroz, 44.0%; Antonio
    Vilela de Queiroz, 21.0%; Ibar Vilela de Queiroz, 15.0%; Fernando Galetti de Queiroz, 5.0%; Ismael Vilela de Queiroz,
    5.0%; Izonel Vilela de Queiroz, 5.0% and Edvair Vilela de Queiroz, 5.0%.
(2) 1.0% of the outstanding quotas are held by Mr. Edvair Vilela de Queiroz.
(3) 2.0% of the outstanding quotas are held by the Vilela de Queiroz Family.
(4) 50.0% of the outstanding quotas are held by Eurofrance SAS.


                                                             *****

    Our registered office is at Av. Antonio Manço Bernardes, s/n°, in the City of Barretos, State of São Paulo.
Our telephone number is (17) 3321 3355 and our and our website is www.minerva.ind.br. Information on our
website is not incorporated into this offering circular.




                                                                8
                                                              THE OFFERING

Issuer............................................................. Minerva S.A.

Selling shareholders...................................... Edivar Vilela de Queiroz, Antonio Vilela de Queiroz,
                                                           Fernando Galletti de Queiroz, Izonel Vilela de Queiroz,
                                                           Edvair Vilela de Queiroz, Ismael Vilela de Queiroz and
                                                           Izonel Vilela de Queiroz.

Securities offered.......................................... 20,000,000 common shares are being offered by us and
                                                             4,000,000 common shares are being offered by the selling
                                                             shareholders. The common shares are being offered to the
                                                             public in Brazil, to qualified institutional buyers in the
                                                             United States and to institutional and other investors
                                                             elsewhere outside the United States and Brazil.

                                                              The offerings of common shares to the public in Brazil will be
                                                              made pursuant to an offering registered in Brazil. The offerings
                                                              of common shares elsewhere outside the United States and
                                                              Brazil will be made in reliance on Regulation S under the
                                                              Securities Act in transactions exempt from registration thereunder.
                                                              The portion of the offering in the United States will be made
                                                              solely to qualified institutional buyers as defined under Rule
                                                              144A promulgated under the Securities Act in transactions
                                                              exempt from registration thereunder.

Over-allotment option................................... We have granted Banco de Investimentos Credit Suisse
                                                         (Brasil) S.A. an option, following consultation with Banco
                                                         Itaú BBA S.A., for a period of up to 30 days following the
                                                         date of this offering circular to purchase up to 3,600,000
                                                         additional common shares to cover over-allotments, if any.

Offering price ............................................... R$18.50 per common share.

Share capital ................................................. Our share capital immediately prior to the offering consists
                                                                of 55,000,000 common shares. Following completion of this
                                                                offering, our share capital will consist of 75,000,000 common
                                                                shares (assuming no exercise of the over-allotment option).

Trading, settlement and clearance ................ Investors residing outside Brazil, including qualified
                                                   institutional buyers in the United States and institutional and
                                                   other investors elsewhere 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 CMN, or Law No. 4,131, dated
                                                   September 3, 1962. For a description on how to comply with
                                                   these registration requirements, see “Description of Capital
                                                   Stock — Regulation of Foreign Investment.”

                                                              Payment for our common shares will be required to be made
                                                              to us and to the selling shareholders through the facility of
                                                              the CBLC, as described in “Description of Capital Stock —
                                                              Trading on Stock Exchanges.”




                                                                       9
Voting rights ................................................. Following the listing of our common shares on the Novo
                                                                Mercado segment of the BOVESPA, holders of our common
                                                                shares will be entitled to one vote per common share in all
                                                                shareholders’ meetings. See “Description of Capital Stock —
                                                                Rights of Common Shares.”

Tag-along rights............................................ Holders of our common shares are entitled to be included in a
                                                             public tender offer in case our controlling shareholder sells
                                                             its controlling stake in us, in which case the minimum price
                                                             to be offered for each common share is 100% of the price to
                                                             be paid per share of the controlling stake. See “Description of
                                                             Capital Stock — Change of Control.”

Lock-up agreements...................................... We, the selling shareholders, our directors and executive officers
                                                         and certain members of the Vilela de Queiroz Family have
                                                         agreed, subject to certain exceptions, not to issue, offer, sell,
                                                         contract to sell, pledge or otherwise dispose of, directly or
                                                         indirectly, until 180 days after the date of this offering circular,
                                                         any common shares, or any securities convertible into, or
                                                         exchangeable or exercisable for, our common shares. In
                                                         addition, pursuant to the Novo Mercado regulations, our
                                                         controlling shareholders and directors and officers may not sell
                                                         or offer to sell any of our common shares or other assets backed
                                                         by our common shares, during the six months following this
                                                         offering and the execution of the Novo Mercado Participation
                                                         Agreement. After termination of this six-month period, our
                                                         controlling shareholders and directors and officers may not sell
                                                         or offer to sell more than 40% of the common shares held by
                                                         them immediately after this offering, or other assets backed by
                                                         our common shares, during an additional six-month period.

Risk factors ................................................... See “Risk Factors” beginning on page 16 and the other
                                                                 information included in this offering circular for a discussion
                                                                 of factors you should consider before deciding to invest in
                                                                 our common shares.

Use of proceeds ............................................ We estimate that our net proceeds from the sale of our common
                                                             shares in this offering, after the deduction of commissions, the
                                                             bonus payable to Banco de Investimentos Credit Suisse (Brasil)
                                                             S.A. and the estimated offering expenses payable by us, will be
                                                             approximately R$333.7 million. We intend to use the net
                                                             proceeds from this offering for: (1) additional investments in,
                                                             and purchase of equipment for, our plants in order to increase
                                                             their operating capacity; (2) the acquisition of companies or
                                                             assets that we have not yet identified in the beef industry; and
                                                             (3) strengthening our working capital.

                                                       We will not receive any proceeds from the sale of common
                                                       shares by the selling shareholders in the secondary offering.

Listing........................................................... Our common shares have been approved for listing on
                                                                   the Novo Mercado segment of the BOVESPA, under the
                                                                   symbol “BEEF3”.




                                                              10
 Dividends...................................................... The Brazilian Corporate Law, and our bylaws require us to
                                                                 distribute at least 25% of our annual adjusted net income, as
                                                                 calculated under Brazilian GAAP and adjusted under the
                                                                 Brazilian Corporate Law (which differs significantly from
                                                                 net income as calculated under U.S. GAAP), unless the
                                                                 payment of dividends is suspended by our board of directors
                                                                 after having concluded that such distribution would be
                                                                 incompatible with our financial condition. See “Dividends
                                                                 and Dividend Policy.”

 Taxation........................................................ Dividend distributions with respect to our common shares are
                                                                  not currently subject to withholding of Brazilian income tax.
                                                                  However, payment of interest attributable to stockholders’
                                                                  equity (in lieu of dividends) currently is subject to withholding
                                                                  of Brazilian income tax. For certain Brazilian and United
                                                                  States tax consequences with respect to U.S. holders of our
                                                                  common shares, see “Tax Considerations.”

 Transfer restrictions ...................................... Our common shares have not been registered under the
                                                              Securities Act and are subject to restrictions on transfer. For
                                                              information on restrictions on transfer of our common shares,
                                                              see “Transfer Restrictions.”
                                                           __________________

    Unless otherwise indicated, all information contained in this offering circular assumes no exercise of the
over-allotment option.




                                                                11
                           SUMMARY FINANCIAL AND OTHER INFORMATION

     Our summary financial data as of and for the three-month periods ended March 31, 2006 and 2007 and as
of and for the years ended December 31, 2004, 2005 and 2006 have been derived from our audited financial
statements included elsewhere in this offering circular. Our financial statements are prepared in accordance
with Brazilian GAAP, which differs in significant respects from U.S. GAAP. For a discussion of these significant
differences relating to our financial statements, see “Appendix A—Summary of Significant Differences
Between Brazilian GAAP and U.S. GAAP.” This summary financial data also contains unaudited data in the
section “Other Data.” Our results of operations for the three-month period ended March 31, 2007 are not
indicative of our results of operations for any future period or year.

    This summary financial information should be read in conjunction with “Selected Financial and Other Information,”
“Presentation of Financial and Other Information,” “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” and our financial statements included elsewhere in this offering circular.




                                                         12
                                                                       As of and for the years                             As of and for the
                                                                        ended December 31,                      three-month period ended March 31,
                                                             2004        2005         2006         2006           2006          2007           2007
                                                                      (audited)                                       (audited)
Amounts expressed in millions                                         (in reais)               (in U.S.$) (1)         (in reais)           (in U.S.$)(1)
Income Statement Data:
Export sales............................................     724.7      815.3         1,007.6     491.4          186.9         271.8        132.6
Domestic sales .......................................       214.5      235.3           304.7     148.6           64.6          75.6         36.9
Gross sales revenue................................          939.2    1,050.6         1,312.3     640.0          251.5         347.4        169.5
Sales taxes..............................................   (118.8)    (110.3)         (119.9)    (58.5)         (22.5)        (41.7)       (20.4)
Net sales revenue ...................................        820.4      940.3         1,192.4     581.5          229.0         305.7        149.1
Cost of goods sold .................................        (628.2)    (735.3)         (918.7)   (448.1)        (178.5)       (235.3)      (114.8)
Gross profit ............................................    192.2      205.0           273.7     133.4           50.5          70.4         34.3
Selling expenses.....................................       (105.1)    (125.4)         (133.5)    (65.1)         (30.0)        (39.4)       (19.2)
General and administrative expenses ....                     (27.8)     (32.1)          (32.2)    (15.7)          (8.6)         (7.6)        (3.7)
Financial income (expense), net ............                 (23.2)     (29.9)          (26.6)    (13.0)          (3.0)          2.6          1.3
Total operating income (expense) .........                  (156.1)    (187.4)         (192.3)    (93.8)         (41.6)        (44.4)       (21.6)
Operating income...................................           36.1       17.6            81.4      39.6            8.9          26.0         12.7
Non-operating income ...........................             (26.8)      (0.4)            –         –              –            (6.1)        (3.0)
Income before tax and social
 contribution ..........................................       9.3       17.2            81.4      39.6            8.9          19.9           9.7
Tax and social contribution – current....                      –         (2.8)          (15.0)     (7.3)          (2.6)         (7.9)         (3.9)
Tax and social contribution – deferred..                      (3.9)      (0.2)          (12.8)     (6.2)          (0.7)         (1.1)         (0.5)
Net income ............................................        5.4       14.2            53.6      26.1            5.6          10.9           5.3
Balance Sheet Data:
Cash and cash equivalents .....................               38.2      29.1            93.0       45.4          30.0         314.9        153.6
Trade accounts receivable from
 customers..............................................    108.6      135.9           196.0      95.6           93.6         167.3         81.6
Inventories..............................................    55.0       54.3           119.1      58.0           94.6         135.2         65.9
Other receivables ...................................         0.9        2.1             2.2       1.0            2.3           2.4          1.2
Taxes recoverable ..................................         79.1      123.1           170.1      83.0          138.1         175.8         85.7
Total current assets ................................       281.8      344.5           580.4     283.0          358.6         795.6        388.0
Taxes recoverable ..................................           –          –               –          –             –             –            –
Judicial deposits .....................................       1.9        1.9             3.4       1.7            1.9           3.4          1.7
Related parties........................................       2.5        2.2             3.4       1.7            4.3           4.6          2.2
Other receivables ...................................         0.3        -               -         -              -             8.6          4.2
Long-term assets ....................................         4.7        4.1             6.8       3.4            6.2          16.6          8.1
Fixed assets ............................................   144.7      218.2           313.1     152.7          220.0         312.0        152.2
Deferred assets .......................................       0.5        0.5             0.5       0.2            0.5           0.5          0.2
Permanent assets ....................................       145.2      218.7           313.6     152.9          220.5         312.5        152.4
Total non-current assets .........................          149.9      222.8           320.4     156.3          226.7         329.1        160.5
Total assets............................................    431.7      567.3           900.8     439.3          585.3       1.124.7        548.5
Trade accounts payable to suppliers ......                   73.9       76.0           124.9      60.9           89.3          99.6         48.6
Loans and financing...............................          192.2      213.4           253.3     123.5          230.2          97.7         47.6
Payroll and tax payable..........................             6.8       12.9            13.7       6.7           14.3          15.5          7.6
Other liabilities.......................................      0.1        1.5             4.5       2.3            0.4           0.0          –
Provision for income taxes ....................                –         2.7            15.0       7.3            2.7          10.1          4.9
Total current liabilities...........................        273.0      306.5           411.4     200.7          336.9         222.9        108.7
Loans and financing...............................           65.0      110.6           192.9      94.1           84.1         592.4        288.9
Union tax INSS payable (2)...................                41.9       25.0            26.4      12.9           25.1          26.2         12.8
Deferred taxes ........................................      16.7       17.3            51.8      25.3           17.9          52.9         25.8
Provision for contingencies ...................              35.2       40.3            29.8      14.5           48.6          30.4         14.8
Related parties........................................       0.2        5.8             0.5       0.2            5.3           0.6          0.3
Total non-current liabilities ...................           159.0      199.0           301.4     147.0          181.0         702.5        342.6
Capital stock...........................................     18.2       29.4            29.4      14.3           29.4          29.4         14.3
Capital reserve........................................       0.2        0.2             0.2       0.1            0.2           0.2          0.1
Revaluation reserve................................          36.6       77.6           149.3      72.8           77.1         148.4         72.4
Retained earnings
 (accumulated deficit)............................           (55.3)    (45.4)            9.1        4.4          (39.3)        21.3          10.4
Stockholders’ equity ..............................           (0.3)     61.8           188.0       91.6           67.4        199.3          97.2
Total liabilities and
 stockholders’ equity ...........................           431.7      567.3           900.8     439.3          585.3       1,124.7        548.5
Other Data:
EBITDA(3) ...........................................        65.4      57.5           121.9       59.5           14.1          27.1         13.2
EBITDA margin(4)................................             8.0%      6.1%           10.2%          –           6.2%          8.9%           –
Net debt(5) .............................................   219.0     294.9           353.2      172.2          284.3         375.2        183.0
Net debt/EBITDA(6) .............................             3.4x      5.1x            2.9x          –           5.2x          2.8x            –
Number of head slaughtered
 (in thousands) .......................................      539        595             791          –           169           220             –
Sales volume (thousands of tons) ..........                  124        145             176          –            43            51             –

(1)     Solely for the convenience of the reader, Brazilian real amounts 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 selling rate at March 31, 2007 of R$2.0504 to
        U.S.$1.00. See “Exchange Rates” for further information about recent fluctuations in exchange rates.
(2)     Social Security National Institute (Instituto Nacional da Seguridade Social), or INSS. This expense is payable over 120 months
        under the PAES program. PAES refers to the Special Installment Program (Parcelamento Especial – PAES).




                                                                                 13
(3)   EBITDA is a performance measure not recognized under Brazilian GAAP that is calculated by our management, and is defined as:
      net income (loss) plus income and social contribution taxes, financial income (expenses), net, non-operating income and
      depreciation and amortization. EBITDA is not a recognized term under Brazilian GAAP and because not all companies use
      identical calculations may not be comparable to other similarly titled measures used by other companies. Our management discloses
      EBITDA because it believes it is useful in its evaluation of its operating performance. EBITDA should not be considered in
      isolation or as a substitute for net income or operating results or an indicator of our operating performance, cash flow, liquidity or
      ability to make debt payments. EBITDA is calculated as follows:
                                                                                                                  As of and for the
                                                                 As of and for the years                 three-month period ended March
                                                                   ended December 31,                                    31,
                                                          2004     2005         2006         2006         2006        2007          2007
                                                                 (audited)                                    (audited)
      (in millions)                                              (in reais)              (in U.S.$)(a)        (in reais)        (in U.S.$)(a)
      Net income.......................................    5.4     14.2         53.6         26.1            5.6     10.9            5.3
      Plus:                                                                                     –
      Tax and social contribution .............            3.9      3.0         27.8         13.5            3.3      9.0           4.4
      Non-operating income .....................          26.8      0.4            –            –              –      6.1           3.0
      Financial income (expense), net......               23.2     29.9         26.6         13.0            3.0     (2.6)         (1.3)
      Depreciation and amortization ........               6.1     10.0         13.9          6.8            2.9      3.7           1.9
      EBITDA...........................................   65.4     57.5        121.9         59.4           14.1     27.1          13.3

      (a)    Solely for the convenience of the reader, Brazilian real amounts 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 selling rate
             at March 31, 2007 of R$2.0504 to U.S.$1.00. See “Exchange Rates” for further information about recent
             fluctuations in exchange rates.
(4)   EBITDA margin is calculated by dividing EBITDA for by total net sales revenue, expressed as percentage. For the three-month
      periods ended March 31, 2007 and 2006, we have calculated our EBITDA margin by dividing our EBITDA for the three-month
      periods ended March 31, 2007 and March 31, 2006 by our total net sales revenue for the corresponding three-month period.
(5)   Net debt is calculated as follows: our short- and long-term debt minus cash, bank deposits and marketable securities.
(6)   We have calculated EBITDA for our Net Debt/EBITDA ratio based on EBITDA for the applicable 12-month period.




                                                                          14
                                               RISK FACTORS

     An investment in our common shares involves a high degree of risk. You should carefully consider the
risks described below, as well as the other information included in this offering circular, including our
financial statements and notes thereto, before making an investment in our common shares. We could be
materially and adversely affected by any of these risk factors. In the event any of the following risks actually
occurs, our business, financial condition, results of operations, cash flow and prospects could be adversely
affected. The trading price of our shares could decline due to any of these risks, and you may lose all or part
of your investment in our shares. Additional risks not presently known to us, or that we currently consider
immaterial may also materially adversely affect our business, financial condition, cash flow, prospective and
the price of our shares.

Risks Relating to the Beef Industry

    Recent outbreaks of FMD in Brazil and any additional new outbreaks of this or other cattle diseases in
    Brazil may materially adversely affect our ability to export fresh beef products, and consequently, our
    results of operations.

     Foot-and-mouth disease, or FMD, is a highly contagious and infectious disease that affects cattle. On
October 11, 2005, Brazilian authorities detected the foot-and-mouth virus on a cattle ranch in the state of
Mato Grosso do Sul, which had previously been considered free of FMD due to an ongoing vaccination
program. FMD was subsequently detected in a number of surrounding cattle ranches. As a result of the recent
outbreak of FMD in Brazil, approximately 58 countries have indefinitely suspended or restricted fresh beef
imports from some Brazilian states. Several of these countries (including Egypt) have banned imports from
the states of Mato Grosso do Sul and Paraná, while other countries (including the majority of the countries in
the European Union) have also banned imports of fresh beef from the neighboring State of São Paulo. Certain
other countries (including Chile and South Africa) have suspended imports of fresh beef from all of Brazil.

     New outbreaks of FMD or other diseases affecting cattle in Brazil may lead to restrictions to sales in the
domestic market or extra restrictions to the sale of our products in international markets, canceling of orders
by our customers and to adverse publicity that could have a material adverse effect on consumer demand and,
as a result, on our results of operations and the market price of our shares.

    Our operations and profitability could be adversely affected by government policies and regulations
    affecting the cattle and beef industries.

    Cattle production and trade flows are significantly affected by government policies and regulations.
Governmental policies affecting the cattle industry, such as taxes, tariffs, duties, subsidies and import and
export restrictions on beef and/or beef byproducts, can influence industry profitability, the use of land
resources, the location and size of cattle production, whether fresh or processed, and the volume and types of
imports and exports.

     Our plants and our products are subject to periodic inspections by federal, state and municipal authorities
and comprehensive food regulations, including controls over processed food. We are subject to extensive
regulation from the Brazilian National Sanitation Inspection Agency (Agência Nacional de Vigilância
Sanitária), or ANVISA, which is responsible for the inspection of all food products: (1) transported outside
the state where the food products were produced; (2) exported from Brazil; or (3) imported into Brazil. We
are also subject to state and municipal sanitary regulations (including inspections) with respect to food
products that are produced or distributed within the state or municipality, as the case may be. Changes in
governmental regulations related to food safety issues may require us to increase our investments or incur
additional costs necessary to meet the applicable specifications. Stricter sanitary regulations may result in an
increase in costs and/or investments that may have an adverse effect on our business and results of operations.
We may also be subject to legal proceedings due to governmental regulations, which litigation may adversely
affect our business and results of operations.




                                                       15
     Our exported products are often inspected by foreign food safety authorities, and any violation may result
in a partial or total return of a shipment to Brazil, partial or total destruction of the shipment and costs due to
delays in product deliveries to our customers. Any restrictions in regulations governing health may result in
additional costs, adversely affecting our business and results of operations.

     Governmental policies in Brazil and other jurisdictions may adversely affect the supply, demand for and
prices of beef products, restrict our ability to do business in existing and target domestic and export markets
and could adversely affect our results of operations. Our operations are subject to extensive regulation and
oversight by the Brazilian Ministry of Agriculture (Ministério da Agricultura, Pecuária e Abastecimento) and
other state, local and foreign authorities regarding the processing, packaging, storage, distribution, advertising
and labeling of our products, including food safety standards. On May 5, 2005, the Brazilian Ministry of
Agriculture suspended exports of processed beef to the United States following recommendations made by a
team of veterinarians from the United States that the Brazilian federal government was to improve sanitary
and monitoring procedures at Brazilian slaughterhouses, as the team concluded that Brazilian government
sanitary inspection teams were not adequately qualified. Therefore, any suspensions and restrictions imposed
recently by numerous countries in light of outbreaks of FMD in Brazil and any future suspensions or
restrictions imposed by Brazilian governmental authorities or governmental authorities in other jurisdictions
could have a material adverse effect on us and our results of operations.

    If our products become contaminated, we may be subject to product liability claims and product recalls
    that would adversely affect our business.

     We may be required to recall products if these products are contaminated, spoiled or inappropriately
labeled. We may be subject to significant liability in the jurisdictions in which our products are sold if the
consumption of any of our products causes injury, illness or death. Any health risk, real or potential, that is
associated with our products, including adverse publicity about health risks from consuming our products,
may cause the loss of confidence by our customers in the safety and quality of our products. Even if our
products are not contaminated, the beef industry may be subject to adverse publicity if products from third
parties are contaminated, resulting in the decrease in demand for our products in the affected market. We
maintain systems to monitor the food safety risks in all phases of our production process. However, the
systems that we use to comply with the governmental regulations may not be sufficient to eliminate the risks
related to food safety. If our products become contaminated, we may be subject to product liability claims and
product recalls that would adversely affect our business and results of operations.

    Compliance with environmental regulations and the necessary permits to operate in the beef industry
    may result in significant costs, and failure to comply with environmental regulations may result in civil
    as well as criminal penalties and liability for damages.

     We and other Brazilian food producers are subject to extensive federal, state and municipal regulations
pertaining to the discharge of materials into the environment and the handling and disposition of wastes. All
Brazilian companies whose activities may have an environmental impact must obtain operating licenses from
the relevant environmental agencies. In some cases, authority to grant such licenses may be delegated to state
environmental agencies. As a result, state and federal environmental authorities that license our operations
continuously monitor our plants.

     Failure to comply with these regulations and obtain the necessary licenses can have serious adverse
consequences for us, including criminal as well as civil and administrative penalties, negative publicity and
the obligation to remediate damages caused to the environment. We have incurred and will continue to incur
capital and operating expenditures to continue to comply with these laws and regulations. Additional
environmental requirements imposed in the future or new interpretation to existing laws could require us to
incur significant additional costs and could have a material adverse effect on our availability of funds for
expenses. Compliance with new environmental regulations may increase our costs and decrease our gains.




                                                        16
     Additional environmental requirements that may be imposed in the future and our inability to obtain
environmental licenses could require us to incur significant additional costs and could have a material adverse
effect on our business, financial condition, results of operations, cash flows and the market value of our shares.

    We do not usually enter into long-term arrangements with our customers and, as a result, the prices at
    which we sell our products are determined in large part by market conditions.

     We do not enter into long-term sales arrangements with our customers and as a result, the prices at which
we sell our products are determined in large part by market conditions. A significant decrease in beef prices
for a sustained period of time could have a material adverse effect on our net sales revenue. Price swings in
raw materials, and the resultant impact on the prices that we charge for our products, may materially and
adversely affect our financial condition, results of operations and the trading price of our shares. In addition, if
we face increased costs, we may not be able to pass these higher costs along to our customers.

    Our performance depends on favorable labor relations with our employees. Any deterioration of those
    relations or increase in labor costs could adversely affect our business.

     At March 31, 2007, we had a total of 5,350 employees. Almost all of our employees belong to unions and
are party to collective bargaining agreements. Any significant increase in labor costs, deterioration of
employee relations, slowdowns or work stoppages at any of our plants, whether due to union activities,
employee turnover or otherwise, could have a material adverse effect on our business, financial condition,
results of operations and cash flow.

Risks Relating to Our Business

    We might be subject to penalties for antitrust violations.

     On June 21, 2005, the Economic Law Secretariat (Secretaria de Direito Econômico), or SDE, initiated
administrative proceedings against 11 Brazilian beef companies, including us and certain other large beef
producers. The proceedings relate to allegations that these beef companies may have breached Brazilian antitrust
regulations by entering into agreements to establish the price of cattle purchased by them for slaughter. In August
2006, the SDE concluded that eight of these companies, including us, breached the law and suggested that CADE
should consider us guilty under Brazilian antitrust laws. On January 30, 2007 and April 25, 2007, CADE and the
Public Attorney’s Office, respectively, issued their opinions and suggested the condemnation of the 11 companies,
including us. These opinions are not binding and CADE shall make the final decision. If CADE accepts the
decisions from the opinions issued and also concludes that we violated these antitrust regulations, CADE may
impose administrative penalties on us, including an administrative fine in the amount of between 1% and 30% of
our annual gross operating revenue of 2004 (for the year prior to the administrative proceeding, the period in which
CADE calculates such fines) and fines imposed on the directors directly or indirectly responsible for such violations
in an aggregate amount ranging from 10% to 50% of the fine imposed on us. In addition, criminal proceedings may
be commenced against our officers and directors by a Brazilian public prosecutor. If CADE were to render an
unfavorable decision, we would be entitled to challenge such decision in Brazilian courts. An adverse decision by
the courts, if upheld, could result in a material adverse effect on our results of operations, financial condition,
perspectives and the trading price of our shares.

    Our operating margins may be negatively impacted by fluctuating raw material costs and selling prices
    and other factors that are outside our control.

     Our operating margins depend on the purchase price of raw materials (primarily cattle) and the price at
which our beef products can be sold. These prices can vary significantly, including over relatively short
periods of time, as a result of a number of factors, including the relative supply and demand for beef and the
market for other protein products, including poultry and pork. The supply and market price of the cattle, our
principal raw material that represents approximately 80% of our cost of goods sold, are dependent upon a
variety of factors over which we have little or no control, including outbreaks of diseases such as FMD, the
relative cost of cattle feed, economic conditions and weather.




                                                         17
    Failure to successfully implement our business strategy may affect our plans to increase our revenue
    and cash flow.

     Our growth and financial performance will depend, in part, on our success in implementing numerous
elements of our strategy that are dependent on factors that are beyond our control. The principal elements of
our strategy are to:

    •    Continue our focus on sales to most profitable markets;

    •    Increase our production capacity through our growth or acquisitions;

    •    Enhance operating efficiencies and cut costs; and

    •    Increase the production and sale of higher margin products.

    We cannot assure you that any of our strategies will be fully or successfully implemented. The beef
industry is particularly influenced by changes in customer preferences, customers’ eating habits, governmental
regulations, regional and national economic conditions, demographic trends and sales practices by retailers.
Some aspects of our strategy may result in an increase in our operating costs. This increase may not be offset
by a corresponding increase in revenue, resulting in a decrease in our operating margins.

     Additionally, we may not be able to successfully integrate future acquisitions or successfully implement
appropriate operational, financial and administrative systems and controls to achieve the benefits that we
expect to result from these acquisitions. The diversion of our management’s attention and any delays or
difficulties encountered in connection with the integration of these businesses or assets could negatively
impact our business, including:

    •    our results of operations and financial condition may be adversely affected if we are unable to
         successfully integrate the business that we acquired; and

    •    some of these strategies depend on factors that are beyond our control, such as changes in the
         conditions of the markets in which we operate, actions taken by our competitors at any time, by the
         Brazilian Government or by any other government. Our failure to achieve any essential part of our
         strategy may negatively impact the growth of our business and our future financial performance.

    We face competition in our business, which may adversely affect our market share and profitability.

    The beef industry is highly competitive. In Brazil, our major beef competitors are JBS (Friboi), Bertin,
Marfrig and Independência. In international beef markets, we compete with numerous producers, including
companies based in the United States (Tyson Foods Inc., Cargill Inc., Smithfield Foods Inc., Swift & Company
and National Beef) and in Australia (Australian Meat, Teys Bros. Pty Ltd. and Nippon Meat Packers Ltd.).
Many factors influence our competitive position, including our operating efficiency and the availability,
quality and cost of raw materials and labor. Some of our competitors have greater financial and marketing
resources, larger customer bases and greater breadth of product offerings than we do. If we are unable to
remain competitive with these other beef producers in the future, our market share may be adversely affected.

    Our exports are subject to numerous risks related to international operations and regulations.

     Our exports represent a significant portion of our gross revenues. In 2006, our exports represented
76.8% of our gross revenues. In our principal export markets (the European Union, Russia, United States and
the Middle East), we are subject to similar risks described below for Brazil. Our future financial performance
will depend significantly on the economic scenario and the current political and social conditions in our
principal export markets. Our ability to export our products in the future may be adversely affected by factors
that are beyond our control, such as:

    •    exchange rate variations;

    •    a downturn in the economy;




                                                      18
    •    imposition of increased tariffs, (including anti-dumping tariffs) or commercial or sanitary barriers;

    •    imposition of exchange controls and restrictions on exchange transactions;

    •    strikes or other events that may affect the availability of ports and transportation;

    •    compliance with different foreign laws; and

    •    sabotage of our products.

     Our operations are frequently affected by strikes by port employees, customs agents, sanitary inspection
agents and other civil servants, including at the Brazilian ports from where we export our products. In 2005,
for example, the sanitary inspection team of the Brazilian government remained on strike for approximately
one month, resulting in delays in the export of our products. An extended strike among any of these workers
in the future may negatively impact our business and our results of operations. In addition, countries to which
we export our products may prohibit the purchase of our products for undetermined periods for different
reasons, including changes in applicable laws. For instance, on May 18, 2007, Russia imposed import
restrictions on 11 Brazilian slaughtering plants, including four of our plants. In 2006, our exports to Russia
represented approximately 24.0% of our total exports. We may not be able to adjust to these changes or find
new markets to compensate for a country that prohibits the purchase of our products.

    We are subject to fluctuations in exchange and interest rates.

     On March 31, 2007, 94.3% of our total indebtedness (in an aggregate amount equivalent to R$690.1 million)
was denominated in foreign currency. Exchange rate variations result from factors that we do not control. If the
Brazilian real devalues in a material capacity, our financial expenses will increase and we may have less access to
financings, which may have an adverse effect on our financial condition and results of operations.

    The unfavorable outcome of pending litigation related to our Batayporã production facility could
    result in an early termination of our lease, which could in turn adversely affect our business, financial
    condition and results of operations.

     In February 2006, we entered into a lease with the Grano family for a slaughterhouse and processing
facility in the city of Batayporã located in the State of Mato Grosso do Sul. The Grano family and WYNY do
Brasil Indústria e Comércio de Couro Ltda., a limited liability company, are involved in a dispute over title to
the land on which this slaughterhouse is located. An unfavorable ruling against the Grano family could result
in the early termination of our lease agreement. If we fail to enter into a new lease agreement for the
Batayporã production facility following any such adverse decision, this would decrease our slaughter and
processing capacity which could adversely affect our business, financial condition and results of operations.

     Moreover, Banco Bradesco S.A. has a security interest on 40% of this facility and Banco do Brasil
S.A. holds a mortgage on our Batayporã production facility land granted by the facility’s former owner,
Friporã – Frigorífico Batayporã Ltda., a limited liability company, to guarantee a loan granted by Banco
do Brasil S.A. in the amount of R$534,000. The loan has not been repaid and the mortgage is currently in
foreclosure and is part of a lawsuit commenced by Banco Bradesco S.A. Consequently, if the overdue
amount or amount owed to Banco Bradesco S.A. are not paid by Friporã prior to the end of the foreclosure
proceeding, the property could be sold by public auction to repay this loan or indemnity amounts. If the
property is sold and we fail to enter into a lease agreement with the new owner of the Batayporã production
facility, this would decrease our slaughter and processing capacity which could adversely affect our
business, financial condition and results of operations.




                                                         19
Risks Relating to Brazil

    The Brazilian government has exercised, and continues to exercise, significant influence over the
    Brazilian economy. This influence, as well as Brazilian economic and political conditions may have a
    direct impact on our business, financial condition, results of operations and the market price of our
    common shares.

    The Brazilian economy has been characterized by frequent, and occasionally drastic, intervention by the
Brazilian government, which has often changed its policies and rules. The Brazilian government’s actions to
control inflation and affect other policies have often involved higher interest rates, changes in tax policy,
wage and price controls, fluctuations in exchange rates, exchange controls and restrictions on remittances
abroad, and limitations on imports, among others. Our business, financial condition, operating revenue, results
of operations and the market value of our common shares may also be adversely affected by significant
changes in policies or rules that may be affected by the following factors:

    •    regulatory changes affecting the operation of our business;

    •    fluctuation in interest rates;

    •    social and political instability;

    •    energy shortages;

    •    fluctuation in exchange rates;

    •    exchange control policies;

    •    inflation;

    •    liquidity of the domestic capital and lending markets;

    •    tax and fiscal policies; and

    •    other economic, social or political developments in or affecting Brazil.

     The political scenario has influenced the performance of the Brazilian economy. Historically, political
crises have affected the confidence of investors and the public in general, which adversely affected the
development of the Brazilian economy and the trading price of securities of Brazilian companies. Moreover,
in October 2006 presidential elections were held in Brazil. The new government may implement new
economic policies. We cannot predict which policies will be adopted by the Brazilian government and if these
policies will adversely affect the Brazilian economy, our business or our financial performance. Uncertainties
and other future developments affecting the Brazilian economy may negatively affect our activities and our
results of operations, which may adversely affect the trading price of our common shares.

    Inflation, and the Brazilian government’s actions to combat inflation, including higher interest rates,
    may contribute significantly to economic uncertainty in Brazil, adversely affecting our results of
    operations and the market value of our shares.

     Brazil has historically experienced high inflation rates. Inflation, as well as government efforts to combat
inflation, had significant negative effects on the Brazilian economy. Since the implementation of the Plano
Real, in July 1994, inflation rates have been substantially lower than in previous periods. However,
inflationary pressures, actions to combat inflation and public speculation about possible additional actions that
may be adopted by the Brazilian government contributed materially to economic uncertainty in Brazil over
the last years and, accordingly, increased the volatility of Brazilian capital markets. Inflation rates, as
measured by the General Price Index - Market (Índice Geral de Preços – Mercado), or IGP-M, were 8.6% in
2003, 12.4% in 2004, 1.2% in 2005 and 3.8% in 2006. Prices, as measured by the IPCA, increased by 9.3% in
2003, 7.6% in 2004, 5.7% in 2005 and 3.1% in 2006.




                                                       20
    Brazil may experience high inflation rates in the future. Inflationary pressures may lead to further
government intervention in the economy, including the introduction of government policies that may
adversely affect the overall performance of the Brazilian economy, which in turn could adversely affect our
business and the trading value of our shares.

    Significant volatility in the value of the real against the U.S. dollar could adversely affect our business
    and the market value of our shares.

     The Brazilian currency has historically suffered frequent devaluations. The Brazilian government has
implemented various economic plans and utilized a number of exchange rate policies, including sudden
devaluations and 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. There have been
significant fluctuations in the exchange rates between the Brazilian currency and the U.S. dollar and other
currencies. For example, the real depreciated against the U.S. dollar by 8.5%, 15.7% and 34.3% in 2000, 2001
and 2002, respectively. Although the real appreciated against the U.S. dollar by 22.3%, 9.0%, 13.5% and 5.9%
in 2003, 2004, 2005 and 2006, respectively, we cannot assure you that the real will not depreciate again in the
future. As of December 31, 2006, the real/U.S. dollar exchange rate was R$2.135 per US$1.00.

     A substantial portion of our indebtedness, a significant portion of our revenue and some of our operating
expenses are, and we expect them to continue to be, denominated in or indexed to the U.S. dollar and to other
foreign currencies. Our total foreign currency exposure on March 31, 2007 with respect to our indebtedness
was approximately R$651.0 million. Although we manage a portion of our exchange rate risk through foreign
currency derivative instruments and export revenues, our foreign currency debt obligations are not completely
hedged. In addition, the market may not offer hedging transactions at reasonable costs. Unless we successfully
hedge this devaluation risk, any decrease in the value of the real relative to the U.S. dollar could have a
material adverse effect on our business and results of operations. In addition, a devaluation, or a less favorable
exchange rate would effectively increase the interest expense in respect of our U.S. dollar-denominated debt.

    Interest rates fluctuations may adversely affect our business and the market price of our shares.

     The Monetary Policy Committee of the Central Bank (Comitê de Política Monetária), or COPOM, sets
forth the base interest rates generally applicable to the Brazilian banking system. From February 2002 to July
2002, the base interest rate decreased from 19.0% to 18.0%. From October 2002 to February 2003, the base
interest rate increased by 8.5% to 26.5%. The base interest rate was high until June 2003, when the Central
Bank started to decrease the base interest rate. Following, during 2004 and the beginning of 2005, the base
interest rate was once again changed by the Central Bank. The base interest rate is currently 12.0%.

     On March 31, 2007, approximately 5.7% of our total indebtedness, in the amount of R$39.1 million, was
(1) denominated in (or convertible into) reais and indexed to the rates of the Brazilian financial market or
inflation rates, such as the Long Term Interest Rate (Taxa de Juros de Longo Prazo), or TJLP, the interest rate
applicable to our financial agreements entered into with BNDES and the Certificado Depositário
Interbancário, or CDI; and (2) denominated in U.S. dollars and indexed to the London Interbank Offer Rate,
or LIBOR. Any increase in the CDI, TJLP or LIBOR and consequent increase in the cost of our debt may
adversely affect our results of operations.

    Developments and the perception of risks in other emerging market countries may adversely affect the
    Brazilian securities markets and the market value of our shares.

     The market price of securities issued by Brazilian issuers is, to varying degrees, influenced by economic
and market conditions in other emerging market countries, especially those in Latin America. Although
economic conditions are different in each country, investors’ reaction to developments in one country may
affect the securities markets and the securities of Brazilian issuers. Crisis in other emerging market countries
may decrease the interest of investors in securities issued by Brazilian companies, including our shares. This
could adversely affect the market price of our shares and affect our access to capital markets and to future
financings at favorable terms or conditions.




                                                       21
     The Brazilian economy is also affected by economic conditions in international markets, particularly to
market and economic conditions in the Unite States. Prices of shares on the BOVESPA fluctuate according to
fluctuations in interest rates and the main indicators in the Unites States.

Risks Relating to the Offer and Our Common Shares

    An active and liquid market for our shares may not develop, thus limiting your ability to sell our
    shares at a desired price and time.

     Prior to this offering, there has not been a public market for our common shares. An active and liquid
market for our shares may not develop or be maintained after the offering. We cannot guarantee that a market
for our shares will develop on the BOVESPA, and if it develops, that it will be sufficiently liquid. The
Brazilian securities markets are substantially smaller, less liquid and more concentrated and volatile than
foreign securities markets.

     The BOVESPA, which is the principal Brazilian stock exchange, had a market capitalization of
approximately U.S.$722.6 billion (R$1.54 trillion) on December 31, 2006, and an average daily trading
volume of U.S.$1.1 billion (R$2.4 billion) in 2006. The top 10 stocks in terms of trading volume accounted
for approximately 46.1% of all shares traded on the BOVESPA in 2006. These market characteristics may
substantially limit the ability of holders of our common shares to sell them at the price and time which they
want to sell them, and this may negatively affect the market price of our common shares.

     Pursuant to applicable Brazilian law, investors that are managers, directors or executive officers of
Minerva, the Brazilian Underwriters or the agents or that are otherwise connected to this offering, including
any relatives of the foregoing (which we collectively refer to as “connected parties”), may buy our common
shares if demand is less than one-third of the total common shares offered, excluding shares that may be
issued pursuant to the over-allotment option, and it may have an adverse impact on the expected liquidity of
our common shares.

    The price per common share to be paid by investors in this offering was determined after the
bookbuilding process and may differ from market prices after this offering. In addition, the participation of
connected parties in this offering, limited to 10% of the total common shares offered, may impact the
determination of the price per common share.

    Sales of a substantial number of our shares after this offering may adversely affect the price of
    our common shares. In addition, the issuance of new shares will dilute the ownership percentage held
    by investors.

     Sales of a substantial number of our common shares on the BOVESPA following this offering, or
the perception that such sales could occur, could adversely affect the market price of our common shares.
Our controlling shareholders are subject to lock-up agreements and other restrictions described in this
offering circular.

    Our share capital is currently represented by 55,000,000 common shares, and will be increased to
83,400,000 common shares after this offering, assuming the exercise in full of the over-allotment option. Our
bylaws allow the issuance of up to 30,000,000 new common shares without the approval of our shareholders.
We may issue substantial amounts of common shares in the future, which would dilute the interest of our investors.

     In accordance with our bylaws, we must generally pay dividends or interest attributable to shareholders
equity to all of our shareholders in an amount equivalent to at least 25% of our annual net income, as
determined and adjusted under the Brazilian Corporation Law. This adjusted net income may be capitalized,
used to absorb losses or otherwise retained as set forth in the Brazilian Corporation Law and therefore may
not be available for the payment of dividends or interest attributable to shareholders’ equity. In addition,
according to the Brazilian Corporation Law, we are allowed to suspend the mandatory distribution of
dividends in any particular year if our board of directors informs our shareholders that such distributions
would be inadvisable in view of our financial condition. See “Dividends and Dividend Policy.”




                                                        22
    The relative volatility and lack of liquidity of the Brazilian securities market may significantly limit
    your ability to sell our securities at a desired price and time.

     Investments in securities trading in emerging markets, such as Brazil, frequently involve higher risks as
compared to other international markets, since these investments are more speculative. The Brazilian
securities market is significantly smaller, less liquid, more volatile and more concentrated than the major
international securities markets. For example, the 10 largest companies listed on the BOVESPA based on
trading volume on December 31, 2006 represented approximately 45.3%, 51.3% and 46.1% of all shares
traded on the BOVESPA in 2004, 2005 and 2006, respectively.

     We cannot guarantee that a market for our shares will develop, and if it develops, that it will be maintained
after the offering. As a result, the investors may not be able to sell their shares at a desired price and time.

    We may need additional capital in the future, which may dilute your interest in your shares.

     We may need additional capital in the future and decide to launch a public or private offering of our
shares or securities convertible into our shares. Under Brazilian Corporation Law, any fund raising through a
public offering of shares, or securities convertible into shares, may occur without preemptive rights of our
shareholders, including shareholders of the shares offered in the public offering. As a result, the shareholdings
of these shareholders may be diluted.

    We may implement a stock option plan in the future, which may result in a dilution of your
    shareholding in us.

     We do not currently have a stock option plan for the members of our management or our employees. We
are considering implementing a stock option plan, but we still have not determined its structure, and it will not
be implemented right after this offering. If and when we decide to implement a stock option plan, it may
result in an economic and shareholding dilution of the interest held by our shareholders.

    We will continue to be controlled by our current controlling shareholders, whose interests may differ
    from those of our other shareholders.

     Upon completion of this offering, our current controlling shareholders will hold or control shares representing,
in the aggregate, 68.0% of our voting share capital, assuming no exercise of the over-allotment option.

     As long as our current controlling shareholders continue to hold or control a significant block of voting
rights, they will control us, and this will enable them, without the consent of our other shareholders:

    •    elect and remove from office the majority of our board of directors;

    •    control our management and policies; and

    •    determine the outcome of most corporate transactions or other matters submitted to our shareholders
         for approval, including mergers, acquisitions, and the sale of all or substantially all of our assets, or
         the delisting of our common shares from the Novo Mercado.

    Our current controlling shareholders may also have their own interests, which may differ from those of
our other shareholders.

    Our bylaws have provisions that may discourage the sale of our company and hinder or delay
    transactions that may be of interest of our shareholders. In certain circumstances, an amendment to
    our bylaws to exclude this provision may not be of the interest of the shareholders.

     Our bylaws have provisions that may discourage, delay or hinder any sale of control or change of the
members of our management. This provision requires that any purchasing shareholder (except shareholders as
of the date of our listing on the Novo Mercado and other investors who become our shareholders in certain
transactions provided for in our bylaws) who purchases our shares or becomes a shareholder (except for




                                                          23
founder’s shares and involuntary share interest provided for in our bylaws), or other rights, equal to 20% or
more of our capital stock, shall conduct, within 30 days as of the date of purchase or as of the date of the
event resulting in ownership of shares, a public offering for the purchase of all of our shares, at a price
established at our bylaws. This provision may delay, postpone or avoid a transaction, or sale of control, in the
best interest of our shareholders.

     This provision avoids the concentration of our shares in the hands of one small group of investors, in
order to promote more widespread ownership of our shares. The cancellation of this provision, which may not
be of the best interest of our shareholders, may be decided at a general shareholders’ meeting attended by
shareholders representing at least 2/3 of our voting shares, on first call, or any number of shareholders, on
second call, through majority vote. The approval of the cancellation of this provision does not give to
dissenting shareholders the right to reimbursement. In addition we, our controlling shareholder or
shareholders voting in favor of such deliberation do not have the obligation to conduct a public offering for
the purchase of shares held by the other shareholders.

    Your ownership in our company may be diluted.

    We expect the price per share to exceed the equity value of our shares upon completion of this offering.
Consequently, investors who purchase our shares in this offering will suffer immediate ownership dilution.
See “Dilution.”

    We have granted a bonus to Banco de Investimentos Credit Suisse (Brasil) S.A., the payment of
    which is conditioned on the successful completion of this offering. As a result, the interests of
    Banco de Investimentos Credit Suisse (Brasil) S.A. may be aligned with the offering price of our
    common shares.

      Due to the long-term relationship between our company and Banco de Investimentos Credit Suisse
(Brasil) S.A., during which Banco de Investimentos Credit Suisse (Brasil) S.A. has provided investment
banking services to us (including the structuring of several financings), we granted to Banco de Investimentos
Credit Suisse (Brasil) S.A. a bonus, or the Bonus. The payment of the Bonus is conditioned on the successful
completion of this offering, and will be settled on a date previously agreed upon by us and Banco de
Investimentos Credit Suisse (Brasil) S.A. The amount of the Bonus will be equal to the real equivalent of
US$15.0 million multiplied by (((the value of the company less the gross proceeds received by us from this
offering) divided by R$600.0 million) minus one). Based upon a price per share of R$18.50 and assuming that
Banco de Investimentos Credit Suisse (Brasil) S.A. exercises its over-allotment option in full, we would pay
to Banco de Investimentos Credit Suisse (Brasil) S.A. an amount equivalent to R$19.4 million.
     Investors should note that the higher the offering price of our common shares, the higher the amount of the
Bonus payable to Banco de Investimentos Credit Suisse (Brasil) S.A. As a result, the interests of Banco de
Investimentos Credit Suisse (Brasil) S.A. may be aligned with the offering price of our common shares.
    We could be classified as a passive foreign investment company for U.S. tax purposes.

     We do not expect to be classified as a passive foreign investment company (‘‘PFIC’’) for U.S. federal
income tax purposes. However, this expectation is based, in part, on the expected composition of our income
and the value of our assets, the expected market value of our shares and our expected use of the proceeds from
this offering and, therefore, there can be no assurance in this regard. If we are or become classified as a PFIC
it may have materially adverse consequences for U.S. investors in common shares. Please see the discussion
under ‘‘Taxation—United States Federal Income Taxation—Passive Foreign Investment Company
Considerations’’.




                                                        24
                                    FORWARD-LOOKING STATEMENTS

     The statements included in this offering circular regarding our plans, forecasts, expectations of future
events, strategies, projections and financial trends affecting our business, as well as statements regarding other
information, mainly under the headings “Summary,” “Risk Factors,” “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and “Business,” consist of forward-looking
statements that involve risks and uncertainties and, therefore, constitute no guarantee of future results.

    Many important factors, in addition to those discussed elsewhere in this offering circular, could cause our
actual results to differ substantially from those anticipated in our forward-looking statements, including,
among other factors:

    •    general economic, political and business conditions in our markets, both in Brazil and abroad, including
         demand and prices for beef and leather products;

    •    interest rate fluctuations, changes in the value of the real in relation to foreign currencies;

    •    developments in, or changes to, the laws, regulations and governmental policies governing our business
         and products, including environmental and sanitary liabilities;

    •    current and future tax legislation;

    •    health-related risks in the food industry;

    •    the outbreak of any disease affecting live cattle and food products;

    •    changes in market prices;

    •    implementation of our principal operating, financial and growth strategies;

    •    offer and demand for our products;

    •    our level of indebtedness and the cost and availability of financing;

    •    our capital expenditures plans; and

    •    the other factors discussed under the section entitled “Risk Factors” in this offering circular.

     Our forward-looking statements are not guarantees of future performance, and our actual results or
other developments may differ materially from the expectations expressed in the forward-looking statements.
As for forward-looking statements that relate to future financial results and other projections, actual results
will be different due to the inherent uncertainty of estimates, forecasts and projections. Because of these
uncertainties, potential investors should not rely on these forward-looking statements. We undertake no
obligation to publicly update any forward-looking statement, whether as a result of new information, future
events or otherwise.

     Statements that are predictive in nature, that depend upon or refer to future events or conditions or that
include words such as “believe,” “may,” “estimate,” “continue,” “potential,” “anticipate,” “intend,” “will,”
“expect” and similar expressions are intended to identify forward-looking statements. Forward-looking
statements and estimates speak only as of the date they were made, and none of us, the selling shareholders,
the underwriters, or the agents undertake any responsibility to update or publicly release any revision of such
forward-looking statements after we distribute this offering memorandum to reflect new information, future
events or other factors.




                                                           25
                                                                    EXCHANGE RATES

    Before March 14, 2005, there were two legal foreign exchange markets in Brazil, the commercial
exchange rate market and the floating exchange rate market. On March 4, 2005, the CMN enacted Resolution
No. 3,265, pursuant to which the floating exchange rate market and the commercial exchange rate market
were unified in one “exchange market”, effective as of March 14, 2005. The new regulation allows the
purchase and sale of foreign currency and the international transfer of reais by any person or legal entity,
regardless of the amount, provided the transaction is legal and complies with certain regulatory procedures.

     Since 1999, the Central Bank has allowed the U.S. dollar-real exchange rate to float freely, and, since
then, the U.S. dollar-real exchange rate has fluctuated considerably. Since the beginning of 2001, the
Brazilian exchange rate market has been increasingly volatile, and, until early 2003, the value of the real
declined relative to the U.S. dollar. The real appreciated against the U.S. dollar in 2005, 2004 and 2003. On
December 31, 2006 and December 31, 2005, the U.S. dollar-real exchange rate was R$2.138 per US$1.00 and
R$2.3407 per US$1.00, respectively. On March 31, 2007, the U.S. dollar-real exchange rate was R$2.050 per
US$1.00. In the past, the Central Bank has intervened occasionally to control unstable movements in foreign
exchange rates. We cannot predict whether the Central Bank or the Brazilian government will continue to let
the real float freely or will intervene in the exchange rate market through the return of a currency band system
or otherwise. The real may depreciate or appreciate against the U.S. dollar substantially in the future.
Exchange rate fluctuations will affect the U.S. dollar equivalent of the real price of our preferred shares on the
BOVESPA as well as the U.S. dollar equivalent of any distributions we make in reais with respect to our
preferred shares. For more information on these risks, see “Risk factors — Risks Relating to Brazil.”

    The following tables set forth the selling rate, expressed in reais per U.S. dollar (R$/US$), for the periods
presented.

Year                                                             Period-end        Average(1)    Low     High
2002 .........................................................      3.533             2.931      2.271   3.955
2003 .........................................................      2.889             3.071      2.822   3.662
2004 .........................................................      2.654             2.926      2.654   3.205
2005 .........................................................      2.341             2.435      2.163   2.762
2006 .........................................................      2.138             2.215      2.059   2.371
2007 (through July 2, 2007) .....................                   1.917             2.044      1.904   2.155

Month                                                            Period-end        Average (1)   Low     High
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 ................................................         2.034            2.032       2.023    2.048
May 2007 .................................................          1.929            2.982       1.929    2.031
June 2007 .................................................         1.926            1.935       1.905    1.964
July 2007(through July 2, 2007) ..............                      1.917                –       1.914    1.930

Source: Central Bank.
(1)     Average of the lowest and highest daily rates in the period.




                                                                              26
                                           MARKET INFORMATION

Trading on the BOVESPA

    In 2000, the Brazilian stock exchanges were reorganized through the execution of memoranda of
understanding by and among the Brazilian stock exchanges. Under the memoranda, all tradings are performed
only on the BOVESPA.

    Trading of securities listed on the BOVESPA, including the Novo Mercado and Levels 1 and 2 of
Corporate Governance Practices, may be carried out outside stock exchanges, in non-organized
over-the-counter markets, in specific cases.

     The BOVESPA is a nonprofit entity owned by its member brokerage firms. Stock exchange trading on the
BOVESPA is limited to member brokerage firms. The BOVESPA has two open outcry trading sessions each
day from 10:00 a.m. to 5:00 p.m. and from 11:00 a.m. to 6:00 p.m., Brazilian daylight saving time through a
computerized system named Megabolsa. The BOVESPA also permits trading after market close, such hours
called the “after market,” from 5:45 p.m. to 7:00 p.m., or from 6:45 p.m. to 7:30 p.m. during Brazilian daylight
savings time. Trading during the after market is subject to regulatory limits on price volatility and on the volume
of shares traded.

     In 2006, the aggregate market capitalization of the companies listed on the BOVESPA was equivalent to
approximately R$1.54 trillion (U.S.$722.6 billion) and the BOVESPA recorded an average daily trading
volume of U.S.$949.0 million. In comparison, in 2006 the aggregate market capitalization of the companies
listed on the New York Stock Exchange was equivalent to U.S.$15.4 trillion, and the New York Stock
Exchange recorded an average daily trading volume of U.S.$68.0 billion. In addition, the Brazilian securities
market is significantly more concentrated than the major international securities markets. For example, on
December 31, 2006, the total capitalization of the 10 largest companies listed on the BOVESPA represented
approximately 51.3% of the total capitalization of all companies listed on the BOVESPA.

    All shares may be traded on the BOVESPA. A liquid and active market for common shares may not
occur, limiting the investors’ ability to trade their common shares. See “Risk Factors—Risks Relating to
the Offering and Our Common Shares—An active and liquid market for our common shares may not
develop, thus limiting your ability to sell our common shares.”

    In order to better control volatility, the BOVESPA adopted a “circuit breaker” system pursuant to
which trading sessions may be suspended for a period of 30 minutes or one hour whenever the indices of
the BOVESPA fall below the limits of 10% or 15%, respectively, in relation to the index registered in
the previous trading session.

     The settlement of transactions involving the purchase and sale of securities on the BOVESPA should occur
within three business days after the trading date, incurring no adjustments for inflation. As a general rule, the seller
should deliver the shares to the BOVESPA on the second business day after the trading date. The delivery and the
payment for shares are made through BOVESPA’s independent clearing house, the CBLC. The CBLC is the
central counterpart guaranteeing trading transactions carried out on the BOVESPA and provides multilateral
clearing and settlement of trading transactions. Under the CBLC regulation, financial settlement takes place 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 irrevocable.

Regulation of the Brazilian Securities Market

     The Brazilian securities markets are jointly regulated by the CVM, which has regulatory authority over the stock
exchanges and securities markets, the CMN and the Central Bank, which have, among other powers, regulatory
authority over brokerage firms, and foreign investment and foreign exchange transactions. The Brazilian securities
markets are governed by the Brazilian Corporation Law and the principal law governing the Brazilian securities
markets, and by regulations issued by the CVM, the CMN and the Central Bank. These laws and regulations, among
others, provide for disclosure requirements applicable to issuers of publicly traded securities, criminal sanctions for
insider trading and price manipulation, and protection of minority shareholders. The Brazilian securities markets are
not as highly regulated and supervised as U.S. securities markets.




                                                          27
     Under Brazilian Corporation Law, a company is either publicly held (companhia aberta), like us, or
privately held (a companhia fechada). A company is publicly held when it has securities traded on the stock
exchange and on over-the-counter markets. All publicly held companies must be listed 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 on the Brazilian over-the-counter market. The shares of a listed company may also
be traded privately, subject to several limitations.
    The over-the-counter market is divided in two categories: (1) the organized over-the-counter market, in
which the transactions are supervised by self-regulating entities authorized by the CVM; and (2) the non-
organized over-the-counter market, in which the transactions are not supervised by self-regulating entities
authorized by the CVM. In either case, transactions are directly traded among persons, outside of the stock
exchange market, through a financial institution authorized by the CVM. The institution shall be registered
with the CVM (or in the relevant over-the-counter market for organized over-the-counter market), but there is
no need of a special license to trade securities of a publicly held company on the over-the-counter market.
    The trading of securities on the BOVESPA may be halted at the request of a company in anticipation of a
material announcement. Trading may also be suspended by 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.
     Under Brazilian Corporation Law and the CVM regulations, information must be disclosed, and there are
restrictions in trading based on privileged information and price manipulation. See “Description of Capital Stock.”
    Trading on Brazilian stock exchanges by non-residents of Brazil is subject to certain restrictions under the
Brazilian foreign investment legislation. See “—Investment in our common shares by non-residents of Brazil.”

Investment in our common shares by non-residents of Brazil
    Non-Brazilian investors must register their investment in our common shares under Law No. 4,131, dated
September 3, 1962, or CMN Resolution No. 2,689 and CVM Instruction No. 325, both as amended. CMN
Resolution No. 2,689 affords favorable tax treatment to non-Brazilian investors who are not residents in a tax
haven jurisdiction (i.e., countries that do not impose income tax or where the maximum income tax rate is
lower than 20%), as defined by Brazilian tax laws. See “Taxation” for further description of tax benefits
extended to non-Brazilian holders who qualify under CMN Resolution No. 2,689.
     Under CMN Resolution No. 2,689, non-Brazilian investors may invest in almost all financial assets and engage in
almost all transactions available in the Brazilian financial and capital markets, provided that certain requirements are
met. In accordance with CMN Resolution No. 2,689, the definition of non-Brazilian investor includes individuals,
companies, mutual funds and other collective investment entities domiciled or headquartered abroad.
    Under CMN Resolution No. 2,689, a non-Brazilian investor must:
    •      appoint at least one representative in Brazil, with powers to perform actions relating to its investment;
    •      appoint an authorized custodian in Brazil for its investment, which must be a financial institution
           duly authorized by the Central Bank and CVM;
    •      through its representative, register as a non-Brazilian investor with the CVM; and
    •      register its foreign investment with the Central Bank.
    Additionally, an investor operating under the provisions of CMN Resolution No. 2,689 must be registered
with the Brazilian internal revenue service pursuant to its Regulatory Instruction No. 200 of September 13, 2002,
as amended. This registration process is undertaken by the investor’s legal representative in Brazil.
    Securities and other financial assets held by non-Brazilian investors pursuant to CMN 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 is restricted to transactions carried out in the stock
exchanges or through organized over-the-counter markets licensed by the CVM, except for transfers resulting
from a corporate reorganization, or occurring upon the death of an investor by operation of law or will.




                                                          28
                                                                        USE OF PROCEEDS

     We estimate that our net proceeds from the sale of our common shares in this offering, after the deduction
of commissions, the bonus payable to Banco de Investimentos Credit Suisse (Brasil) S.A. and the estimated
offering expenses payable by us, will be approximately R$333.7 million.

     We intend to use the net proceeds from this offering: (1) for the construction of new slaughtering plants
and beef processing units and for additional investments in, and purchase of equipment for, our existing
plants, in order to increase our overall operating capacity; (2) for the acquisition of companies or assets that
we have not yet identified in the beef industry, including slaughtering plants, beef processing units and
companies in the beef sector; and (3) to strengthen our working capital, in each case, according to the
estimated percentages set forth in the chart below:

Purpose                                                                                                                    Percentage (%)
Capital expenditures to expand our operating capacity, including through the
 construction of new slaughtering plants and processing units and the expansion
 of the slaughtering and beef processing capacity of our existing plants................                                   40.0%
Acquisition of slaughtering plants, beef processing units or companies in
 the beef sector .......................................................................................................   30.0%
Working capital ......................................................................................................     30.0%

     Even though acquisitions are part of our growth strategy and the Brazilian beef industry may offer several
acquisition opportunities, we cannot predict when an acquisition will occur nor the amounts involved in future
transactions. As of the date of this offering circular, we have not entered into any agreements in connection
with any acquisitions. We will disclose to the market, in accordance with applicable law, any acquisition that
we may make. See “Risk Factors—Certain Factors Relating to our Business and Industries—Our failure to
successfully implement our business strategy, including any expansion of our business through strategic
acquisitions, could adversely affect our results of operations.”

       We will not receive any proceeds from the secondary offering of common shares by the selling shareholders.




                                                                                         29
                                                               CAPITALIZATION

     The following table sets forth our short- and long-term indebtedness, shareholders’ equity and total
capitalization as of March 31, 2007, on an actual basis and on an as adjusted basis to give effect to the
issuance of common shares hereby, assuming net proceeds of R$333.7 million, after deducting commissions,
the bonus payable to Banco de Investimentos Credit Suisse (Brasil) S.A. and the estimated offering expenses
payable by us, and assuming no exercise of the over-allotment option. Other than this offering, there has been
no significant change in our capitalization since March 31, 2007.

                                                                                        As of March 31, 2007
                                                                      Actual                                            As Adjusted
                                                    (in millions of US$)(1)    (in millions of reais)   (in millions of US$)(1) (in millions of reais)
Cash, cash equivalents and
 marketable securities ..........................           153.6                     314.9                     316.3                   648.6
Short-term indebtedness ......................               47.6                      97.7                      47.6                    97.5
Long-term indebtedness.......................               288.9                     592.4                     288.9                   592.4
Shareholders’ equity ............................            97.2                     199.3                     259.9                   533.1
Total capitalization(2)........................             433.7                     889.4                     596.4                 1,223.0

(1) Solely for the convenience of the reader, Brazilian real amounts as of December 31, 2006 have been translated into
    U.S. dollars at the exchange rate as of March 31, 2007 of R$2.0504 to U.S.$1.00. See “Exchange Rates” for further
    information about recent fluctuations in exchange rates.
(2) Capitalization is defined as the sum of our short- and long-term indebtedness and shareholders’ equity.

    You should read this table in conjunction with “Selected Financial Information,” “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated balance
sheet and “pro forma” financial statements included elsewhere in this offering circular.




                                                                              30
                                                                                 DILUTION

      As of March 31, 2007, our total shareholders’ equity was R$199.3 million and our net book value was
 R$3.63 per share. Net book value represents total assets less total liabilities. Net book value per share as of
 March 31, 2007 is determined by dividing our total net book value by the number of our outstanding shares as
 of such date.

      After giving effect to the sale by us of 20,000,000 common shares in the primary offering but without
 giving effect to the over-allotment option, based upon an offering price of R$18.50 per share and after
 deducting the underwriting discounts and commissions, the bonus payable to Banco de Investimentos Credit
 Suisse (Brasil) S.A. and the estimated offering expenses payable by us, our estimated shareholders’ equity at
 March 31, 2007 would have been approximately R$533.1 million, representing R$7.11 per common share.
 Considering the price of R$18.50 per common share, this offering would result, as of March 31, 2007, in an
 increase in the net book value of R$3.48 per common share to existing shareholders, and an immediate
 dilution in the net book value of R$11.39 per common share to new investors acquiring common shares in this
 offering. This dilution represents the difference between the offering price per common share paid by
 investors and the book value per common share immediately after giving effect to this offering.

         The following table illustrates this dilution:

                                                                                                                             As of March 31, 2007
Offering price per common share ...........................................................................               R$18.50           US$9.02(1)
Net book value per common share as of March 31, 2007 ......................................                                R$3.63           US$1.77
Increase in net book value per common share attributable
  to existing shareholders.......................................................................................          R$3.48           US$1.69
Net book value per common share after completion
  of this offering.....................................................................................................    R$7.11           US$3.46
Dilution per common share for new investors(2) ...................................................                        R$11.39           US$5.55
Percentage dilution per common share for new investors(3)..................................                                61.6%             61.6%

 (1) Real amounts have been translated solely for convenience into U.S. dollars at an exchange rate of R$2.050 per
       US$1.00, the exchange rate in effect on March 31, 2007, as reported by the Central Bank.
 (2) Dilution represents the difference between the offering price per common share paid by investors and the book value
       per common share immediately after giving effect to this offering.
 (3) Calculated to reflect dilution in the book value per common share for new investors vis-à-vis the offering price per
       common share.

     The offering price per share bears no relationship to the book value of our common shares and will be
 established based on the bookbuilding procedure.

     The amounts paid by our controlling shareholders to acquire common shares (or quotas, as applicable) of
 our company during the last five fiscal years were as follows:

         •      on November 20, 2002, certain of our selling shareholders subscribed for 1,700,000 new quotas of
                our company, for a price of R$1.00 per quota;

         •      on June 25, 2003, certain of our selling shareholders subscribed for 850,000 new quotas of our
                company, for a price of R$1.00 per quota; and

         •      on December 31, 2005, certain of our selling shareholders subscribed for new quotas of our company
                for a total price of R$11,168,000.

     Except for the over-allotment option there are no other outstanding options to purchase our common shares, we
 do not have any debt convertible into our common shares, and during the past five years, we have not issued any
 other securities or granted any options that would require us to issue additional common shares.




                                                                                         31
                       SELECTED FINANCIAL AND OTHER INFORMATION

     Our selected financial data as of and for the three-month periods ended March 31, 2006 and 2007 and as
of and for the years ended December 31, 2004, 2005 and 2006 have been derived from our audited financial
statements included elsewhere in this offering circular. Our financial statements are prepared in accordance
with Brazilian GAAP, which differs in significant respects from U.S. GAAP. For a discussion of these
significant differences relating to our financial statements, see “Appendix A—Summary of Significant
Differences Between Brazilian GAAP and U.S. GAAP.” This selected financial data also contains unaudited
data in the section “Other Data.” Our results of operations for the three-month period ended March 31, 2007
are not necessarily indicative of our results of operations for any future period or year.

     This selected financial information should be read in conjunction with “Selected Financial and Other
Information,” “Presentation of Financial and Other Information,” “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” and our financial statements included elsewhere in this
offering circular.




                                                     32
                                                                        As of and for the years                             As of and for the
                                                                         ended December 31,                      three-month period ended March 31,
                                                              2004       2005          2006         2006           2006          2007           2007
                                                                       (audited)                                       (audited)
Amounts expressed in millions                                          (in reais)               (in U.S.$) (1)         (in reais)           (in U.S.$)(1)
Income Statement Data:
Export sales.............................................     724.7      815.3         1,007.6     491.4          186.9         271.8        132.6
Domestic sales ........................................       214.5      235.3           304.7     148.6           64.6          75.6         36.9
Gross sales revenue.................................          939.2    1,050.6         1,312.3     640.0          251.5         347.4        169.5
Sales taxes...............................................   (118.8)    (110.3)         (119.9)    (58.5)         (22.5)        (41.7)       (20.4)
Net sales revenue ....................................        820.4      940.3         1,192.4     581.5          229.0         305.7        149.1
Cost of goods sold ..................................        (628.2)    (735.3)         (918.7)   (448.1)        (178.5)       (235.3)      (114.8)
Gross profit .............................................    192.2      205.0           273.7     133.4           50.5          70.4         34.3
Selling expenses......................................       (105.1)    (125.4)         (133.5)    (65.1)         (30.0)        (39.4)       (19.2)
General and administrative expenses .....                     (27.8)     (32.1)          (32.2)    (15.7)          (8.6)         (7.6)        (3.7)
Financial income (expense), net .............                 (23.2)     (29.9)          (26.6)    (13.0)          (3.0)          2.6          1.3
Total operating income (expense) ..........                  (156.1)    (187.4)         (192.3)    (93.8)         (41.6)        (44.4)       (21.6)
Operating income....................................           36.1       17.6            81.4      39.6            8.9          26.0         12.7
Non-operating income ............................             (26.8)      (0.4)            –         –              –            (6.1)        (3.0)
Income before tax and social
 contribution ...........................................       9.3      17.2             81.4      39.6            8.9          19.9           9.7
Tax and social contribution – current.....                      –        (2.8)           (15.0)     (7.3)          (2.6)         (7.9)         (3.9)
Tax and social contribution – deferred...                      (3.9)     (0.2)           (12.8)     (6.2)          (0.7)         (1.1)         (0.5)
Net income .............................................        5.4      14.2             53.6      26.1            5.6          10.9           5.3
Balance Sheet Data:
Cash and cash equivalents ......................              38.2       29.1            93.0       45.4          30.0         314.9        153.6
Trade accounts receivable from
 customers...............................................    108.6      135.9           196.0      95.6           93.6         167.3         81.6
Inventories...............................................    55.0       54.3           119.1      58.0           94.6         135.2         65.9
Other receivables ....................................         0.9        2.1             2.2       1.0            2.3           2.4          1.2
Taxes recoverable ...................................         79.1      123.1           170.1      83.0          138.1         175.8         85.7
Total current assets .................................       281.8      344.5           580.4     283.0          358.6         795.6        388.0
Taxes recoverable ...................................           –          –               –          –              –            –            –
Judicial deposits ......................................       1.9        1.9             3.4       1.7            1.9           3.4          1.7
Related parties.........................................       2.5        2.2             3.4       1.7            4.3           4.6          2.2
Other receivables ....................................         0.3        -               -         -              -             8.6          4.2
Long-term assets .....................................         4.7        4.1             6.8       3.4            6.2          16.6          8.1
Fixed assets .............................................   144.7      218.2           313.1     152.7          220.0         312.0        152.2
Deferred assets ........................................       0.5        0.5             0.5       0.2            0.5           0.5          0.2
Permanent assets .....................................       145.2      218.7           313.6     152.9          220.5         312.5        152.4
Total non-current assets ..........................          149.9      222.8           320.4     156.3          226.7         329.1        160.5
Total assets.............................................    431.7      567.3           900.8     439.3          585.3       1.124.7        548.5
Trade accounts payable to suppliers .......                   73.9       76.0           124.9      60.9           89.3          99.6         48.6
Loans and financing................................          192.2      213.4           253.3     123.5          230.2          97.7         47.6
Payroll and tax payable...........................             6.8       12.9            13.7       6.7           14.3          15.5          7.6
Other liabilities........................................      0.1        1.5             4.5       2.3            0.4           0.0          –
Provision for income taxes .....................                –         2.7            15.0       7.3            2.7          10.1          4.9
Total current liabilities............................        273.0      306.5           411.4     200.7          336.9         222.9        108.7
Loans and financing................................           65.0      110.6           192.9      94.1           84.1         592.4        288.9
Union tax INSS payable (2)....................                41.9       25.0            26.4      12.9           25.1          26.2         12.8
Deferred taxes .........................................      16.7       17.3            51.8      25.3           17.9          52.9         25.8
Provision for contingencies ....................              35.2       40.3            29.8      14.5           48.6          30.4         14.8
Related parties.........................................       0.2        5.8             0.5       0.2            5.3           0.6          0.3
Total non-current liabilities ....................           159.0      199.0           301.4     147.0          181.0         702.5        342.6
Capital stock............................................     18.2       29.4            29.4      14.3           29.4          29.4         14.3
Capital reserve.........................................       0.2        0.2             0.2       0.1            0.2           0.2          0.1
Revaluation reserve.................................          36.6       77.6           149.3      72.8           77.1         148.4         72.4
Retained earnings
 (accumulated deficit).............................          (55.3)     (45.4)            9.1        4.4          (39.3)        21.3          10.4
Stockholders’ equity ...............................          (0.3)      61.8           188.0       91.6           67.4        199.3          97.2
Total liabilities and
 stockholders’ equity ............................           431.7      567.3           900.8     439.3          585.3       1,124.7        548.5
Other Data:
EBITDA(3) ............................................        65.4      57.5           121.9       59.5           14.1          27.1         13.2
EBITDA margin(4).................................             8.0%      6.1%           10.2%           –          6.2%          8.9%           –
Net debt(5) ..............................................   219.0     294.9           353.2      172.2          284.3         375.2        183.0
Net debt/EBITDA(6) ..............................             3.4x      5.1x            2.9x           –          5.2x          2.8x            –
Number of head slaughtered
 (in thousands) ........................................      539        595             791           –          169           220             –
Sales volume (thousands of tons) ...........                  124        145             176           –           43            51             –

(1)     Solely for the convenience of the reader, Brazilian real amounts 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 selling rate at March 31, 2007 of R$2.0504 to
        U.S.$1.00. See “Exchange Rates” for further information about recent fluctuations in exchange rates.
(2)     Social Security National Institute (Instituto Nacional da Seguridade Social), or INSS. This expense is payable over 120 months
        under the PAES program. PAES refers to the Special Installment Program (Parcelamento Especial – PAES).




                                                                                  33
(3)   EBITDA is a performance measure not recognized under Brazilian GAAP that is calculated by our management, and is defined as:
      net income (loss) plus income and social contribution taxes, financial income (expenses), net, non-operating income and
      depreciation and amortization. EBITDA is not a recognized term under Brazilian GAAP and because not all companies use
      identical calculations may not be comparable to other similarly titled measures used by other companies. Our management discloses
      EBITDA because it believes it is useful in its evaluation of its operating performance. EBITDA should not be considered in
      isolation or as a substitute for net income or operating results or an indicator of our operating performance, cash flow, liquidity or
      ability to make debt payments. EBITDA is calculated as follows:

                                                                                                                  As of and for the
                                                                 As of and for the years                 three-month period ended March
                                                                   ended December 31,                                    31,
                                                          2004    2005          2006         2006         2006        2007          2007
                                                                 (audited)                                    (audited)
      (in millions)                                              (in reais)              (in U.S.$)(a)        (in reais)        (in U.S.$)(a)
      Net income ......................................    5.4     14.2         53.6         26.1            5.6     10.9            5.3
      Plus:                                                                                     –
      Tax and social contribution.............             3.9      3.0         27.8         13.5           3.3       9.0           4.4
      Non-operating income ....................           26.8      0.4            –            –             –       6.1           3.0
      Financial income (expense), net .....               23.2     29.9         26.6         13.0           3.0      (2.6)         (1.3)
      Depreciation and amortization........                6.1     10.0         13.9          6.8           2.9       3.7           1.9
      EBITDA ..........................................   65.4     57.5        121.9         59.4          14.1      27.1          13.3

(a)   Solely for the convenience of the reader, Brazilian real amounts 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 selling rate at March 31, 2007 of R$2.0504 to
      U.S.$1.00. See “Exchange Rates” for further information about recent fluctuations in exchange rates.
(4)   EBITDA margin is calculated by dividing EBITDA for by total net sales revenue, expressed as percentage. For the three-month
      periods ended March 31, 2007 and 2006, we have calculated our EBITDA margin by dividing our EBITDA for the three-month
      periods ended March 31, 2007 and March 31, 2006 by our total net sales revenue for the corresponding three-month period.
(5)   Net debt is calculated as follows: our short- and long-term debt indebtedness minus cash, bank deposits and marketable securities.
(6)   We have calculated EBITDA for our Net Debt/EBITDA ratio based on EBITDA for the applicable 12-month period.




                                                                          34
           MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS

    The following discussion of our financial condition and results of operations should be read in
conjunction with our audited financial statements as of and for the three-month periods ended March 31, 2006
and 2007 and as of and for the years ended December 31, 2004, 2005 and 2006, and the notes thereto included
elsewhere in this offering circular, as well as the information presented under “Presentation of Financial and
Other Information” and “Selected Financial and Other Information.”

    The following discussion contains forward-looking statements that involve risks and uncertainties. Our
actual results may differ materially from those discussed in the forward-looking statements as a result of
various factors, including those set forth in “Forward-Looking Statements” and “Risk Factors.”

Overview

    We are one of the market leaders in Brazil in the production and sale of fresh beef, processed beef and
beef byproducts, with a daily slaughtering capacity of 5,000 head of cattle and daily processing capacity of
1,200 tons, or approximately 7,500 head of cattle. In 2006, we were among the three largest Brazilian
exporters of beef, processed beef and beef byproducts based on our gross export sales revenue, according to
SECEX data in 2006. Our export sales totaled US$426 million, and we sold our products to approximately
600 customers in approximately 80 countries. We also export wet blue hides and live cattle in addition to beef
byproducts. In 2006, export sales accounted for approximately 76.8% of our gross sales revenue, while our
domestic sales accounted for approximately 23.2% of our gross sales revenue.

Key Factors Affecting Our Revenue and Results of Operations

Brazilian Economic Environment

     The Brazilian economy improved significantly in 2004. Brazil’s GDP increased by 5.7% and the
average unemployment rate decreased from 10.9% to 9.6% in the country’s major metropolitan regions,
pursuant to unemployment estimates disclosed by the IBGE, resulting in an increase in demand for goods
and services. Brazil recorded a primary surplus in its public accounts of 4.6% of GDP, which was above the
target established by the International Monetary Fund, or IMF, of 4.3% of GDP. Brazil’s balance of
payments reached a surplus of US$34.0 billion. Inflation, as measured by the IPCA, was 7.6% and the
average long-term interest rate (Taxa de Juros de Longo Prazo), or TJLP, was 9.8%. In 2004, the real
appreciated 8.1% against the U.S. dollar. This economic rebound, however, raised some concern about
inflation, resulting in the Central Bank maintaining high interest rates. In addition, taxes increased from
34.9% to 35.91% of the GDP, according to Brazil’s Federal Revenue.

      2005 was marked by accusations of corruption against officials of the Brazilian government and their
allies, and also by the effort of the Central Bank to keep inflation at a target of 4.5%, resulting in continued
high interest rates. However, mainly due to the decreasing inflation rates, beginning in November 2005, the
Brazilian government started a process of interest rate cuts. On December 31, 2005, the base interest rate was
at 18.0%. Also in 2005, the real appreciated 11.8% against the U.S. dollar. Brazil recorded a primary surplus
in its public accounts of US$44.8 billion, the highest surplus ever recorded. The average unemployment rate
decreased from 9.6% to 8.3% in the country’s major metropolitan regions, pursuant to unemployment
estimates disclosed by the IBGE. Inflation, as measured by the IPCA, was 5.7% and the average TJLP was
9.8%. GDP increased 3.7%, 2.9% and 5.7% in 2006, 2005 and 2004, respectively.

    In 2006, the real appreciated 7.5% against the U.S. dollar. Brazil recorded a primary surplus in its public
accounts of U.S.$6.3 billion. The average unemployment rate increased from 8.3% to 10.0% in the country’s
major metropolitan regions, pursuant to unemployment estimates disclosed by the IBGE. Inflation, as
measured by the IPCA, was 3.1% and the average TJLP was 6.9%.

     During the first three months of 2007, the real appreciated 4.3% against the U.S. dollar. As of March 31,
2007, the exchange rate for reais into U.S. dollars was R$2.05 to U.S.$1.00. During this same period, the base
interest rate, or SELIC, was 12.75% and the average inflation rate, as measured by the IPCA, was 0.42%.




                                                       35
    The following table shows data regarding GDP growth, inflation, interest rates and the U.S. dollar to real
exchange rate for the periods indicated:

                                                                                                        Three-month
                                                                                                        Period Ended
                                                                      Year Ended December 31,            March 31,
                                                              2004              2005             2006       2007
  GDP growth..........................................         5.7%             2.9%             3.7%        N/A
  Inflation (IGP-M)(1).............................           12.4%             1.2%             3.8%       4.3%
  Inflation (IPCA)(2) ...............................          7.6%             5.7%             3.1%       3.0%
  INPC(3) ................................................     6.1%             5.1%             2.8%       3.2%
  CDI(4) ..................................................   16.2%            19.1%            15.2%      12.7%
  TJLP(5).................................................     9.8%             9.8%             7.9%       6.5%
  Appreciation of the real against the
    U.S. dollar.........................................      8.1%             12.1%             8.6%       5.6%
  Exchange rate at the end of the period
    per U.S.$1.00 ....................................        R$2.7            R$2.3            R$2.1      R$2.1
  Average exchange rate per
    U.S.$1.00(6) .....................................        R$2.9            R$2.4            R$2.2      R$2.1

Sources: FGV, IpeaData, Central Bank and Bloomberg.
(1) Inflation (IGP-M) is the general market price index (Índice Geral de Preços – Mercado) measured by the FGV.
(2) Inflation (IPCA) is a broad consumer price index measured by the IBGE.
(3) The National Consumer Price Index (Índice Nacional de Preços ao Consumidor), or INPC, is the inflation rate
    measured by the IBGE for families with income between one and eight minimum salaries in the nine largest
    metropolitan areas of Brazil, including Brasília and Goiânia.
(4) The CDI rate is the average of inter-bank overnight rates in Brazil (accumulated for period-end month, annualized).
(5) TJLP is the long-term interest rate, defined as the basic cost of financing granted by the BNDES.
(6) Represents the average of the commercial selling exchange rates on the last day of each month during the
    respective year.

Main Factors Affecting our Results of Operations

Effects of Brazilian GDP Growth and Domestic Demand for Our Products

     Our domestic sales represented 23.2% and 21.8% of our gross sales revenue in 2006 and the three-
month period ended March 31, 2007, respectively. As a substantial part of our operations are in Brazil,
we are significantly affected by economic conditions in Brazil. Due to our significant market share in the
Brazilian fresh and processed beef markets, our results of operations and financial condition have been,
and will continue to be, affected by the growth rate of GDP in Brazil and by fluctuations in the demand
for our products in Brazil.

    In 2006, Brazilian GDP increased by 3.7% and consumption of beef in Brazil increased by 2.4%,
compared to 2005. Beef consumption per capita in Brazil increased by 1.4% to 36.9 kg in 2006,
compared to 36.4 kg in 2005, according to a report published by the USDA in April 2007. The increased
domestic consumption of beef resulted primarily from an increase in economic activity in Brazil in 2006
and respective increase in demand for our products.

    In 2005, Brazilian GDP increased by 2.9% and consumption of beef in Brazil increased by 6.0%,
compared to 2004. Beef consumption per capita in Brazil increased by 4.6% to 36.4 kg in 2005,
compared to 34.8 kg in 2004, according to the USDA. The increased domestic consumption of beef
resulted primarily from an increase in economic activity in Brazil in 2005 and respective increase in
demand for our products.

    In 2004, Brazilian GDP increased by 5.7%, the highest annual growth rate since 1994, while
Brazilian consumption of beef increased by 2.0%, compared to 2003. Beef consumption per capita
increased by 0.9% in 2004, having gone from 34.5 kg in 2003 to 34.8 kg in 2004. The increased
domestic consumption of beef resulted primarily from a recovery of economic activity in Brazil in 2004,
compared to 2003.




                                                                       36
    Brazilian GDP growth has fluctuated significantly in recent years, and we believe that it will
continue to fluctuate in the following years. Our management believes that economic growth in Brazil
should positively affect our future net sales revenue and our results of operations. However, continued
low growth of Brazilian GDP or a recession in Brazil may reduce our future net sales revenue in the
domestic market and negatively impact our results of operations.

Effects of Fluctuations in Cattle and Beef Prices

    Fluctuations in the domestic and international market price of beef significantly affect our net
operating revenue, and fluctuations in the domestic market price of cattle have significant effects on our
costs of goods sold.

Effects on Gross Operating Revenue

     Fluctuations in international and domestic beef prices may significantly affect our net operating revenue.
Our domestic beef prices are set generally by market conditions, which we do not control. The domestic and
international market prices of our products have fluctuated significantly, and we believe that they will
continue to do so. Many factors determine the price fluctuation of commodities and they may significantly
affect the margins of the agribusiness industry. Price fluctuation in certain regions of Brazil is normal in the
cattle raising industry because of the short and long cattle raising cycles. Cattle raising cycles are determined
by the weather, i.e., periods of rain and drought interfere in the offer and demand relations that determine
market prices. During these periods, cattle raising and slaughtering costs increase, resulting in decreased beef
prices, increased supply and increased consumption. Long cattle raising cycles repeat every three years due to
the natural movement of the cattle raising activity and cause losses to the cattle rancher. Any change in
sanitary restrictions and an outbreak of FMD may also cause losses to the cattle rancher. Significant increases
in the domestic and international prices of our products would likely increase our net sales revenue and our
results of operations to the extent that we are able to maintain our operating margins and increased prices do
not reduce sales volumes of our products. Conversely, significant decreases in the domestic and international
prices of our products would likely reduce our net sales revenue and our results of operations if we are unable to
increase our operating margins or these reduced prices do not result in increased sales volumes of our products.

      Our average domestic beef prices increased by 16.4% to R$5,872.00 per ton in 2005, compared to
R$5,045.00 per ton in 2004, primarily as a result of (1) increased demand and (2) the introduction of a
different mix of products in the domestic market, including higher value added products, such as sirloin,
filet mignon, and other cuts.

     Our average domestic beef prices decreased by 21.4% to R$4,617.00 per ton in 2006, compared to
R$5,872.00 per ton in 2005, primarily as a result of the excess supply of fresh beef in Brazil, resulting from
the effects of outbreaks of FMD in Brazil. Our principal export markets, including Russia and the European
Union, suspended their imports. The increase in the domestic supply of fresh beef and in competition resulted
in lower fresh beef prices to the consumer.

     Our average domestic beef prices increased by 10.3% to R$5,156.00 per ton in the three-month period
ended March 31, 2007, compared to R$4,672.00 per ton in the same period in 2006. The first quarter of 2006
was the most difficult period for us due to the suspension of imports by our principal export markets,
including Russia and the European Union, and the decrease in domestic beef prices, as discussed above.

     Our average international beef prices increased by 4.2% to US$2,109.00 per ton in 2005, compared to
US$2,023.00 per ton in 2004. International prices of our principal product, fresh beef, increased by 3.1% to
US$2,138.00 per ton in 2005, compared to US$2,074.00 per ton in 2004, primarily as a result of the increase
in demand for Brazilian products after sanitary restrictions were imposed on some of our competitors in other
countries. However, due to the appreciation of 11.8% of the real against the U.S. dollar in 2005, the price of
fresh beef decreased by 14.3%, when measured in reais, from R$6,068.00 per ton in 2004 to R$5,204.00 per
ton in 2005.




                                                        37
     Our average international beef prices increased by 19.5% to US$2,520.00 per ton in 2006, compared to
US$2,109.00 per ton in 2005. Our international fresh beef prices increased by 19.3% to US$2,551.00 per ton
in 2006, compared to US$2,138.00 per ton in 2005, primarily as a result of decreased supply of fresh beef
from Brazil in the international markets. Sanitary restrictions were imposed on fresh beef produced in certain
Brazilian states allowing fresh beef produced in the other states to reach higher prices. However, due to the
appreciation of 8.5% of the real against the U.S. dollar in 2006, the price of fresh beef increased by only
6.7%, when measured in reais, from R$5,204.00 per ton in 2005 to R$5,553.00 per ton in 2006.

    Our average international beef prices increased by 15.2% to US$2,516.00 per ton in the three-month
period ended March 31, 2007, compared to US$2,184.00 per ton in the corresponding period in 2006.

     Our average international fresh beef prices increased by 19.1% to US$2,571.00 per ton in the three-
month period ended March 31, 2007, compared to US$2,159.00 per ton in the corresponding period in 2006,
primarily as a result of an increase in international demand for beef as opposed to other sources of protein, an
increase that was partially influenced by certain restrictions imposed on chicken exports. Our average
international beef prices increased by 10.6% to R$5,305.00 per ton in the three-month period ended March
31, 2007, compared to R$4,798.00 per ton in the corresponding period in 2006, and our average
international fresh beef prices increased to R$5,422.00 per ton in the three-month period ended March 31,
2007, compared to R$4,744.00 per ton in the corresponding period in 2006, primarily as a result of the
appreciation of the real against the U.S. dollar in the period.

Effects on our Cost of Goods Sold

     A significant portion of our cost of goods sold consists of the cost of purchasing raw materials. The
primary raw material we use in producing beef is cattle, whose domestic market prices vary according to the
offer and demand for cattle. We generally purchase cattle and cattle quarters in spot market transactions, and
the prices we pay for cattle are based on the per pound market price of cattle in Brazil. Significant increases in
the price of cattle and, consequently, the cost of producing our products, would likely reduce our gross
margins and results of operations to the extent that we are unable to pass all of these increased costs on to our
customers and could result in reduced sales volumes of our products. Conversely, significant decreases in the
price of cattle and, consequently, the cost of producing our products, would likely increase our gross margins
and results of operations and could result in increased sales volumes if this lower cost leads us to lower our
prices. The domestic per 15 kilogram market price of cattle in Brazil was R$60.5, R$62.5, R$55.6 and R$51.8 in
2003, 2004, 2005 and 2006, respectively. The average domestic per 15 kilogram market price of cattle in Brazil
during the three-month periods ended March 31, 2007 and 2006 was R$53.9 and R$50.1, respectively.

Effect of Export Levels

     In general, the prices of our products sold outside Brazil are higher than the prices of our products sold in
the domestic market. The difference in prices is due to several factors, including:

    •    higher prices of certain commodities in developed countries, compared to prices of the same
         commodities in developing countries;

    •    higher costs of transporting products outside Brazil;

    •    warehousing and other logistics costs; and

    •    tariffs and duties.

     Our ability to export our products depends on several factors, including (1) the level of economic growth
in our export markets, (2) other economic conditions in our export markets (including prevailing inflation
rates, interest rates and foreign currency exchange rates) and (3) fluctuations in the global demand for our
products, including as a result of outbreaks of cattle diseases and trade restrictions. Any changes in these or
other factors that affect our exports may negatively impact our results of operations.




                                                        38
     Our exports represent a significant portion of our gross revenues. In 2006, our revenues from exports
represented 76.8% of our gross revenues. Our products are subject to import restrictions imposed by the
governments of our main export markets. In October 2005, as a result of an outbreak of FMD in the State of
Mato Grosso do Sul, 58 countries (including all of the countries of the European Union and Egypt) imposed
restrictions on imports of fresh beef products produced in certain Brazilian states. Nevertheless, due to the
diversified geographic location of our plants, our exports to these markets were not affected, as we were able
to export products to these markets from our facilities located in the states not affected by this disease.

    In addition, on May 18, 2007, Russia imposed import restrictions on products from 11 Brazilian
slaughtering plants, including four of our plants. Nevertheless, our diversified customer base allowed us to
manage such import ban by reallocating our exports to other countries, including Algeria, Egypt and Israel,
which are major importers of frontal beef cuts, like Russia. We believe that we will be able to export products
from these four plants to Russia in the near future. For more information see “Risk Factors Our exports are
subject to numerous risks related to international operations and regulations.”

Effects of Fluctuations in Exchange Rates between the Real and the U.S. Dollar

    Our results of operations and financial condition have been, and will continue to be, affected by the rate of
depreciation or appreciation of the real against the U.S. dollar because:

    •    a substantial portion of our net sales revenue is linked to U.S. dollars; and

    •    we have significant amounts of U.S. dollar-denominated liabilities that require us to make principal and
         interest payments in U.S. dollars.

     On March 31, 2007, our consolidated indebtedness denominated in U.S. dollars represented 94.3% of our
total indebtedness.

    As a result, when the real depreciates against the U.S. dollar:

    •    The interest costs on our U.S. dollar-denominated indebtedness increase in reais, which negatively
         affects our results of operations in reais;

    •    The amount of our U.S. dollar-denominated indebtedness increases in reais, and our total liabilities
         and debt service obligations in reais increase; and

    •    Our financial expenses tend to increase as a result of foreign exchange losses that we must record.

     Conversely, when the real appreciates against the U.S. dollar:

    •    The interest costs on our U.S. dollar-denominated indebtedness decrease in reais, which positively
         affects our results of operations in reais;

    •    The amount of our U.S. dollar-denominated indebtedness decreases in reais, and our total liabilities
         and debt service obligations in reais decrease; and

    •    Our financial expenses tend to decrease as a result of foreign exchange gains that we must record.

    Any major devaluation of the real against the U.S. dollar would significantly increase our financial
expenses and short-term and long-term indebtedness, as expressed in reais. Conversely, any major
appreciation of the real against the U.S. dollar would significantly decrease our financial expenses and short-
term and long-term indebtedness, as expressed in reais.




                                                         39
     Our export sales enable us to generate receivables payable in foreign currencies and tend to provide a
natural hedge against a portion of our U.S. dollar-denominated debt service obligations, although they do not
fully match them. Accordingly, we enter into hedging arrangements to mitigate exchange rate fluctuations in
our U.S. dollar-denominated indebtedness. On March 31, 2007, 19.7% of our foreign-denominated
indebtedness was hedged.

    Virtually all of our exports are expressed in U.S. dollars or another foreign currency.

Effect of the Level of Indebtedness and Interest Rates

     At March 31, 2007, our total outstanding indebtedness was R$690.1 million, of which R$651.0 million
was denominated in U.S. dollars. This level of indebtedness resulted in financial expenses of R$28.6 million
in the three-month period ended March 31, 2007, of which R$15.1 million consisted of interest expenses,
R$9.3 million consisted of foreign exchange expenses, R$0.6 million consisted of discounts to our customers
and R$3.6 million consisted of CPMF and other financial expenses. The interest rates on our indebtedness
depend on a variety of factors, including prevailing Brazilian and international interest rates and risk
assessments of our company, the industries in which we operate and the Brazilian economy.

Effects of Taxes on Our Income

     We are subject to a variety of generally applicable Brazilian federal and state taxes on our operations and
results. We are generally subject to Brazilian federal income tax and social contribution at an effective rate
of 34%, which is the standard corporate tax rate in Brazil. Our export sales are currently exempt from PIS
(a federal value-added tax), COFINS (a federal value-added tax) and ICMS (a state value-added tax on sales
and services) under generally available exemptions, subject to our compliance with the requirements of
these exemptions.

PIS and COFINS

    PIS and COFINS taxes are Brazilian federal taxes that were created to fund the government’s
unemployment payments, social security and other social programs. Pursuant to Brazilian regulations
governing these taxes, PIS and COFINS tax credits are generated for companies that export, including us, in
connection with our purchases of raw materials, such as live cattle and cattle quarters. As a result of Brazilian
regulations, we had accumulated tax credits in an aggregate amount of R$85.4 million at March 31, 2007.

ICMS

     ICMS tax credits result from the difference between credit of taxes received by us in connection with our
purchase of live cattle, cattle quarters, packaging materials, chemical products and other related products in all
states in which we operate slaughterhouses and the debit of taxes resulting from the sales of our products in
the domestic market. Because products that we export are exempt from ICMS taxes in Brazil and
approximately 77% of our gross sales revenue is derived from exports, we have accumulated ICMS tax
credits in an aggregate amount of R$84.1 million at March 31, 2007, that we are using to pay our purchase of
raw materials, packaging materials and electricity, for use in our production processes.

Seasonality

    We suffer the impact of seasonal variations in the purchase of raw materials and in the sale of our
products. However, the impact of seasonal variations on our gross profit cannot be assessed because our gross
profit is also impacted by other factors, including the exchange rate fluctuations.

    Purchase of raw material. Availability of cattle in the northern and center-western regions of Brazil
generally decreases in the second half of the year because of drought, and cattle losing weight during this
period. In the southern parts of Brazil, where cattle raising activities are more widely developed and feed is
available to supplement cattle’s diet in the dry season are more widely available in the second half of the year.




                                                       40
     Sale of our products. Demand for beef and per capita income are strongly correlated, and beef demand
has been increasing the past few years. Demand for beef suffers the impact of seasonal variations due to
religious, cultural and climate factors. In the Middle East, beef consumption increases during the Ramadan
religious holidays. In Eastern Europe, beef consumption increases during the winter months, when protein
consumption increases. In Western Europe, beef consumption is higher during the summer months. In Brazil,
beef consumption increases during national and other holidays, especially the year-end holidays.

Critical Accounting Policies

     The presentation of our financial condition and results of operation in accordance with Brazilian GAAP
requires that we make certain judgments and estimates regarding the effects of matters that are inherently
uncertain and that impacts the carrying value of our assets and liabilities. Certain of our accounting policies
require higher degrees of judgment than others in their application. Actual results may differ from those
estimated depending upon the variables, assumptions or conditions used by our management. In order to
provide an understanding regarding how our management forms its judgments about future events, including
the variables and assumptions underlying the estimates and the sensitivity of those judgments to different
variables and conditions, we discuss certain of our critical accounting policies below.

    •    Provision for Doubtful Accounts. We record a provision for doubtful accounts based on an amount
         that we consider sufficient to cover any probable losses on the realization of our accounts receivable.
         In order to determine overall adequacy of the allowance for doubtful accounts, we regularly
          evaluate the amount and characteristics of our accounts receivable. We calculate our provision in
         light of past collection and write-off experience, as well as when payment delays in excess of 360
         days occur and when we believe that we may not receive payment in full.

    •    Inventories. Inventories are mainly comprised of finished products, work-in-process and materials
         used in the production of our products. Inventories were recorded at their average acquisition or
         production cost, not exceeding the lesser of their market or replacement value.

    •    Other Current Assets and Liabilities. Other assets are recorded as the lesser of cost or market value.
         Other liabilities are recorded by their known or estimated values, including income, charges or
         corresponding exchange rate fluctuations, when applicable.

    •    Our provision policy is determined according to the probability of loss based on the opinion of our
         legal counsels, as follows: (1) 100% of the amount in controversy when we believe there is a
         probable chance of loss; and (2) no provision is made for matters that we believe the chance of loss
         is remote.

Description of Main Income Statement Line Items

Net Sales Revenue

    Our net sales revenues consist primarily of:

    •    Revenues from Sales of Fresh Beef and Beef Byproducts. Revenues (domestic and export) from the
         sale of cuts of fresh and frozen beef, and beef byproducts, including processed beef and offal.

    •    Revenues from Sales of Products of Third-parties. Revenues from the domestic sale of third parties’
         food products, including potatoes and frozen vegetables, pasta, cooked meals, chicken, etc.

    •    Leather. Revenues from the sale of wet-blue leather and green hides.

    •    Live cattle. Revenues from export sales of live cattle, specifically to the Middle East.

Cost of Goods Sold

    A significant portion of our cost of goods sold consists of the cost of purchasing raw material. The
primary raw material we use in producing beef and beef byproducts is cattle. In addition to cattle, our cost of
goods sold also consists of other production costs (including packaging and other raw materials) and labor.




                                                       41
Operating Income

     Our operating income consists primarily of:

    •    Selling expenses. This line item includes expenses for sea and land freight, storage and other
         shipment expenses, selling expenses, selling commissions and allowances for doubtful accounts.

    •    General and administrative expenses. This line item includes primarily expenses related to payroll
         and other payments made to members of our management, payment to legal consultants and
         technical, accounting, tax and communications consultants.

    •    Financial expenses, net. This line item includes expenses from interest incurred on our indebtedness,
         revenues from interest on our investments, taxes on our financial income (including PIS and
         COFINS until July 2004), taxes on financial transactions (including the Provisional Contribution on
         Financial Transactions (Contribuição Provisória sobre a Movimentação ou Transmissão de Valores
         e de Créditos e Direitos de Natureza Financeira), or CPMF), expenses and revenues from
         fluctuations of the real against the U.S. dollar and revenues and expenses from transactions
         with derivatives.

Non-Operating Results

    This line item includes certain non-operating results, including revenues from the sale of certain
non-operating assets.

Current and Deferred Income Tax and Social Contribution

     We record deferred tax assets and liabilities based on the differences between the carrying amounts on
our financial statements and the tax basis of assets and liabilities, as well as on the tax loss carry-forward
credits, using prevailing tax rates that can reach up to a maximum rate of 34% on our taxable income,
including (1) income tax at a rate of 15% on our taxable income, (2) supplementary income tax on the amount
of our annual taxable income in excess of R$240,000 at a rate of 10% and (3) social contribution on net profit,
or CSLL, at a rate of 9% on our taxable income.

Recent Events

     On April 30, 2007, we spun-off certain of our assets and liabilities related to our direct and indirect
ownership in Transportadora Minerva Ltda. and Agropecuária Vilela de Quieroz Ltda., respectively (which
we refer to collectively as the Spin-Off), to Mutuca Ltda., an entity owned and controlled by the Vilela de
Queiroz Family. As a result of the Spin-Off, our company and our subsidiaries own assets and have liabilities
solely related to the production and sale of beef and beef byproducts. The assets and liabilities spun-off to
Mutuca generated 0.8% and 1.6% of our net income in 2006 and for the three months ended March 31, 2007,
respectively. In addition, as a result of the Spin-Off, (1) a portion of our shareholders’ equity in the aggregate
amount of R$53.5 million, corresponding to the 11,267,999 quotas of Transportadora, was transferred to
Mutuca, (2) our capital stock decreased by R$10.7 million and (3) and we recorded revaluation reserves in the
amount of R$42.8 million.

Results of Operations

     The following discussion of our results of operations is based on the financial information derived from
our financial statements.

     In the following discussion, references to increases or decreases in any year are made by comparison to
the corresponding prior year, except as the context otherwise indicates.




                                                       42
Three-Month Period Ended March 31, 2007 Compared with Three-Month Period Ended March 31, 2006

   The following table sets forth financial information of our company for the three-month periods ended
March 31, 2007 and 2006.

                                                                                                    As of and for the three-month period ended
                                                                                                                     March 31,
                                                                                                          2006                         2007
                                                                                                                (in millions of reais)
Financial Information:
Gross sales revenue:......................................................................               251.5                     347.4
  Beef...........................................................................................        218.8                     293.3
  Leather ......................................................................................          19.6                      29.3
  Live cattle..................................................................................            4.8                      17.9
  Sale of products of third-parties ............................................                           7.9                       6.3
  Freight and other (sales from Agropecuária Vilela de
     Queiroz) ............................................................................                 0.4                        0.6
  Sales taxes and returns ..............................................................                 (22.5)                     (41.7)
Total net sales revenue................................................................                  229.0                      305.7
Cost of goods sold.........................................................................             (178.5)                    (235.3)
Gross profit ...................................................................................          50.5                       70.4
Selling expenses............................................................................             (30.0)                     (39.4)
General and administrative expenses ............................................                          (8.6)                      (7.6)
Financial expenses, net..................................................................                 (3.0)                       2.6
Operating income                                                                                           8.9                       26.0
Non-operating income...................................................................                      –                       (6.1)
Income taxes and social contribution ............................................                         (3.3)                      (9.0)
Net income ...................................................................................             5.6                       10.9

Gross sales revenue

    Our gross sales revenue increased by 38.1%, from R$251.5 million in the three months ended March 31,
2006 to R$347.4 million in the corresponding period in 2007.

     Beef. Gross sales revenue from sales of beef products increased by 34.0%, from R$218.8 million in the
three months ended March 31, 2006 to R$293.3 million in the corresponding period in 2007, due to the
combined effect of the following factors:

       •      our domestic gross sales revenue increased by 15.2%, from R$55.1 million in the three months ended
              March 31, 2006 to R$63.5 million in the corresponding period in 2007, due to a 4.4% increase in the
              volume of beef products sold from 11.8 thousand tons in the three months ended March 31, 2006 to
              12.3 thousand tons in the corresponding period in 2007. Our average domestic beef prices increased
              by 1.9% in the three months ended March 31, 2006 compared to the corresponding period in 2007,
              from R$5,890 per ton to R$5,998 per ton;

       •      our gross sales revenues from export sales of beef products increased by 40.4%, from R$163.7
              million in the three months ended March 31, 2006 to R$229.8 million in the corresponding period in
              2007, primarily due to a 27.0% increase in our export volumes from 34.1 thousand tons in the three
              months ended March 31, 2006 to 43.3 thousand tons in the corresponding period in 2007. The
              increase in our export volumes resulted from increased international demand for our products in the
              first quarter of 2007, when compared to the first quarter of 2006. In addition, the outbreak of FMD in
              October 2005 lowered demand for our products in the first quarter of 2006. Our export sales, when
              denominated in reais, increased by 10.6% compared to the corresponding period in 2006. The price
              of our fresh beef, when denominated in U.S. dollars, increased by 19.1%, from US$2,159 per ton in
              2006 to US$2,571 per ton in 2007.




                                                                                         43
     Leather. Gross sales revenue of leather increased by 49.5%, from R$19.6 million in the three months
ended March 31, 2006 to R$29.3 million in the corresponding period in 2007, due to the combined effect of
the following factors:

    •   our domestic gross sales revenue increased by 341.7%, from R$1.2 million in the three months ended
        March 31, 2006 to R$5.3 million in the corresponding period in 2007, due to a 352.0% increase in
        the volume of leather products sold from 0.7 million of square feet in the three months ended March
        31, 2006 to 2.3 million of square feet in the corresponding period in 2007. Our average domestic
        leather prices increased by 36.8% in the three months ended March 31, 2006 compared to the
        corresponding period in 2007; and

    •   our gross sales revenues from export sales of leather products increased by 30.3%, from R$18.5
        million in the three months ended March 31, 2006 to R$24.1 million in the corresponding period in
        2007, due to the 24.6% increase in the volumes of leather products sold from 7.7 million of square
        feet in the three months ended March 31, 2006 to 9.6 million of square feet in the corresponding
        period in 2007. Our average domestic leather prices increased by 7.2% in the three months ended
        March 31, 2006 compared to the corresponding period in 2007.

     Live cattle. Gross sales revenue of live cattle increased by 272.9%, from R$4.8 million in the three
months ended March 31, 2006 to R$17.9 million in the corresponding period in 2007, due to a 290.0%
increase in the volume of live cattle sold from 2.4 thousand tons in the three months ended March 31, 2006
to 9.4 thousand tons in the corresponding period in 2007.

    Sale of products of third-parties. Sale of products of third-parties decreased by 20.3%, from
R$7.9 million in the three months ended March 31, 2006 to R$6.3 million in the corresponding period in
2007, due to the delay in importing certain items such as potatoes and cuts of lamb.

     Freight and other (sales from Agropecuária Vilela de Queiroz). Revenue of R$0.6 million in the three
months ended March 31, 2007 and R$0.4 million in the corresponding period in 2006 refer to the gross
revenue of our former direct and indirect subsidiaries, Transportadora Minerva Ltda. and Agropecuária
Vilela de Queiroz Ltda. On April 30, 2007, we transferred our equity interests in Transportadora, (and
indirectly in Agropecuária Vilela de Queiroz Ltda.) to Mutuca.

Sales taxes and returns

     Our sales taxes and returns increased by 85.3%, from R$22.5 million in the three months ended March
31, 2006 to R$41.7 million in the corresponding period in 2007, primarily due to the increase in export taxes
of wet blue leather from 7.0% to 9.0%. Product returns decreased from R$2.1 million in the three months
ended March 31, 2006 to R$1.2 million in the corresponding period in 2007. Taxes payable and other sales
taxes increased from R$20.4 million in the three months ended March 31, 2006 to R$40.5 million in the
corresponding period in 2007. As a result, sales taxes and returns, as a percentage of the gross sales revenue
increased from 8.9% in the three months ended March 31, 2006 to 12.0% in the corresponding period in 2007.

Cost of goods sold

    Our cost of goods sold increased by 31.8%, from R$178.5 million in the three months ended March 31, 2006
to R$235.3 million in the corresponding period in 2007, due to the combined effect of the following factors:

    •   our labor costs increased by 53.4%, from R$10.3 million in the three months ended March 31, 2006
        to R$15.8 million in the corresponding period in 2007 primarily due to the commencement of
        operations of our plant in the city of Batayporã, in the State of Mato Grosso do Sul in March 2006
        and the commencement of an additional processing shift at our slaughterhouse and processing
        facility located in Palmeiras de Goiás in the State of Goiás, and our general manufacturing costs
        increased by 94.4%, from R$7.2 million in the three months ended March 31, 2006 to R$14.0
        million in the corresponding period in 2007, mainly due to the commencement of operations of our
        plant in the city of Batayporã, in the State of Mato Grosso do Sul in March 2006, which required us
        to incur additional maintenance costs;




                                                     44
    •    an increase in export tax credits from R$32.2 million in the three months ended March 31, 2006 to
         R$62.8 million in the corresponding period in 2007, due to changes in applicable tax legislation, and
         higher export sales, including as a result of the commencement of operations of our plant in the city
         of Batayporã, in the State of Mato Grosso do Sul in March 2006. Our export sales increased by
         45.4% in the three months ended March 31, 2007 compared to the corresponding period in 2006; and

    •    an increase of our cost for the purchase of cattle and carcasses from third-parties by 40.8%, from
         R$167.1 million in the three months ended March 31, 2006 to R$235.2 million in the corresponding
         period in 2007. However, as a percentage of our net sales revenue, our cost for the purchase of cattle
         and carcasses from third-parties increased from 72.9% in the three months ended March 31, 2006 to
         76.9% in the corresponding period in 2007, primarily due to higher cost of cattle in the first quarter
         of 2007 compared to 2006. The average price of cattle increased by 7.6%, from R$50.1 per 15
         kilograms of beef in the first quarter of 2006 to R$53.9 per 15 kilograms of beef in the first quarter
         of 2007.

    As a percentage of the net sales revenue, cost of goods sold decreased from 77.9% in the three months
ended March 31, 2006 to 77.0% in the corresponding period in 2007.
Gross profit
     As a result of the foregoing, our gross profit increased by 39.4%, from R$50.5 million in the three
months ended March 31, 2006 to R$70.4 million in the corresponding period in 2007. Our gross margin, as a
percentage of net sales revenue, increased from 22.1% in the three months ended March 31, 2006 to 23.0%
in the corresponding period in 2007.

Selling expenses

     Selling expenses increased by 31.3%, from R$30.0 million in the three months ended March 31, 2006 to
R$39.4 million in the corresponding period in 2007, primarily due to an increase in variable selling expenses from
R$26.1 million in the three months ended March 31, 2006 to R$34.2 million in the corresponding period in 2007
and increased sales in the three months ended March 31, 2007. In 2005, approximately 87.0% of our selling
expenses varied according to the volume that we sold during the period. In addition, fixed selling expenses
increased from R$3.9 million in the three months ended March 31, 2006 to R$5.2 million in the corresponding
period in 2007. However, as a percentage of net sales revenue, variable selling expenses decreased from 11.4% in
the three months ended March 31, 2006 to 11.2% in the corresponding period in 2007, primarily due to a decrease
in commissions expenses of R$4.4 million in the three months ended March 31, 2006 (1.9% of the net sales
revenue) to R$4.0 million in the corresponding period in 2007 (1.3% of the net sales revenue), and an increase in
export sea freight expenses, from R$10.7 million in the three months ended March 31, 2006 (4.7% of the net sales
revenue) to R$12.9 million in the corresponding period in 2007 (4.2% of the net sales revenue). Our fixed selling
expenses, as a percentage of the net sales revenue, remained stable at 1.7% in the three-month periods ended
March 31, 2006 and 2007. As a percentage of the net sales revenue, selling expenses decreased from 13.1% in the
three months ended March 31, 2006 to 12.9% in the corresponding period in 2007.

General and administrative expenses

     Our general and administrative expenses decreased by 11.6%, from R$8.6 million in the three months
ended March 31, 2006 to R$7.6 million in the corresponding period in 2007, due to the combined effect of the
following factors:

    •    an increase in personnel expenses from R$3.0 million in the three months ended March 31, 2006 to
         R$4.0 million in the corresponding period in 2007; and

    •    a decrease in depreciation expenses from R$2.9 million in the three months ended March 31, 2006 to
         R$0.5 million in the corresponding period in 2007, because we recorded certain depreciation
         expenses as cost of goods sold in the three-month period ended March 31, 2007 resulting from the
         change of the accounting criteria to allocate depreciation between the industrial and the
         administrative areas. In the three months ended March 31, 2006, we recorded depreciation entirely as
         general and administrative expenses.




                                                        45
     As a percentage of net sales revenue, general and administrative expenses decreased from 3.8% in the
three months ended March 31, 2006 to 2.5% in the corresponding period in 2007.

Financial expenses, net

    Our financial expenses, net increased from an expense of R$3.0 million in the three months ended
March 31, 2006 to an income of R$2.6 million in the corresponding period in 2007, primarily due to the
appreciation of the real against the U.S. dollar in the three months ended March 31, 2007 resulting in income
from the appreciation of R$19.6 million, compared to R$5.9 million in the corresponding period of 2006.
Our net financial expenses, as a percentage of net sales revenue, increased from 1.3% negative to 0.9%
positive, in the three months ended March 31, 2006 and 2007, respectively.

Operating income

    Operating income represented 3.9% of our net sales revenue in the three months ended March 31, 2006
and 8.5% of our net sales revenue in the corresponding period in 2007. Our operating margin increased by
192.1%, from R$8.9 million in the three months ended March 31, 2006 to R$26.0 million in the
corresponding period in 2007.

Income taxes and social contribution

    Income taxes and social contribution increased from R$3.3 million in the three months ended March 31,
2006 to R$9.0 million in the corresponding period in 2007, due to an increase in taxable income in the three
months ended March 31, 2007 compared to corresponding period in 2006.

Net income

    As a result of the foregoing, we recorded net income of R$10.9 million in the three months ended March 31,
2007, compared to R$5.6 million in the corresponding period in 2006. As a percentage of net sales, net income was
2.4% in the three months ended March 31, 2006 compared to 3.6% million in the corresponding period in 2007.

Year Ended December 31, 2006 Compared with Year Ended December 31, 2005

   The following table sets forth consolidated financial information of our company for the years ended
December 31, 2006 and 2005.

                                                                                                   As of and for the years ended December 31,
                                                                                                         2005                         2006
                                                                                                               (in millions of reais)
Financial Information:
Gross sales revenue:.....................................................................            1,050.6                    1,312.3
  Beef..........................................................................................       939.2                    1,123.5
  Leather .....................................................................................         52.7                       96.9
  Live cattle.................................................................................          25.2                       53.2
  Sale of products of third-parties..............................................                       33.5                       34.5
  Freight and other (sales from Agropecuária Vilela de
     Queiroz)..............................................................................                 –                       4.2
  Sales taxes and returns .............................................................               (110.3)                    (119.9)
Total net sales revenue...............................................................                 940.3                    1,192.4
Cost of goods sold........................................................................            (735.3)                    (918.7)
Gross profit ..................................................................................        205.0                      273.7
Selling expenses...........................................................................           (125.4)                    (133.5)
General and administrative expenses ...........................................                        (32.1)                     (32.2)
Financial expenses, net.................................................................               (29.9)                     (26.6)
Operating income.........................................................................               17.6                       81.4
Non-operating income..................................................................                  (0.4)                         –
Income taxes and social contribution ...........................................                        (3.0)                     (27.8)
Net income ..................................................................................           14.2                       53.6




                                                                                        46
Gross sales revenue

     Our gross sales revenue increased by 24.9%, from R$1,050.6 million in 2005 million to R$1,312.3
million in 2006.

    Beef. Gross sales revenue from sales of beef products increased by 19.6%, from R$939.2 million in 2005
to R$1,123.5 million in 2006, due to the combined effect of the following factors:

    •    our domestic gross sales revenue increased by 25.4%, from R$199.0 million in 2005 to R$249.5
         million in 2006, due to the 59.3% increase in the volume of beef products sold from 33.9 thousand
         tons in 2005 to 54.0 thousand tons in 2006. Our average domestic beef prices decreased by 21.4%
         from 2005 to 2006; and

    •    our sales revenues from export sales of beef products increased by 18.1%, from R$740.2 million in
         2005 to R$874.0 million in 2006, primarily due to a 10.5% increase in our export volumes from
         144.2 thousand tons in 2005 to 159.3 thousand tons in 2006. Our international beef prices increased
         by 19.3% in 2006, from US$2,138.00 per ton in 2005 to US$2,551.00 per ton in 2006. These price
         increases were partially offset by the 8.5% appreciation of the real against the U.S. dollar in 2006.

     Leather. Gross sales revenue of leather increased by 83.9%, from R$52.7 million in 2005 to R$96.9
million in 2006, due to the combined effect of the following factors:

    •    our domestic gross sales revenue increased by 489.3%, from R$2.8 million in 2005 to R$16.5
         million in 2006, due to the 392.7% increase in the volumes of leather sold, from 1.9 million of
         square feet in 2005 to 9.2 million of square feet in 2006. Our average domestic leather prices
         decreased by 21.4% in 2006 compared to 2005;

    •    our gross sales revenues from export sales of leather increased by 61.1%, from R$49.9 million in
         2005 to R$80.4 million in 2006, due to the 48.0% increase in the volumes of leather sold, from 22.7
         million of square feet in 2005 to 33.6 million of square feet in 2006.

    Live cattle. Gross sales revenue of live cattle increased by 112.0%, from R$25.2 million in 2005 to
R$53.2 million in 2006, primarily due to the 128.6% increase in our sales volumes from 11.9 thousand tons in
2005 to 27.2 thousand tons in 2006.

     Sale of products of third-parties. Sale of products of third-parties increased by 3.0%, from R$33.5
million in 2005 to R$34.5 million in 2006, primarily due to the increase in sales volume of 32.4%, from 6.8
thousand tons in 2005 to 9.0 thousand tons in 2006.

Sales taxes and returns

     Our sales taxes and returns increased by 8.7% in 2006, from R$110.3 million in 2005 to R$119.9 million in
2006, primarily due to product returns that increased from R$4.0 million in 2005 to R$8.8 million in 2006
and an increase in taxes payable from R$106.3 million in 2005 to R$111.1 million in 2006. As a percentage
of the gross sales revenue, sales taxes and returns decreased from 10.5% in 2005 to 9.1% in 2006.

Cost of goods sold

    Our cost of goods sold increased by 24.9%, from R$735.3 million in 2005 to R$918.7 million in 2006,
primarily due to an increase in the volume of products sold, as well as the combination of the following factors:

    •    an increase of our operating costs due to the commencement of operations at our new plant located
         in the city of Batayporã, in the State of Mato Grosso do Sul. Labor costs increased by 19.2%, from
         R$47.5 million in 2005 to R$56.6 million in 2006, and general manufacturing costs increased by
         28.9%, from R$32.5 million in 2005 to R$41.9 million in 2006;




                                                        47
    •   a decrease in export tax credits from R$231.6 million in 2005 to R$171.7 million in 2006, due to
        changes in the tax legislation, and the transfer of part of our export production to our new plant in
        the city of Palmeiras de Goiás, in the State of Goiás, where tax incentives for exports are lower if
        compared to the tax incentives for exports in the State of São Paulo. Since the FMD outbreak in
        October 2005, we are licensed to export to Europe only from our plant in Palmeiras de Goiás, in the
        State of Goiás; and

    •   an increase of our added costs for the purchase of cattle and carcasses from third-parties by 12.6%,
        from R$764.1 million in 2005 to R$860.5 million in 2006. However, as a percentage of our net sales
        revenue, our cost for the purchase of cattle and carcasses from third-parties decreased by 81.3% in
        2005 to 72.2% in 2006, primarily due to lower purchase prices of cattle in 2006 compared to 2005.
        The average price of cattle decreased by 6.8%, from R$55.60 per 15 kilograms of beef in 2005 to
        R$51.8 per 15 kilograms of beef in 2006.

    As a percentage of the net sales revenue, cost of goods sold decreased from 78.2% in 2005 to 77.0% in 2006.

Gross profit

     As a result of the foregoing, our gross profit increased by 33.5%, from R$205.0 million in 2005 to
R$273.7 million in 2006. Our gross margin, as a percentage of net sales revenue, increased by 21.8% in 2005
to 23.0% in 2006.

Selling expenses

     Selling expenses increased by 6.5%, from R$125.4 million in 2005 to R$133.5 million in 2006,
primarily due to an increase in variable selling expenses from R$109.9 million in 2005 to R$114.4 million
in 2006, as a result of an increase in sales in 2006 compared to 2005. In 2006, approximately 86.0% of
our selling expenses varied according to the volume that we sold during the year. In additional, fixed selling
expenses increased from R$15.5 million in 2005 to R$19.1 million in 2006. However, as a percentage of net
sales revenue, variable selling expenses decreased from 11.7% in 2005 to 9.6% in 2006, primarily due to a
decrease in commissions expenses of R$13.7 million in 2005 (1.5% of the net sales revenue) to R$9.2 million
in 2006 (0.8% of the net sales revenue) and in export sea freight expenses, from R$49.7 million in 2005 (5.3%
of the net sales revenue) to R$48.5 million 2006 (4.1% of the net sales revenue). Our fixed selling expenses,
as a percentage of the net sales revenue, remained stable at 1.7% and 1.6% in 2005 and 2006, respectively.

General and administrative expenses

     Our general and administrative expenses increased by 0.3%, from R$32.1 million in 2005 to R$32.2
million in 2006, due to the combined effect of the following factors:

    •   an increase in personnel expenses from R$9.5 million in 2005 to R$13.7 million in 2006. This
        increase was caused by the commencement of operations of our leased plant in the city of
        Batayporã, in the State of Mato Grosso in February 2006;

    •   an increase in depreciation expenses from R$10.1 million in 2005 to R$13.9 million in 2006,
        primarily due to an increase in the book value of our permanent assets in R$95.8 million, caused by
        the revaluation of assets carried out in May 2006; and

    •   the reversal of provisions resulting from payment of transportation expenses that did not occur and
        other operating revenues that totaled R$13.6 million in 2006 compared to R$2.8 million in 2005.

    As a percentage of the net sales revenue, general and administrative expenses decreased from 3.4% in
2005 to 2.7% in 2006.




                                                       48
Financial expenses, net

    Our financial expenses, net decreased by 11.0%, from R$29.9 million in 2005 to R$26.6 million in 2006,
due to the combined effect of the following factors:

       •      an increase in our interest expenses, CPMF, bank fees and discounts from R$43.9 million in 2005
              (4.7% of the net sales revenue) to R$55.3 million in 2006 (4.6% of the net sales revenue) as a result
              of an increase in our outstanding indebtedness that we incurred for working capital purposes;

       •      an increase in our financial income from R$14.0 million in 2005 to R$28.7 million in 2006, a result
              of the adjustment of certain tax credits to the SELIC rate; and

       •      a decrease in the net income from exchange rate variations from R$11.5 million in 2005 to R$8.9
              million in 2006.

    Our financial expenses, net, as a percentage of the net sales revenue, decreased from 3.2% in 2005 to
2.2% in 2006.

Operating income

    Operating income represented 1.9% of our net sales revenue in 2005 and 6.8% of our net sales revenue in
2006. Our operating income increased from R$17.6 million in 2005 to R$81.4 million in 2006.

Income taxes and social contribution

    Income taxes and social contribution increased from R$3.0 million in 2005 to R$27.8 million in 2006,
primarily due to the increase of our net income, which is 3.8 times higher than in 2005, resulting in increased
current taxes and the revaluation of assets that resulted in increased deferred taxes.

Net income

       As a result of the foregoing, we recorded net income of R$53.6 million in 2006, compared to R$14.2
million in 2005. As a percentage of the net sales revenue, net income was 1.5% in 2005 and 4.5% in 2006.

Year Ended December 31, 2005 Compared with Year Ended December 31, 2004

       The following table sets forth consolidated financial information of our company for the years ended
December 31, 2005 and 2004.

                                                                                                    As of and for the years ended December 31,
                                                                                                          2004                         2005
                                                                                                                (in millions of reais)
Financial Information:
Gross sales revenue:.....................................................................                 939.2                   1,050.6
  Beef ..........................................................................................         817.6                     939.2
  Leather .....................................................................................            84.7                      52.7
  Live cattle ............................................................................                    –                      25.2
  Sale of products of third-parties..............................................                          36.9                      33.5
  Sales taxes and returns .............................................................                  (118.8)                   (110.3)
Total net sales revenue...............................................................                    820.4                     940.3
Cost of goods sold........................................................................               (628.2)                   (735.3)
Gross profit ..................................................................................           192.2                     205.0
Selling expenses...........................................................................              (105.1)                   (125.4)
General and administrative expenses ...........................................                           (27.8)                    (32.1)
Financial expenses, net.................................................................                  (23.2)                    (29.9)
Operating income.........................................................................                  36.1                      17.6
Non-operating income..................................................................                    (26.8)                     (0.4)
Income taxes and social contribution ...........................................                           (3.9)                     (3.0)
Net income ..................................................................................               5.4                      14.2




                                                                                         49
Gross sales revenue

    Our net sales revenue increased by 11.9%, from R$939.2 million in 2004 to R$1,050.6 million in 2005.

    Beef. Gross sales revenue from sales of beef products increased by 14.9% from R$817.6 million in 2004
to R$939.2 million in 2005 due to the combined effect of the following factors:

    •    our domestic gross sales revenue increased by 18.1%, from R$168.5 million in 2004 to R$199.0
         million in 2005 due to the 1.5% increase in the volume of beef products sold from 33.4 thousand
         tons in 2004 to 33.9 thousand tons in 2005. Our average domestic beef prices increased by 16.4%
         from 2004 to 2005;

    •    our gross sales revenues from export sales of beef products increased by 14.0%, from R$649.1
         million in 2004 to R$740.2 million in 2005, primarily due to a 31.6% increase in our export
         volumes from 109.6 thousand tons of beef in 2004 to 144.2 thousand tons in 2005. Our international
         beef prices increased by 4.2% in 2005, from U.S.$2,023 per ton in 2004 to U.S.$2,109 per ton in
         2005. These price increases were partially offset by the 11.8% appreciation of the real against the
         U.S. dollar in 2005; and

    •    the prices of our international fresh beef and beef byproducts increased by 3.1% on average from
         U.S.$2,074 per ton in 2004 to U.S.$2,138 per ton in 2005, primarily as a result of a higher demand
         for beef products partially caused by the outbreak of avian influenza in Asia and Russia in 2005.
         However, due to the 11.8% appreciation of the real against the U.S. dollar in 2005, our international
         fresh beef prices, when measured in reais, decreased by 14.2% on average from R$6,068 per ton in
         2004 to R$5,204 per ton in 2005.

     Despite the 12.5% increase in our export sales revenues in 2005 compared to 2004, our export sales
revenue was significantly lower during the three-month period ended December 31, 2005 when compared to
the corresponding period in 2004 due to the outbreak of FMD in the State of Mato Grosso do Sul in October
2005 that resulted in certain countries imposing an embargo on fresh beef products from Brazil. Our gross
export revenue during the three-month period ended December 31, 2005 was 38.6% lower compared to the
three month period ended September 30, 2005.

     Leather. Gross sales revenue of leather decreased by 37.8% from R$84.7 million in 2004 to R$52.7
million in 2005, primarily due to a decrease in volume of the leather sold, from 32.0 million square feet of
leather in 2004 to 24.6 million square feet in 2005. This reduction was due to the fact that, until the end of
2004, in addition to processing hides from our own slaughterhouses, we also purchased hides from other
slaughterhouses. In 2005, we decided to process hides only from our own slaughterhouses.

     Live cattle. During 2005, we began to export live cattle through our office located in the city of Belém in
the State of Pará. In 2005, we exported 11.9 thousands tons of live cattle and net sales revenue of exports of
live cattle totaled R$25.2 million.

     Sale of products of third-parties. Sale of products of third-parties decreased by 9.2%, from R$36.9 million
in 2004 to R$33.5 million in 2005, primarily due to the temporary shortage of potatoes in the period.

Sales taxes and returns

     Sales taxes and returns decreased by 7.2% in 2005, from R$118.8 million in 2004 to R$110.3 million in
2005, primarily due to product returns that decreased from R$5.2 million in 2004 to R$4.0 million in 2005
and a decrease in taxes payable from R$113.6 million in 2004 to R$106.3 million in 2005. As a percentage of
the gross operating revenue, sales taxes and returns decreased from 12.6% in 2004 to 10.5% in 2005.

Cost of goods sold

    Our cost of goods sold increased by 17.0%, from R$628.2 million in 2004 to R$735.3 million in 2005,




                                                       50
primarily due to an increase in the volume of products sold, as well as an increase in certain of our costs
mainly related to the commencement of operations at our new slaughterhouse and processing facility located
in Palmeiras de Goiás in the State of Goiás, such as labor costs, which increased by 39.7% from R$34.0
million in 2004 to R$47.5 million in 2005 and direct production costs, which increased by 60.9% from
R$20.2 million in 2004 to R$32.5 million in 2005. As a percentage of net sales revenues, our cost of goods
sold rose from 76.6% in 2004 to 78.2% in 2005. For 2005, the average price of cattle in Brazil was R$55.6
per 15 kilograms of beef compared to R$62.5 per 15 kilograms of beef in 2004.

Gross profit

   As a result of the foregoing, our gross profit increased by 6.7%, from R$192.2 million in 2004 to
R$205.0 million in 2005. Our gross margin, as a percentage of net sales revenue, decreased to 21.8% in 2005
compared to 23.4% in 2004.

Selling expenses

     Selling expenses increased by 19.3%, from R$105.1 million in 2004 to R$125.4 million in 2005,
primarily due to an increase in the volume sold in 2005 compared to 2004. Approximately 87.0% of our
selling expenses vary according to our volume sold. The main increases in our selling expenses were an
increase in our storage expenses (from R$3.8 million in 2004 to R$12.6 million in 2005) and domestic and
international freight expenses (from R$65.4 million in 2004 to R$74.2 million in 2005). Our selling expenses,
as a percentage of net sales revenue, remained stable at 13.3% in 2005 and 12.8% in 2004.

General and administrative expenses

     Our general and administrative expenses increased by 15.5%, from R$27.8 million in 2004 to R$32.1
million in 2005, primarily due to an increase in our fixed expenses incurred to increase our production
capacity, as well as our commencement of slaughtering and de-boning operations at our Palmeiras de Goiás
production facility in August 2004 and June 2005, respectively. As a percentage of net sales revenue, general
and administrative expenses remained stable at approximately 3.4% in both 2004 and 2005.

Financial expenses, net

     Our financial expenses, net increased by 28.9%, from R$23.2 million in 2004 to R$29.9 million in 2005,
primarily due to the net effect of (1) an increase in our interest expense from R$19.0 million in 2004 to
R$35.5 million in 2005 as a result of an increase in average rates applicable to our outstanding indebtedness
and the increase in our outstanding indebtedness that we incurred for working capital purposes and to finance
capital expenditures that we made in 2005, and (2) a decrease in our net financial income from R$4.3 million
in 2004 to R$2.5 million as a result of the 11.8% appreciation of the real against the U.S. dollar in 2005. Our
net financial expenses, as a percentage of net sales revenue, remained relatively stable, representing 2.8% and
3.2% of our net sales revenue in 2004 and 2005, respectively.

Operating income

     Operating income represented 4.4% of our net sales revenue in 2004 and 1.9% of our net sales revenue in
2005. Our operating income decreased from R$36.1 million in 2004 to R$17.6 million during 2005. However,
in 2004, we recorded R$26.8 million as a non-recurring expense relating to certain amounts that we owed to
the INSS for unpaid social security taxes prior to 2004, which we agreed to pay in 168 monthly installments
under the Special Installment Program (Parcelamento Especial – PAES), or PAES. Including this non-
recurring expense, our operating margin in 2004 was 1.1% compared to 1.9% in 2005.

Income taxes and social contribution

    Income taxes and social contribution decreased from R$3.9 million in 2004 to R$3.0 million in 2005,
primarily due to a decrease in taxable income in 2005 caused by losses in the three-month period ended
December 31, 2005 as a result of the outbreak of FMD in the State of Mato Grosso do Sul in October 2005.




                                                      51
Net income

     As a result of the foregoing, we recorded net income of R$14.2 million in 2005, compared to R$5.4
million in 2004. As a percentage of net sales, net income was 0.7% in 2004 and 1.5% in 2005.

Liquidity and Capital Resources

    Our financial condition and liquidity is and will be influenced by a variety of factors, including:

    •    our ability to generate cash flows from operations;

    •    the level of our outstanding indebtedness and the interest we are obligated to pay on this
         indebtedness, which affects our net financial expenses;

    •    prevailing domestic and international interest rates, which affect our debt service requirements;

    •    changes in exchange rates;

    •    our ability to continue to obtain financing from Brazilian and international financial institutions and
         the international capital markets;

    •    our working capital needs, based on our growth plans; and

    •    our capital expenditure requirements, which consist primarily of purchasing new equipment, and
         possible strategic investments and acquisitions.

    Our principal cash requirements consist of the following:

    •    working capital requirements;

    •    the servicing of our indebtedness;

    •    capital expenditures related to investments in operations, maintenance and equipment; and

    •    our sustainable growth.

    Our principal sources of liquidity have traditionally consisted of the following:

    •    cash flows from operating activities; and

    •    short-term and long-term borrowings.

     During 2006 and 2005, we used cash flows generated by operations primarily for working capital needs,
capital expenditures related to the modernization of our production units, and to service our indebtedness and
to pay distributions in respect of our quotas. At March 31, 2007, our cash, cash equivalents and marketable
securities amounted to R$314.9 million.

Working Capital

     Our working capital was R$363.2 million and R$346.7 million at March 31, 2007 and at December 31,
2006, respectively. Our current assets increased by R$215.2 million to R$795.6 million at March 31, 2007
from R$580.4 million at December 31, 2006. The increase in our current assets since December 31, 2006 was
largely due to an increase in our accounts receivable and inventory levels.




                                                           52
     Our current liabilities decreased by R$188.5 million to R$222.9 million at March 31, 2007 compared to
R$411.4 million at December 31, 2006. The decrease in current liabilities was primarily due to the payment of
part of our short-term debt using part of the proceeds from the issuance by Minerva Overseas Ltd. of the
notes that we guarantee. This offering allowed us to extend our overall debt maturity profile and improve our
cash flow and current liquidity.

    The following table sets forth certain components of our sources of funds or cash flows for the years
ended December 31, 2006, 2005 and 2004 and the three-months ended March 31, 2007:

                                                                                                                                          Three months
                                                                                                                                             ended
                                                                                           Years ended December 31,                        March 31,
                                                                                       2004          2005             2006                    2007
                                                                                                      (in millions of reais)
Cash flows provided by (used in):
 Operating activities....................................................                0.2              (60.0)            (58.0)             (46.4)
 Investing activities.....................................................             (40.5)             (40.8)            (13.0)              (2.7)
 Financing activities....................................................               47.0               91.8             134.7              271.1
Increase (decrease) in cash and cash equivalents ........                                6.7               (9.0)             63.7              222.0

Projected Sources and Uses of Cash

    In 2006, we spent approximately R$319.5 million to meet our short-term contractual obligations and
required maintenance capital expenditures. We met these cash requirements through a combination of cash
generated from operating activities and cash generated by financing activities, including the extension of the
maturity profile of our short-term debt.

     We anticipate that we will be required to spend approximately R$637.2 million to meet our long-term
contractual obligations and commitments and budgeted capital expenditures in 2007 and 2008, R$443.8
million for 2007 and R$193.4 million for 2008. We anticipate that we will meet these cash requirements
through a combination of cash generated from operating activities and cash generated by financing activities,
new debt financings and the refinancing of our indebtedness as it becomes due.

Indebtedness

     At March 31, 2007, our total outstanding indebtedness was R$690.1 million, consisting of R$97.7 million of
short-term indebtedness and R$592.4 million of long-term indebtedness. At March 31, 2007, approximately
R$95.5 million, or 14.1%, of our outstanding indebtedness was secured. Because approximately 78% of our
gross revenues in 2006 were derived from exports, the foreign currency generated from our export sales provides
a natural hedge for a significant portion of our U.S. dollar-denominated liabilities.

    The following table sets forth our outstanding short- and long-term principal obligations in U.S. dollars
and Brazilian reais at March 31, 2007 and March 31, 2006:

                                                                                                                      As of March 31,
                                                                                                             2006                             2007
                                                                                                                     (in millions of reais)
Short-term debt ....................................................................................         230.2                             97.7
    Real-denominated ........................................................................                 86.8                              9.4
    Dollar-denominated......................................................................                 143.4                             88.3
Long-term debt.....................................................................................           84.1                            592.4
    Real-denominated ........................................................................                 35.1                             29.7
    Dollar-denominated......................................................................                  49.0                            562.7
Total debt ............................................................................................      314.3                            690.1
    Real-denominated ........................................................................                121.9                             39.1
    Dollar-denominated......................................................................                 192.4                            651.0




                                                                                        53
       The following table sets forth our outstanding secured indebtedness at March 31, 2007:

Debt Instruments                                                                                                 Principal Amount Secured
                                                                                                                    (in millions of reais)
Export Prepayment Agreements .................................................................                               57.5
BNDES ......................................................................................................                 10.8
Others (Financiadora de Estudos e Projetos).............................................                                     27.2
 Total........................................................................................................               95.5

Short-term Indebtedness

     Our short-term debt decreased by R$132.5 million, or 57.6%, from R$230.2 million at March 31, 2006 to
R$97.7 million at March 31, 2007, primarily due to a partial reduction of our short-term debt through the
use of proceeds from the issuance by Minerva Overseas Ltd. of the notes that we guarantee. We maintain lines
of credit with several Brazilian and international banks to finance our working capital requirements. We
believe that we will continue to be able to obtain sufficient credit from financial and other institutions, to
finance our working capital needs based on our past track record and current market conditions.

Long-term Indebtedness

     Our long-term debt increased by R$508.3 million, or 604.4%, from R$84.1 million at March 31, 2006 to R$592.4
million at March 31, 2007, primarily due to the issuance by Minerva Overseas Ltd. of senior unsecured notes in the
principal amount of US$200 million that we guarantee, as well as entering into export prepayment facilities with
certain banks that have a maturity of five years. This increase in our long-term debt is part of our financial strategy to
improve our debt profile and finance our capital expenditures to increase our slaughter capacity.

    Our principal outstanding long-term debt instruments as of March 31, 2007, in addition to the notes issued by
Minerva Overseas Ltd., consisted of export prepayment facilities with varied maturities extending until 2010 and
loans from BNDES and Financier of Studies and Projects (Financiadora de Estudos e Projetos), a division of
BNDES, or FINEP, that mature in 2012 and are secured by mortgages on certain of our real properties, including
two farms and our production facilities located in the city of Barretos in the State of São Paulo and in the city of
Palmeiras de Goiás in the State of Goiás, and are guaranteed by family members of the Vilela de Queiroz family.
We expect that these guarantees will remain in place after this offering.

     We are party to several bi-lateral secured export prepayment agreements with certain financial institutions,
including affiliates of Credit Suisse Securities (USA) LLC. These agreements mature between 2007 and 2011. The
terms of some of these export prepayment facilities limit our ability and the ability of our subsidiaries, with certain
important exceptions, to pay dividends, create liens, incur additional indebtedness, engage in a merger, sale or
consolidation transaction or sell assets. Some of these agreements require us to comply with certain financial
covenants, including, without limitation, the following:

       •      an EBITDA to financial expense ratio equal or greater than 2.25:1.0;

       •      a net bank debt (excluding FINEP debt) to EBITDA ratio of not more than 3.9:1.0; and

       •      a net bank debt (excluding FINEP debt) to total capitalization ratio of not more than 0.75:1.0.

   In 2004, we entered into an agreement with the INSS to settle certain outstanding INSS tax obligations of
R$26.7 million, which we have agreed to pay in 120 monthly installments under the PAES program.

Senior, Unsecured, Guaranteed 9.50% Notes

     We issued 9.50% notes due 2017 in an aggregate principal amount of US$150.0 million on January 19,
2007 and US$50.0 million on February 6, 2007, through our wholly-owned subsidiary Minerva Overseas
Ltd.. These notes are unconditionally and irrevocably guaranteed by us. Interest on these notes accrues at a




                                                                                         54
rate of 9.50% per annum and is payable semi-annually on February 1 and August 1 of each year, beginning
on August 1, 2007. The principal amount of these notes is payable in full on February 1, 2017. The principal
obligations related to these notes under the indenture are:

       •      restrictions on our ability to incur additional indebtednes;

       •      restrictions on our ability to create liens;

       •      restrictions on our payment of dividends of up to 50% of the net income of the fiscal year; and

       •      certain restrictions in connection with our sale of assets.

Contractual Commitments

    The following table sets forth the maturity profile of our outstanding indebtedness and material
contractual obligations, including leases and agreements to pay certain tax and social contribution obligations
over time, at March 31, 2007:

                                                                  Less than   One to Three Three to Five More than
                                                                  One Year       Years           Years          Five Years   Total
                                                                                         (in millions of reais)
Loans and financing ...................................              97.7        150.6             37.5            404.3     690.1
  Reais-denominated.................................                  9.5          21.8             7.8                0      39.1
  U.S. dollar-denominated ........................                   88.2        128.8             29.7            404.3     651.0
Leases.........................................................       2.9           1.3               0                0       4.2
Taxes, charges and contributions ...............                      0.7           3.7             3.9             18.6      26.9
  Total contractual obligations...............                      101.3        155.6             41.4            422.9     721.2

Loan maturities

     Based on the profile of our indebtedness at December 31, 2006 and our track record, we believe we will
continue to be able to raise funds in U.S. dollars and reais and meet our financial obligations. We further
believe that investments made during recent years, in addition to investments we intend to make during the
following years, part of which will be financed upon the use of the net proceeds of this offering, will allow us
to increase our ability to generate cash, strengthen our credit ratios and enhance our capacity to meet our
financial obligations.

Capital Expenditures

    Our aggregate capital expenditures in property, plant and equipment were R$12.9 million, R$40.8 million
and R$36.4 million in 2006, 2005 and 2004, respectively.

    During December 31, 2006, we invested primarily in the modernization of our plants. During the years
ended 2004 and 2005, we invested primarily in the improvement of our slaughtering and processing facility in
Palmeiras de Goiás in the State of Goiás,

    During 2007 and 2008, we expect to invest approximately R$250.0 million in the following projects
(approximately R$95.0 million in 2007 and R$155.0 million in 2008):

       •      increase our slaughtering and processing capacities through the acquisition of new plants and the
              expansion of our production capacity. In January 2007, we began the construction of a facility in the
              city of Rolim de Moura in the State of Rondônia. In April 2007, we purchased a slaughterhouse for
              R$20.0 million in the city of Araguaína, in the State of Tocantins, with a daily slaughtering capacity
              of 700 head (850 head after the planned expansion). Also in April 2007, we purchased a plant still
              under construction for R$10.0 million in the city of Redenção, in the State of Pará, with a daily
              slaughtering capacity of 1,700 head; and




                                                                              55
    •    in January 2007, we began constructing a processing facility for cooked and frozen beef in the city of
         Barretos in the State of São Paulo. This cooked and frozen beef will be primarily used in fast-food and
         restaurant chains, catering companies and others in the food industry. This new plant is being constructed
         in partnership with Dawn Farms Group of Ireland. The partnership is currently being established and its
         corporate name will be Minerva Dawn Farms S.A.

    •    in addition, we are developing a project for the contruction of a biodiesel plant that will produce
         biodiesel from beef fat. We are in the process of evaluating and choosing the location of, and the
         technology to be used, in this plant.

    We do not have any material capital divestitures in progress, and we have not made any material capital
divestitures during the last three fiscal years, other than the Spin-Off.

Off-Balance Sheet Arrangements

     We hedge exchange rate and interest rate risks related to certain of our accounts receivable from clients,
financings and loans and marketable securities through derivative instruments, such as swap contracts (including U.S
dollar to real, U.S. dollar to CDI and LIBOR to CDI and vice-versa) and futures contracts traded on the the Brazilian
Futures Exchange Market (Bolsa de Mercadorias e Futuros), or BM&F. On March 31, 2007, we had exchange rate
swap contracts in effect in an aggregate amount of US$30.0 million and one outstanding swap contract (U.S. dollar to
CDI) in effect in an aggregate amount of US$37.5 million to hedge exchange rate and interest rate risks in connection
with our revenues denominated in foreign currency and our senior unsecured notes, respectively.

Quantitative and Qualitative Disclosures About Market Risks

     We are exposed to a number of market risks arising from our normal business activities, which market
risks represent the potential losses arising from adverse changes in market rates and prices. These market risks
principally involve the possibility that changes in currency exchange rates or interest rates will adversely
affect the value of our financial assets and liabilities or our future cash flows and earnings. Due to our high
export volumes, we believe that we have a “natural hedge” of our liabilities denominated in U.S. dollars and
therefore do not enter into derivative transactions in respect of foreign exchange rates.

Interest Rate Risk

    Our variable interest rate exposure is primarily subject to variations of the long-term interest rate for real-
denominated borrowings. As of March 31, 2007, our real-denominated debt was R$39.1 million. Assuming a
hypothetical 1% increase in the interest rates applicable to our net indebtedness, our net interest expense
would have increased by approximately R$0.4 million in the three-month period ended March 31, 2007.

Foreign Currency Exchange Rate Risk

     A substantial portion of our debt is denominated in U.S. dollars. Accordingly, we are exposed to foreign
currency rate risk. We believe that our exposure to losses caused by exchange rate variations between the real
and the U.S. dollar are largely mitigated by the significant level of our export revenues that we generate in
U.S. dollars or other foreign currencies (representing approximately 78% of our gross sales revenues for the
three-month period ended March 31, 2007).

     In the event that the real were to devalue by 10% against the U.S. dollar during 2007 as compared with
the real/U.S. dollar exchange rate at March 31, 2007, our financial expenses denominated in U.S. dollars at
March 31, 2007 would increase by approximately R$65.1 million.

Costs Related to this Offering

     Based on a price per common share of R$18.50, the total costs related to this offering incurred by us are
estimated to be R$38.6 million, assuming no exercise of the over-allotment option, or R$36.3 million
assuming the over-allotment option is exercised, and will be recorded in our financial statements for the
nine-month period ended September 30, 2007, affecting our results of operations.




                                                         56
                                                                                  INDUSTRY

World Beef Industry

Raw material

     According to USDA data published in April 2007, the world’s cattle inventory totaled approximately
1.0 billion head of cattle at the end of December 31, 2006, which represents a growth of 1.0% when compared
to 2005. For 2007, the growth rate of recent years is expected to be maintained. Brazil has the largest
commercial cattle herd in the world with 180.1 million head of cattle in 2006, according to USDA.

    The table below shows the largest cattle herds in the world. We can infer that the main countries that will
drive the herd growth expected for 2007 will be Brazil and China.

                                                                                                         World's Largest Cattle Herds
Country                                                                                         2004         2005            2006       2007(1)
                                                                                                             (in millions of head)
India(2)...................................................................................      283.1       282.5          282.3         282.0
Brazil ......................................................................................    165.5       169.6          173.8         180.3
China ......................................................................................     134.7       137.8          141.6         145.3
United States ..........................................................................          94.9        95.4            96.7         97.0
European Union......................................................................              87.5        86.4            85.8         85.1
Argentina................................................................................         50.8        50.2            50.2         51.2
Australia .................................................................................       26.6        27.3            27.8         28.6
Mexico....................................................................................        28.4        27.6            26.9         26.6
Russia .....................................................................................      22.3        21.1            19.8         19.0
Canada....................................................................................        14.6        15.1            14.8         14.3
Africa......................................................................................      13.5        13.5            13.8         14.2
Other countries .......................................................................           65.0        61.6            60.8         60.1
Total.......................................................................................     986.9       998.0          994.3       1,003.8

Source: USDA.
(1) Estimated.
(2) Non-commercial herd.

Production

     In 2006, 53.8 million tons of beef were produced worldwide, a growth of 2.2% when compared to 2005,
according to USDA data published in April 2007. Positive highlights are the production growth: (1) in the
United States, evidencing a recovery in its production, which had been affected in the past by a BSE outbreak
in 2004; (2) in Brazil, in view of the growing demand in the domestic and international markets; and (3) in
China, due to the continued growth in its domestic consumption. For 2007, USDA estimates the same
production growth as in 2006, and the highlights are expected to once again be the United States, Brazil and
China, due to the same reasons in 2006.




                                                                                           57
       The following table shows the world’s leading beef producers:

                                                                                                          Worldwide Production of Beef
Country                                                                                          2004            2005            2006        2007(1)
                                                                                                           (in tons of carcass equivalent)
United States ..........................................................................         11,261         11,318          11,981       12,062
Brazil ......................................................................................     7,975          8,592           9,020        9,325
European Union......................................................................              8,007          7,848           7,930        7,860
China ......................................................................................      6,759          7,115           7,492        7,900
Argentina................................................................................         3,130          3,200           3,100        3,125
India(2)...................................................................................       2,130          2,250           2,375        2,500
Mexico....................................................................................        2,099          2,125           2,175        2,200
Australia .................................................................................       2,081          2,102           2,183        2,290
Russia .....................................................................................      1,590          1,525           1,430        1,380
Canada....................................................................................        1,496          1,523           1,425        1,385
New Zealand ..........................................................................              720            705             655          715
Other countries .......................................................................           4,079          4,151           4,072        4,054
Total.......................................................................................     51,327         52,454          53,838       54,796

Source: USDA.
(1) Estimated.
(2) Includes buffalo meat.

    According to estimates made by GIRA described in the chart below, the world’s beef production will
grow (in tons) by 1.2% per year until 2015, and Brazil is expected to drive 21.5% of this growth.


 75000
                                                                                                                                     -526
                                                                                                            +444
                                                                                +1,038                                  +351
 70000                                                      +2,083
                                                                                                -484                                             70,122
                                        +4,770

 65000


                 62,446
 60000



 55000



 50000
                   2005                China               Brazil              USA              EU-27     MENA(1)     Argentina     Others        2015




Source: GIRA.
(1) Middle East and North Africa.




                                                                                           58
Offtake rate

     Despite having the second largest commercial cattle herd in the world, the United States is the world’s
leading producer of beef. This is due to the high offtake rate in the United States, which reached 37.0% in
2006, and is influenced by several factors such as: (1) cattle species; (2) form of raising (confinement); (3) use
of growth hormones; and (4) quality and type of animal feed. In 2006, Brazil's offtake rate was 22.0% given
that as opposed to the United States, Brazil’s cattle raising is predominantly extensive (grazing) and the use of
growth hormones in cattle raising is prohibited. Such factors cause Brazilian cattle herd to take longer to reach
the ideal weight for slaughter.

Increase in slaughter rate as a source of growth of Brazil’s output

    Despite having the largest commercial cattle herd in the world, Brazil is the world’s second largest
producer of beef. This is due to a low offtake rate (22.0%) when compared to the 37.0% offtaker rate of the
United States. If Brazil’s offtake rate had been 30.0% in 2006, it would have been the world’s largest
producer of beef, according to the data presented in the CNA’s National Permanent Forum of Cattle Raising
and Slaughter (Fórum Nacional Permanente de Pecuária e Corte da CNA).

    As shown in the chart below, Brazil still has room to improve its offtake rate:

                                                                                                     46.1%

                                                                                             38.4%
                                                                                     35.0%
                                                                            33.2%
                                                                  30.7%
                                              27.0%      27.7%
                                    24.4%
                   21.2%   22.4%




          8.3%




          India   South    Brazil   Mexico   Argentina   Canada Australia   Europe   USA     China   Russia
                  Africa




          Source: USDA.

Exports

     According to a report published by the USDA in April 2007, in 2006 the world’s exports increased by
only 1.0% when compared to 2005, despite the growth in worldwide beef consumption. Such a small increase
in worldwide exports is mainly due to (1) export restrictions adopted by the Argentine government in March
2006, causing the country to drop from the third largest beef exporter in 2005 to the sixth largest in 2006, and
(2) the outbreak of BSE in Canada in 2003. In the same period, Brazil experienced growth of 12.9% in its
exports, expanding and consolidating even further its position as a global leader, despite restrictions by certain
countries that limit Brazil’s exports of fresh beef (either applying to certain regions of Brazil or to the country
as a whole) because of the FMD outbreak in the state of Mato Grosso do Sul at the end of 2005 and in the
state of Paraná in the beginning of 2006.




                                                            59
      The table below describes the evolution of leading beef exporting countries from 2004 to 2006:

World’s Leading Beef Exporting Countries

Country                                                                                                2004          2005           2006         2007(1)
                                                                                                               (in tons of carcass equivalent)
Brazil .............................................................................................   1,628         1,867         2,109         2,235
Australia ........................................................................................     1,394         1,413         1,459         1,530
India (2).........................................................................................       499           627           750           800
United States .................................................................................          209           317           523           585
Uruguay.........................................................................................         410           487           510           520
Argentina.......................................................................................         623           762           556           500
New Zealand .................................................................................            606           589           541           600
European Union.............................................................................              358           254           220           200
Canada...........................................................................................        557           551           440           420
China .............................................................................................       61            91            99           102
Mexico...........................................................................................         18            31            38            40
Other countries ..............................................................................           133           102            28            39
Total..............................................................................................    6,496         7,092         6,996         7,454

Source: USDA.
(1) Estimated.
(2) Includes buffalo meat.

     Due to growing global demand and the expected further liberalization of trade barriers, beef exports
are expected to increase over the next few years. For 2007, the USDA forecasts published in April 2007 a
growth of 6.5% in global exports, given the expected deregulation of the Argentina beef industry, which
remains severely regulated by its federal government, and the growth in United States exports. The growth
of world’s exports for the next few years also takes into consideration the growth of Brazil’s exports.

     According to projections made by GIRA, Brazil, Argentina and Uruguay are expected to continue to
increase their market share when compared to developed countries such as Australia, United States and
European Union. For the projected period, Brazil is expected to increase its market share from 26.3% in 2005
to 31.1% in 2006.




                                                                                           60
    The charts below are GIRA’s estimates about the increase in worldwide beef exports and show that
Brazil will be the exporter with the largest share of this growth by 2010 and 2015.


                           12000




                           10000



                                                                            Others
                            8000
                                                                            New Zealand
                                                                            Australia
                                                                            EU-27
                            6000                                            Uruguay
                                                                            Brazil
                                                                            Argentina
                                                                            USA
                            4000
                                                                            Canada



                            2000




                               0
                                    2000     2005        2010   2015



        Source: Gira.




                                                    61
     The chart below shows an estimate made by GIRA regarding the main countries that are expected to
drive the increase in the worldwide volume of exported beef between 2005 and 2015. Based on such estimate,
Brazil is expected to account for 36.1% of the increase in the exported volume (in tons), with the largest share
of the world’s growth of beef exports.


  12000
                                                                                                               +325
                                                                                                    +399
                                                            +676                +403
  10000
                                                                                                                           -195                      10,132
                                      +1,250                                                                                             -215

    8000

                    7,489
    6000



    4000


    2000



         0
                    2005               Brazil               USA              Canada             Argentina     Uruguay       EU          Others        2015




Source: Gira.

Imports

      The United States and Russia are currently the world’s largest beef importers. Over the next few years, the
European Union, which was the fourth largest importer of beef in the world, is expected to increase its beef imports
as its farmers are required to reduce their cattle production to adjust to European Union regulations. Mexico, which
in 2006 was the sixth largest importer of beef in the world, is also expected to increase its beef imports over the next
few years due to a decrease in cattle production caused in part by an ongoing drought.

       The following table illustrates the evolution of the world's main beef importing countries:
World’s Leading Beef Importers

Country                                                                                               2004           2005           2006         2007(1)
                                                                                                               (in tons of carcass equivalent)
United States ...............................................................................         1,669          1,632          1,399        1,497
Russia..........................................................................................        730            993            955          960
Japan ...........................................................................................       647            700            692          700
European Union ..........................................................................               584            600            560          580
Mexico ........................................................................................         287            325            372          375
Egypt...........................................................................................        168            214            225          240
South Korea ................................................................................            218            243            290          295
Canada ........................................................................................         111            133            159          170
Other countries............................................................................             477            584            563          592
Total ...........................................................................................     4,891          5,424          5,215        5,409

Source: USDA.
(1) Estimated.




                                                                                           62
    The chart below illustrates GIRA’s estimate of which countries will likely be the leading beef importers
by volume in 2015.



 12000

                                                                                             +478
                                                                      +260       +185
 10000                                                     +289
                                               +452                                                      10,132
                        +622         +357

  8000

            7,489
  6000



  4000


  2000



     0
            2005        EU          MENA(1)    USA         Japan     S.Korea     Russia      Others      2015




Source: Gira.
(1) Middle East and North Africa.




                                                      63
    The charts below show the growth in the amount of beef imported by each of the leading beef importing
countries, and shows that Brazil will be among the main suppliers for many of these countries:

                                EU                                                                    MENA

  1400                                                                     1200

  1200
                                                                           1000

  1000
                                                                            800      Others
                       Others        Uruguay
   800                                                                                           Australia
                                                                            600
                                                                                     India
   600
                                       Brazil                               400
   400                                                                               EU


   200                                                                      200         Brazil
                                     Argentina
      0                                                                       0    Argentina/Uruguay
      2000              2005                  2010             2015           2000            2005                 2010   2015




                                 Russia                                                                 United States

  1200                                                                     3000      Other
                                                                                     South America           Others

  1000                                          Others                     2500
             Ukraine
   800                          EU                   Uruguay               2000                          New Zealand

   600                                                                     1500                              Australia
                                     Brazil                                                                  Uruguay
   400                                                                     1000
                                                                                                             Mexico
   200                                                                      500
                                     Argentina                                                               Canada
     0                                                                        0
     2000               2005                  2010             2015           2000               2005              2010   2015


Source: GIRA.

Consumption

     Beef is a protein-rich source of nutrition and the world’s third most consumed type of meat after pork
and poultry. In 2006, approximately 51.7 million tons of beef was consumed globally. The world’s beef
consumption is concentrated in the Western hemisphere and has grown on average by 1.8% per year.
However, growth in the world’s beef consumption, including Brazil, is expected to be approximately 1.7%
in 2007, compared to 2006.

    According to USDA data published in April 2007, the largest growth in world beef consumption in the
coming years is expected to occur in East and Southeast Asia, Latin America, the Middle East and North
Africa, as a result of expected population growth and growth in per capita income in these regions (as beef
consumption per capita is strongly correlated with economic growth and the resulting income growth).




                                                                      64
The following table shows the world’s leading beef consuming countries:

                                                                                 Worldwide Consumption of Beef
Country                                                           2004               2005                 2006          2007(1)
                                                                                  (in tons of carcass equivalent)
United States ...........................................         12,667            12,663               12,830            13,011
European Union ......................................              8,292             8,194                8,270             8,240
China.......................................................       6,703             7,026                7,395             7,800
Brazil.......................................................      6,400             6,774                6,939             7,120
Argentina ................................................         2,512             2,443                2,550             2,630
Mexico ....................................................        2,368             2,419                2,509             2,535
Russia......................................................       2,308             2,503                2,370             2,325
India(2)....................................................       1,631             1,623                1,625             1,700
Japan .......................................................      1,182             1,200                1,173             1,210
Canada ....................................................        1,057             1,106                1,140             1,130
Australia..................................................          747                735                 719               730
Other countries........................................            2,921             3,006                3,019             3,027
Total .......................................................     49,875            50,851               51,725            52,641

Source: USDA.
(1) Estimated.
(2) Includes buffalo meat.

    The chart below shows the projected growth in beef consumption in the coming years and the regions of
the world that are expected to drive such growth:


  75000


                                                                                                         +227       +634
                                                                     +471        +425        +248
  70000
                                                           +896                                                                     70,122
                                       +4,775


  65000


                 62,446
  60000



  55000



  50000
                   2005                China               USA      Japan         India    MENA(1)      Mexico      Others          2015



Source: GIRA.
(1) Middle East and North Africa.

Competitiveness

       The competitiveness of a beef producer on the international market is significantly impacted by its cost structure.

    The two main components of the overall industry cost structure are raw materials and production costs. Brazil
enjoys the lowest overall average cost structure among the largest beef exporting countries.




                                                                            65
       The following table sets forth the average cost of cattle purchased in the world’s main beef producing countries:

Country                                                                                                                          Cattle Purchase Cost in 2006
                                                                                                                                        (US$/kilogram)
Brazil.......................................................................................................................                0.80
New Zealand ...........................................................................................................                      1.20
Argentina ................................................................................................................                   1.30
Australia..................................................................................................................                  1.40
USA ........................................................................................................................                 1.90
Ireland .....................................................................................................................                2.90

Source: ABIEC.

     Another factor that impacts the cost of cattle raising is the cost of land. As set forth in the following chart,
all of the other countries have land use rates higher than 50.0%, except for Argentina, whose rate is 38.0%.

                                                                          Available area               Used area

         394




                              269

                                                  220
                                    188                                189
                                                                                            169 169
                                                        132                  128                                 138
                                                                                                                        96
                                                                                                                                 84         76          71
                66
                                                                                                                                      47         46
                                                                                                                                                             27


           Brazil               USA                Russia               Europe                India                China        Australia   Canada     Argentina




Source: FAO.
Note: Data about available land in Brazil does not include the Amazon.

Sanitary and Trade Restrictions

     Among the leading importers of beef, the block formed by the NAFTA countries, Japan and South Korea
restricts imports of fresh beef from countries or regions where there are active foot-and-mouth vaccination
programs. These countries only accept imports of processed beef. The European Union allows imports of
fresh beef from certain regions within countries that have been affected by FMD, if those regions have not
been directly affected, in compliance with the regionalization rules suggested by the International Office of
Epizootics, or IOE. However, the European Union has restricted the free trade of fresh beef through an import
quota system and also has banned the importation of beef treated with hormones and anabolic steroids.
Accordingly, the European Union has banned U.S. beef treated with growth hormones due to health concerns.
Brazilian cattle is not treated with growth hormones and accordingly may benefit from any extension of the
existing E.U. ban on U.S. beef. In addition to the European Union, other countries that are large importers of
fresh beef tend to follow the recommendations by IOE, but have freedom to establish rules for beef imports.




                                                                                            66
Brazilian Beef Industry

     With an estimated 180.3 million head of cattle, Brazil has the largest cattle herd in the world for
commercial purposes, and large growth potential, especially when considering the available arable land in
millions of hectares, as illustrated by the graph below:

        328




                     88           81
                                              60
                                                           44          42           36          31
                                                                                                             11


        Brazil     Russia        USA        Europe      Argentina     China      Australia    Canada       Uruguay




Source: FAO/IBGE.

    Over the last 15 years, the Brazilian beef industry has undergone an intense process of internationalization,
and Brazilian beef exports have increased from less than 5% of domestic beef production in the early 1990’s to
approximately 20.0% in 2006. In addition, the Brazilian share of the world’s total beef exports has increased
from approximately 5% in the early 1990’s to 27.8% in 2006, despite the fact that Brazil has access to less than
52.0% of the world’s fresh meat markets, because the block formed by the NAFTA countries, Japan and South
Korea prohibits imports of fresh beef from Brazil. Brazilian beef exports grew by an average of 22.0% from
2000 to 2006, as a result of:

    •     increased productivity in the Brazilian beef industry and reduction of production costs;

    •     improved marketing and advertising efforts;

    •     increased number of export destinations; and

    •     reduction in sanitary and trade barriers.




                                                         67
    The following flow chart illustrates the destination of Brazilian beef production:

                                                       Brazilian production
                                                       9,020 (thousand t.e.c)




                                                                               Exports
                                                                        2,109 (thousand t.e.c)
                                                                                 25%
                     Domestic consumption
                     6,939 (thousand t.e.c)
                              75%
                                                               Fresh beef                    Processed beef
                                                         1,666.1 (thousand t.e.c)         442.9 (thousand t.e.c)
                                                                   79%                             21%
                         Per capita
                        consumption
                           36.9 kg
                                                              Destinations                  Destinations
                                                                  111                           100

                                                              Russia: 26%                  US: 31%
                                                              EU25: 18%             United Kingdom: 25%
                                                              Egypt: 16%          Other countries: EU25: 19%




        Source: USDA, April 2007.

    In 2006, beef and its byproducts accounted for 17.5% of the total agricultural products exported by
Brazil. The chart below indicates the share of Brazilian cattle of agricultural products in 2006:

                     Share of Brazilian Cattle of Agricultural Products Exported in 2006

                                                          Coffee    Tobacco Fruit Juice
                                                           6%         4%
                                      Leather and Byproducts                       3%
                                             7%                                       Others
                                                                                       12%

                                 Wood
                                  8%




                                 Pulp
                                 9%                                                              Soybeans
                                                                                                   18%




                                  Sugar and Ethanol
                                        16%
                                                                             Meat
                                                                                17%


           Source: CAPB.




                                                                   68
   The following chart shows the total amount (in US$ millions) of Brazilian beef exports to major
importing markets in 2006, divided between fresh beef and processed beef:

                                           Fresh Beef Exports from Brazil (%)


                                           Others
                                            17%                         Russia
                                                                         25%

                          Hong Kong
                     Israel  2%
                       3%
                    Romania
                      3%
              Saudi Arabia
                   3%
                              Iran
                              4%
                                                                           European Union
                             Algeria                                            18%
                               4%

                                       Bulgaria
                                                          Egypt
                                         5%
                                                           16%




           Source: CAPB

                                         Processed Beef Exports from Brazil (%)




                                       Others                           USA
                                        31%                             30%




                             Japan
                              1%
                          Egypt
                           2%
                              Puerto Rico
                                  2%
                       Arab Emirates
                                                                  European Union
                             2%        Iran
                                                   Cuba                25%
                                                2%
                                                    5%




           Source: CAPB




                                                            69
Sanitary and Quality Control

    During the 1990’s, Brazil made significant improvements in the sanitary control of its cattle herd,
especially concerning FMD. It is expected that in 2007, 95% of the Brazilian cattle herd will be located in
areas free of FMD as a result of increased vaccination programs. The maps below show the states of Brazil
considered free of FMD on February 2007, and their evolution when compared with the data from 1998.


                                                                Feb/2007




                                   FMD-free           Temporally             FMD-free with
                                   area               Suspended              vaccination



           Source: IOE.

    The majority of Brazilian cattle are traceable, which makes it possible to identify the cattle’s origin.
This traceability has been implemented by the Brazilian government through the Brazilian System for
Identification and Certification of Bovine and Buffalo Beef (Sistema Brasileiro de Identificação e
Certificação de Origem Bovina e Bubalina), or SISBOV, in accordance with Ordinance No. 1 of January 9,
2002, as amended by Ordinance Nos. 1 and 17 of January 21, 2005 and December 12, 2003, respectively,
enacted by MAPA. SISBOV requires cattle to be tagged with a number unique to each animal, and records to
be maintained by farmers of cattle births, sales, vaccinations and deaths. SISBOV specifies which public and
private entities are responsible (and the criteria) for monitoring and certifying the origin of imported and
domestic beef products. In addition, the Brazilian government currently monitors the world’s largest
vaccination program in which both domestic cattle and cattle from neighboring countries are vaccinated
against FMD.

Other Topics Relevant to the Industry

BSE

     Beef consumption patterns are and will continue to be influenced by food safety issues. The first BSE
(popularly known as “mad cow disease”) crisis began in March 1996 when the British government announced a
link between BSE and a disease afflicting humans, Creutzfeldt-Jakob Disease. This discovery caused an
immediate reduction of beef consumption on a worldwide basis. Several measures were introduced to control the
spread of BSE among cattle and to minimize the risk of human exposure. These control measures included the
Over Thirty Months Scheme, or the OTMS, which involved the purchase and destruction of all U.K. cattle over
thirty months of age, the Calf Processing Aid Scheme, or the CPAS, which involved the destruction of European
Union calves less than 20 days old, the Selective Cull measure, which required killing cattle most at risk of BSE,
and the cattle identification and traceability schemes. BSE is linked to cattle that are fed animal-based feeds.
Brazil is considered to be free of BSE and is viewed as less vulnerable to the disease because its entire cattle
herd grazes freely in pastures or is fed vegetable-based rations without animal byproducts.




                                                       70
FMD

    FMD is a contagious disease caused by a virus, and it affects bovines, swine, buffalos and other animals.
Contamination of humans as a result of the ingestion of meat and other products of the same origin has not
been proven. Transmission among human beings has never been reported either.

     The importance of FMD in terms of public health would be minimal if the economic and social impacts
were not taken into account, since it results in losses in production, productivity and profitability of cattle
raising. The disease causes a reduction of beef availability in the country, and also results in the reduction of
exports due to embargos imposed by importing countries.




                                                        71
                                                                             BUSINESS

           We are one of the market leaders in Brazil in the production and sale of fresh beef, processed beef and
       beef byproducts, with a daily slaughtering capacity of 5,000 head of cattle and daily processing capacity of
       1,200 tons, or approximately 7,500 head of cattle. In 2006, we were among the three largest Brazilian
       exporters of beef, processed beef and beef byproducts based on our gross export sales revenue, according to
       SECEX data in 2006. Our export sales totaled US$426 million, and we sold our products to approximately
       600 customers in approximately 80 countries. We also export wet blue hides and live cattle in addition to beef
       byproducts. In 2006, export sales accounted for approximately 76.8% of our gross sales revenue, while our
       domestic sales accounted for approximately 23.2% of our gross sales revenue.

            We have flexibility in our production process resulting from the advanced technology that we employ and
       health standards that we maintain at our production facilities, enabling us to adjust our product offerings to
       take advantage of changes in demand and prices in the international and domestic markets, and consequently
       allowing us to increase our sales of higher margin products. We believe that our leading position in the
       international and domestic markets is mainly due to a combination of the following factors: (1) modern
       production facilities that are licensed to export beef products and comply with diverse customer and
       regulatory requirements; (2) a diversified product portfolio; (3) our ability to customize our products;
       (4) reputation and recognition of the “Minerva” brand; and (5) efficient distribution logistics that enable us
       to monitor the quality of our products until they are delivered to our customers.

               The following table summarizes our main financial and operating information for the periods indicated:

Financial Information                         For the Year ended December 31,              Variation     For the three months ended March 31,       Variation
                                           2004       2005      2006        2006          2004 to 2006     2006             2007        2007        2006/2007
(in millions)                                       (in reais)          (in U.S.$)(1)          %                 (in reais)         (in U.S.$)(1)      %
Gross sales revenue .............          939.2    1,050.6    1,312.3       640.0           39.7          251.5          347.4         169.4         38.1
 Domestic market ................          214.5      235.3      304.7       148.6           42.1           64.6           75.6          36.9         17.0
 % of gross sales revenue ....              22.8       22.4       23.2        23.2            1.8           25.7           21.8          21.8        (15.3)
 International market............          724.7      815.3    1,007.6       491.4           39.0          186.9          271.8         132.6         45.4
 % of gross sales revenue ....              77.2       77.6       76.8        76.8           (0.4)          74.3           78.2          78.2          5.3
Net sales revenue..................        820.4      940.3    1,192.4       581.5           45.3          229.0          305.7         149.1         33.5
Net income............................       5.4       14.2       53.6        26.1          892.6            5.6           10.9           5.3         94.6
EBITDA(2)...........................        65.4       57.5      121.9        59.5           86.4           14.1           27.1          13.2         92.2
EBITDA margin (%)(3).......                  8.0        6.1       10.2        10.2           27.5            6.2            8.9           8.9         36.9
Short-term loans and
 financing..............................   192.2      213.4      253.3       123.5            31.8         230.2           97.7           47.6       (57.6)
Long-term loans and
 financing..............................    65.0      110.6      192.9        94.1          196.8           84.1          592.4          289.0       604.4
Total loans and financing..                257.2      324.0      446.2       217.6           73.5          314.3          690.1          336.6       119.6
Cash and bank deposits........             (38.2)     (29.1)     (93.0)      (45.4)         143.5          (30.0)        (314.9)        (153.6)      949.7
Net debt(4) ...........................    219.0      294.9      353.2       172.2           61.3          284.3          375.2          183.0        32.0

(1) Solely for the convenience of the reader, Brazilian real amounts 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 selling rate at March 31, 2007 of R$2.0504 to
    U.S.$1.00. See “Exchange Rates” for further information about recent fluctuations in exchange rates.
(2) EBITDA, a performance measure used by our management, is defined as net income, plus income and social contribution taxes, financial
    income (expense), net, non-operating income, and depreciation and amortization. EBITDA is useful because it is frequently used by
    securities analysts, investors and other interested parties in the evaluation of companies in the beef industry. EBITDA is not a recognized
    term under Brazilian GAAP and does not purport to be an alternative to net income as a measure of operating performance or to cash
    flows from operating activities as a measure of liquidity. Because not all companies use identical calculations, this presentation of
    EBITDA may not be comparable to other similarly titled measures or to free cash flow for discretionary use, as they do not consider
    certain cash requirements such as interest payments, tax payments and debt amortization.
(3) EBITDA Margin is calculated by dividing EBITDA by net operating sales revenue.
(4) Net debt is calculated as follows: our short- and long-term debt indebtedness minus cash, bank deposits and marketable securities.




                                                                                     72
      The following table sets forth our main operating data:

                                                                                                For the Year         For the three months
Operating Information                                                                         ended December 31,        ended March 31,
                                                                                       2004         2005      2006     2006        2007
Number of cattle slaughtered (in thousands of head of cattle)......                     539         595        791      169         220
Sales Volume (in thousands of tons) .............................................       143         178        213       46          56
Equivalent head of cattle (in thousands of head of cattle).............                 785         918      1,114      272         323
Wet blue hide sales volume(1).......................................................   30.2        21.6       32.4      7.2         9.9
Live cattle sales volume (in thousands of tons).............................              –        12.0       27.2      2.4         9.4
(1) In millions of square feet.

     Our processing capacity is approximately one and a half times our slaughtering capacity, which we
believe provides us with flexibility in our production process and allows us to process both cattle and cattle
quarters purchased from third parties. We believe this processing flexibility enables us to maximize our
profitability levels as processing is the activity that adds additional value to the beef.

     Our five plants and one processing unit are strategically located in the States of Mato Grosso do Sul,
Goiás, São Paulo and Tocantins, in close proximity to the ports from which our products are exported, as well
as to the main domestic markets. We are also located near our cattle suppliers (located within an average
distance of 250 to 300 kilometers from our plants). The strategic location of our plants in four states in Brazil
helps to mitigate the risks that we face from outbreaks of cattle diseases and provides us with flexibility for
our exports.

     In the beginning of 2007, we began construction of a new plant in the State of Rondônia and in April
2007, we purchased two new plants, one in the State of Tocantins (operating) and one in the State of Pará
(under construction). We believe that if these plants operate at full capacity, our daily slaughtering capacity
will increase by 57.0%, from 5,000 head of cattle as of the date of this offering circular to 7,850 head of cattle
by the end of 2008. In addition, we believe that during the same period, our daily processing capacity will
increase by 58.3%, from 1,200 tons (equivalent to approximately 7,500 head of cattle) in 2007 to 1,900 tons
(equivalent to approximately 11,600 head of cattle).




                                                                                 73
     The following map shows the location of our current plants, distribution centers and our office for exports
of live cattle in the State of Pará:


                                                                       New industrial
                                            Belém Unit, exports        complex opened
                                            of live cattle             in May in the City
                                                                       of Redenção



                                                                                Project for a new
                                                                                industrial complex in
                                                                                the City of Araguaina




                    Project for a new
                    industrial complex in
                    the City of Rolim de
                    Moura


              Legend
              Legenda

      Centro de Distribui
                       ç
      Distribution Center

     SalesóOffice
     Plants




     Our high quality products are a direct result of the quality of the cattle we slaughter, a strict tracking
system that enables us to trace our cattle’s origins and our emphasis on offering products that have been
thoroughly inspected and certified. Moreover, we have technology and know-how that allows us to offer a
range of approximately 4,000 different products.

     We manage our logistics network for domestic and export markets in a very efficient manner, which,
we believe, allows us to offer superior logistic services to our customers, such as ship chartering and our own
storage facility, as well as delivery flexibility to diverse locations in domestic and export markets. In export
markets, we obtain economies of scale in negotiating our shipping costs due to our logistics structure and the
volume of our shipments. We have a large customer base of approximately 600 customers in 80 countries to which
we distribute our products to developed markets, mainly to food service customers, retail customers (supermarkets
and large food chains) and other food companies. We also distribute our products in markets that have poor
logistics infrastructure. In these markets, our economies of scale are particularly significant given that our ability to
provide logistics services is even more important in these regions. In addition, we export live cattle from the port of
Belém, in the State of Pará, through a special logistics network that utilizes both road and water transportation to
transport the cattle to the port of Belém and special charter ships to transport the live cattle overseas.

     Our diversified customer base has allowed us to manage the import restrictions imposed in May 2007 by
Russia on products from 11 Brazilian slaughtering plants, including four of our plants. We were able to reallocate
our exports to other countries to which we had been exporting our products, including Algeria, Egypt and Israel. In
light of our belief that the application of these import restrictions on our four plants is baseless, combined with
efforts by us and the Brazilian governmental authorities to contest these restrictions, we believe that we will be
authorized again to export our products to Russia in the near future. For more information on this matter, see “Risk
Factors—Our exports are subject to numerous risks related to international operations and regulations.”




                                                                  74
     In the domestic market, we operate through a wholesale division to service large customers (food companies
operating in Brazil, meat distributors, supermarkets and supermarket chains) and a retail division, with two
distribution centers in the State of São Paulo. We have approximately 12,500 medium and small customers in
approximately 600 cities in the States of São Paulo, Minas Gerais and Paraná. We use the one-stop-shop concept
to offer several types of frozen or cool perishable products to our customers, including products supplied by us or
third parties (products for resale). As a result, we are able to maximize our deliveries through a larger distribution
of products. Moreover, as of May 2007, we started to service customers in the Mid-West region of Brazil through
our distribution center located at our plant in the City of Palmeiras de Goiás, State of Goiás, where we also use the
one-stop-shop concept.

Brazil’s Competitive Advantages in the World Beef Industry

     We believe that the continuous growth of Brazilian GDP, the increase of foreign direct investments in
Brazil, economic and political stability, inflation control and the gradual decrease in domestic interest rates
have created a favorable economic environment in Brazil during the past few years. The preliminary
macroeconomic indicators of 2007 show an upward trend in Brazil’s economic growth and monetary stability.
Brazil’s basic interest rate is expected to continue to gradually decrease and credit availability is expected to
increase, contributing to significant further economic growth in 2007. In addition, the Brazilian beef industry,
as one of the world’s leaders, offers several competitive advantages, including:

    Scale and Competitive Positioning.

     In 2006, Brazil was ranked as follows according to data published by the USDA in 2006: (1) the largest beef
exporter, even after taking into account that Brazil exported fresh beef to less than 52.0% of the international
markets that import fresh beef in total volume; (2) the largest commercial cattle herd; (3) the second largest
producer of beef; and (4) the third largest consumer of beef in total volume. In addition, Brazil’s ratio of the
number of cattle slaughtered in a given year to the total size of the cattle herd during such year, or offtake rate, is
low, 22.4% in 2006, according to a report published by FNP, Anualpec 2007, in comparison to 28.0% in
Argentina and 36.0% in the United States during the same year. This low offtake rate represents a good
opportunity to improve production. Additionally, Brazil is well-positioned to benefit from the expected increase
in beef demand from emerging countries, which is expected to represent 70.0% of the total growth of the world
beef market in 2007 as compared to the total volume in 2006, according to the USDA.

    Historic Growth and High Potential for Production Growth.

     According to a report published by the USDA in April 2007, Brazilian production of beef and beef
byproducts has increased by 24.5% during the last five years, in comparison to a total increase in production
of 5.0% in the international market. According to reports published by the USDA, in October 2006 and
April 2007, total exports, production and domestic consumption of Brazilian beef had an annual average
increase of 24.4%, 5.6% and 1.9%, respectively, during the five years ended December 31, 2006. The growth
of Brazilian beef exports in recent years is a result of the general improvement in industrial and health
conditions, genetic improvement of cattle and the growing specialization of this industry, which has lead to
the opening of new markets. One example was the opening of the Russian and Eastern European markets to
Brazilian beef after the bovine spongiform encephalopathy, or BSE, outbreak in Europe in 2001 and 2002. In
addition, despite this impressive growth, Brazil is one of the few countries that still has large reserves of
available land at low costs, allowing it to expand with relatively low environmental impact and a low
concentration of animals per hectare. According to information published by MAPA, in April 2007, Brazil
utilized only 90 million hectares of the 388 million hectares of available land for agriculture and livestock,
with another 105 million additional hectares available. In 2004, according to MAPA, Brazil had a market
share of only 3.9% of the world’s agribusiness market (in terms of revenue from exports). In addition, exports
of beef and beef byproducts are growing as a percentage of total Brazilian exports, from 1.5% of total exports
in 2005 to 2.1% of total exports in 2006. We believe that our main competitors in Brazil do not have an
adequate combination of available land, adequate weather conditions, human and economic resources and
ownership and the technology expertise that we have to raise cattle.




                                                          75
    Low Production Cost.

     The production cost of beef and beef byproducts in Brazil is low when compared to Brazil’s main
competitors principally due to: (1) favorable climate conditions and availability of land at low prices, directly
affecting cattle prices; (2) strong levels of technology development compared to Brazil’s main competitors in
Latin America; (3) economies of scale generated by high production volume; (4) generally low operating
costs and availability of skilled labor, contributing to the competitiveness of Brazilian producers in the
international market; and (5) optimal use of cattle, creating economies of scale. According to a report from
ABIEC, the average purchase price of cattle in Brazil in 2006 was US$0.80/kilogram compared to
US$1.40/kilogram in Australia, US$1.90/kilogram in the United States and US$1.30/kilogram in Argentina.

    Grass-Fed Cattle and High Quality of Products.

     In Brazil, cattle is mainly grass fed. Unlike most of the leading international beef producing countries
(including the United States and the European Union), Brazilian cattle is grass fed or receives a plant based
feed, eliminating the risk of an outbreak of BSE in Brazilian cattle. In addition, the diversity of cattle breeds
in Brazil makes it easier to service diversified international markets and meet their specific demands.
Furthermore, Brazilian beef has no growth hormones, which are used in cattle raising in other countries.

     These competitive advantages and the fact that the Brazilian government imposes no significant
restrictions on the beef industry, unlike Argentina that charges a surtax over fresh beef exports, result in an
excellent opportunity to meet higher world demand for beef. Brazil is supplying the increase in beef demand
due to the growth of the global population, increased income per capita, increased foreign trade and decreased
local production in several countries.

Our Strengths

    We believe our success as one of the largest exporters of Brazilian beef and beef byproducts is mainly
due to the following competitive strengths:

    Presence in Most Profitable Markets.

     We are well-positioned to meet the needs of the most demanding markets, which allow us to obtain
higher margins for our beef and beef byproducts. Currently, the export market presents more consistent
growth rates and higher margins than the domestic market. We focus on the export market, which has allowed
us to grow at a higher rate than our competitors as shown in the SECEX data for 2006. Our exports increased
by 39.0% from 2004 to 2006, more than the 25.0% average growth rate for Brazilian beef exports during the
period. During the corresponding period, we exported our products to approximately 80 countries, including
Russia, Italy, United Kingdom, the Netherlands, and many countries in the Middle East, North Africa and
Asia. We were pioneers in the export of: (1) products to the Russian retail market, currently the largest export
market for Brazilian beef products; (2) live cattle to the Middle East; and (3) salted kosher beef products to
Israel and halal products to Muslim countries.

    Modern Plants and a Large, Customized and High Quality Portfolio of Products.

     Our modern plants use advanced technology to process beef, maintain high standards for productivity, quality
and food safety, are certified to sell in many international markets, and meet the quality standards of the most
demanding markets. We believe our plant in the city of Palmeiras de Goiás in the State of Goiás is one of the most
modern slaughtering and processing facilities in Latin America. This plant has numerous efficiency enhancing
features, including advanced processing technology and sanitary equipment, integrated logistics, a modern freezing
system and automated packaging equipment. Our product portfolio is comprised of approximately 4,000 different
items. We also have the ability to highly customize our product offering (special cuts at different sizes), with a
focus on chilled meats that compete with domestically produced products in international markets. We also have a
line of processed beef (cubed beef, roast beef and cooked frozen beginning in 2008). These features help us obtain
and maintain loyal customers, meet our customers’ demand and use our production flexibility to adjust our product
mix to take advantage of changes in demand and prices in the international and domestic markets, which allows us
to increase our sales of higher margin products.




                                                        76
    Efficient and Integrated Distribution Logistics.

     Our efficient and integrated distribution logistics allows us to focus on the most attractive markets, and as
a result, maintain relatively high margins. Moreover, our strategically located operations allow us to reduce
costs in connection with our purchase of cattle, our exports and our domestic distribution of products:

    •    Export Market. Our logistics network for exports via storage, transportation, cost effective insurance
         and strong cooperation with shipowners and ports in Brazil give us the necessary operating
         efficiency to ensure that our high quality products are delivered on a timely basis. We export most of
         our products on a CIF basis, utilizing breakbulk (charters) and containers that enable us to obtain
         economies of scale in negotiating our freight, storage and insurance costs. In addition, our highly
         efficient and rapid logistics network allows us to sell fresh chilled beef products to the European
         market. As a result, we are able to directly compete with European producers.

    •    Domestic Market. We use third-party services to efficiently transport cattle from farms to our plants.
         We have an outstanding logistics system in the domestic market to supply the wholesale market
         directly from our plants and the retail market through our two distribution centers located in the State
         of São Paulo. Through our two distribution centers, we distribute our products and third party
         products to small and medium-sized retail customers with at least twice weekly deliveries to small
         and medium-sized customers in the countryside of the States of São Paulo, Minas Gerais and Paraná.
         Our plants are located near the principal domestic consumer markets in Brazil, which allows for
         significant gains in logistical efficiency.

    Customer Diversification.

   Our distribution channels in the international and domestic markets have been structured to efficiently
meet the demands of these markets and to maintain a diversified customer base:

    •    Export Market. Our exports are distributed to approximately 600 customers in approximately 80
         countries. In each market, we usually use two or three strong regional distributors. In addition, in
         order to ensure close proximity to our final end consumers, our sales in developed countries are
         carried out through three different channels: (1) processed food companies; (2) companies in the
         food service industry, such as catering services, fast-food chains, restaurants and hotels; and (3) retail
         customers, such as supermarkets and retail chains. In emerging markets, we focus on geographical
         and ethnic coverage. For instance, we export kosher beef products to Israel and halal products to
         Muslim countries. In order to further consolidate our market share in important markets and provide
         better customer service, we maintain sales offices in Russia (Moscow) and in Lebanon (Beirut). We
         are in the process of opening a sales office in Algeria.

    •    Domestic Market. We direct our domestic sales through two channels: (1) our wholesale division,
         which sells products to wholesalers and supermarkets directly from our slaughterhouses and
         processing facilities; and (2) our retail division, which sells our products and products from third
         parties to approximately 12,500 small and medium-sized retail customers located in approximately
         600 cities in Brazil. We seek to obtain customer loyalty through the concept of a one-stop-shop for
         the sale of perishable products supplied by us and third parties. We deliver products directly to our
         customers at least twice weekly and seek to become the major supplier of certain customers. The
         diversification of our distribution channels, especially in the domestic market, and our focus on
         small and medium-sized customers allows us to obtain higher margins than for our sales to
         supermarket chains and other large customers. It also allows us to expand our activities and
         achieve economies of scale for logistics through the resale of products from third-parties. In
         addition to the two distribution centers in the cities of São Bernardo do Campo and Olímpia, both
         in the State of São Paulo, in the second quarter of 2007, we began distribution operations at our
         Palmeiras de Goiás plant, in the State of Goiás. We estimate that we will service customers in
         approximately 50 cities in the State of Goiás and the Federal District of Brazil through these new
         distribution opeations, reaching 1,500 new retail customers.




                                                        77
    Experienced Management and Successful Acquisitions.

     We are managed by an experienced team of reputable professionals in the beef industry. In 1957,
the Vilela de Queiroz family started cattle raising and cattle transportation services, creating long-standing
relationships in the beef industry, positioning themselves as a solid and outstanding player in this segment
of the industry. We believe our continued growth is sustainable in the long term and we are prepared to
participate in the consolidation of the Brazilian market of slaughterhouses because of (1) our ability to
successfully implement our strategy; (2) our successful integration of plants that we purchased or leased;
(3) successful partnerships with foreign, multinational companies; and (4) our experienced management.

Our Strategy

     Our business strategy is to capitalize on our strengths and competitive advantages and enhance our
activities by focusing on the most profitable markets in order to create value for our shareholders. The
principal components of our strategy include:

    Continued Focus on the Most Profitable Markets.

     We will continue to focus on production for and sales to the most profitable markets, benefiting from our
flexible, rapid and high quality production capacity, which allows us to customize our products and develop
new markets. We currently believe that the international market will remain more profitable than the domestic
market. However, we intend to use our flexibility to adjust our product offerings to take advantage of changes
in demand and prices in both the international and domestic markets, following market trends.

    Expand Our Production Capacity to Consolidate the Market.

     We intend to use our successful experience in acquisitions and our financial strength to participate in the
consolidation of the Brazilian slaughterhouse market. We intend to increase our slaughtering and processing
capabilities either through organic growth or by purchasing or leasing other plants. In addition, we intend to
grow and further diversify our operations by expanding to additional locations in Brazil. In 2007, we began
construction of a plant in the city of Rolim de Moura in the State of Rondônia. In April 2007, we purchased a
plant in the city of Araguaína in the State of Tocantins and a plant under construction in the city of Redenção
in the State of Pará.

    Enhance Operating Efficiencies and Lower Operating Costs.

     We are committed to maintaining our position as a low cost producer of beef products and beef byproducts.
We will continue to focus on maintaining higher profit margins by improving our operating efficiencies,
modernizing our plants, reducing our operating costs, increasing our economies of scale and integrating our
logistics network. We intend to apply our internal controls and state-of-the-art software systems at our Palmeiras
de Goiás plant to each of our other facilities in order to increase our operating efficiency.

    Increase Sales of Value Added Products.

     We intend to increase sales of value added products, by continuing to introduce new customized products
to our customers, acquire companies or lease protein processing plants pursuant to the following strategies:

    •    Export Market. We plan to continue to invest in value-added and customized beef products,
         increasing the sales of fresh and frozen beef and processed beef, such as cubed beef, roast beef and
         cooked and frozen beef. We are building a plant to produce cooked and frozen meat, in the City of
         Barretos, State of São Paulo, through a joint-venture with the Dawn Farms Group, an Irish group and
         one of the largest producers of processed meat in Europe. In order to consolidate our market share in
         important markets and provide customized customer service, we maintain sales offices in Moscow,
         Russia and in Beirut, Lebanon.




                                                        78
      •    Domestic Market. We intend to continue to increase sales of value added products and are increasing
           our sales of fresh beef cuts, products sold in small portions and different types of processed beef
           byproducts to be used in cooked meals by fast-food chains, restaurants and catering companies. We
           also plan to increase our sales to medium-sized and small retail companies through our efficient
           logistics structure.

     By increasing our sales of value added products, we believe that we will meet our customers’ needs in
domestic and international markets. As a result, we believe we will continue to build strong relationships and
strategic partnerships with our customers, contributing to increase our sales volume and profitability. In addition,
we believe that we can improve the use of our distribution network to strengthen the “Minerva” brand.

History

    We have been maintaining consistent and sustainable growth throughout the years, and our history
highlights our experience in purchasing and transporting cattle and the beginning of our operations in the beef
industry. Below are some highlights of our history:

1957      The Vilela de Queiroz family began raising cattle and providing logistical services to transport cattle
          from ranches to slaughterhouses;

1992      The Vilela de Queiroz family purchased our first slaughterhouse and processing facility located in the City
          of Barretos, State of São Paulo (our current headquarters) from Frigorífico Minerva do Brasil S.A. In
          addition, on March 9, 1992, we established Indústria e Comércio de Carnes Minerva Ltda.;

1999      We leased and later acquired a slaughterhouse and processing facility in the City of José Bonifácio,
          State of São Paulo;

2001      We leased a processing facility in the City of Cajamar, State of São Paulo;

2004      We constructed a new slaughterhouse and processing facility in the City of Palmeiras de Goiás, State
          of Goiás, which we believe is one of the most modern beef processing facilities in Latin America;

2006      We entered into a lease agreement for a slaughterhouse and processing facility in the City of
          Batayporã, State of Mato Grosso do Sul. See “Business—Overview”; and

2007      We began the construction of our plant in the City of Rolim de Moura, State of Rondônia. In April
          2007, we purchased a plant in the City of Araguaína, State of Tocantins and a plant under construction
          in the City of Redenção, State of Pará. Moreover, in January 2007, we began constructing a plant to
          produce cooked and frozen meat, in the City of Barretos, State of São Paulo, through a joint-venture
          with the Dawn Farms Group of Ireland.

Corporate restructuring

    We were originally incorporated as a limited liability company (sociedade empresária limitada) called
Indústria e Comércio de Carnes Minerva Ltda. The following chart shows the simplified corporate structure of
the Minerva Group as of November 30, 2005 (percentage numbers reflect the percentage ownership of total
share capital):

                                                 Vilela de Queiroz Family (1)

                                                                100.0%

                                                   Minerva and Subsidiaries


(1)   The Vilela de Queiros Family is comprised of Edivar Vilela de Queiroz, Antonio Vilela de Queiroz, Ibar Vilela de
      Queiroz, Fernando Galletti de Queiroz, Ismael Vilela de Queiroz, Izonel Vilela de Queiroz and Edvair Vilela de
      Queiroz. Collectively, the Vilela de Queiroz Family held all of the shares of our company.




                                                           79
     In December 2005, certain members of the Vilela de Queiroz Family contributed to a capital increase in
our company by contributing quotas of Agropecuária Vilela de Queiroz Ltda., which is the owner of several
farms. On that same date, we contributed to the capital increase of Transportadora Minerva Ltda. with quotas
representing 99.99% of the capital stock of Agropecuária Vilela de Queiroz Ltda. The following chart shows
the simplified corporate structure of the Minerva Group after each of these capital increases (percentage
numbers reflect the percentage ownership of total share capital):

                                                 Vilela de Queiroz Family

                                                                 100.00%


                                                Minerva and its subsidiaries

                                                                 99.99%(1)

                                                  Transportadora Minerva

                                                                 99.99%(1)

                                              Agropecuária Vilela de Queiroz


(1) 0.01% of the quotas were held by Edivar Vilela de Queiroz.

     On April 30, 2007, we transferred our equity interests in Transportadora Minerva Ltda., or
Transportadora, (and indirectly to Agropecuária Vilela de Queiroz Ltda.) to Mutuca, which is owned by the
Vilela de Queiroz Family. As a result of the transfer of the assets and liabilities of Transportadora, we retained
only the assets and liabilities related to our core beef production business. Transportadora represented 0.8% of
our net sales revenue in 2006 and 1.6% of our net sales revenues for the three months ended March 31, 2007,
respectively. On May 23, 2007, we received consents and waivers from holders representing at least 66 2/3%
of the notes of certain restrictive covenants contained in the Indenture dated as of January 26, 2007, among
Minerva Overseas Limited, Minerva and the other parties thereto. The consents and waivers allowed us to
transfer all of our equity interest in Transportadora. This transfer is intended to streamline our corporate
structure and allow us to focus on our core beef production business. In connection with the transfer of our
interests in Transportadora, we, Minerva Overseas Limited, Transportadora and the other parties entered into
a supplemental indenture under which Transportadora jointly and severally with us, guaranteed all of Minerva
Overseas Limited’s obligations in respect of the notes and Transportadora is bound by certain restrictive
covenants. The following chart shows the simplified corporate structure of the Minerva Group after the
transfer of assets (percentage numbers reflect the percentage ownership of total share capital):

                                               Vilela de Queiroz Family

                                                              100.00%

                                              Minerva and its subsidiaries




                                                         80
     On May 2, 2007, our company became a corporation (sociedade anônima) and changed its name to
Minerva S.A. On June 14, 2007, the members of the Vilela de Queiroz Family transferred a significant part of
their equity interest in our company to VDQ Holdings S.A., a holding company controlled by the Vilela de
Queiroz Family The following chart shows the current simplified corporate structure of the Minerva Group
(percentage numbers reflect the percentage ownership of total share capital):

                                                         Vilela de Queiroz
                                                             Family(1)
                                                         100.0%


                                            7.28%         VDQ Holdings

                                                                  92.72%

                                                          Minerva and its
                                                           subsidiaries




  99.00%(2)                       100.00%                                   98.00%(3)                         50.00%(4)



    Redi Neto                      Minerva                           Minerva Indústria e Comércio             Euro Minerva
    Construções Ltda               Overseas Ltd.                     de Alimentos Ltda                        Comércio e Exp. Ltda.



(1) The ownership of VDQ Holdings by the Vilela de Queiroz Family is as follows: Edivar Vilela de Queiroz, 44.0%;
    Antonio Vilela de Queiroz, 21.0%; Ibar Vilela de Queiroz, 15.0%; Fernando Galetti de Queiroz, 5.0%; Ismael Vilela
    de Queiroz, 5.0%; Izonel Vilela de Queiroz, 5.0% and Edvair Vilela de Queiroz, 5.0%.
(2) 1.0% of the outstanding quotas are held by Mr. Edvair Vilela de Queiroz.
(3) 2.0% of the outstanding quotas are held by the Vilela de Queiroz Family.
(4) 50.0% of the outstanding quotas are held by Eurofrance SAS.

Recent Developments

     In April 2007, we purchased a slaughtering plant and the land on which it is located in the city of
Araguaína, in the State of Tocantins, with a daily slaughtering capacity of 700 head of cattle, for a total
purchase price of R$20.0 million. We expect to invest approximately R$20.0 million in order to (1) expand
the daily slaughtering capacity of this plant to 850 head of cattle, (2) build and install a beef processing unit in
this plant with a capacity of 140 tons of beef per day and (3) obtain the certifications required to export
products from this slaughtering plant. We also purchased a slaughtering plant that is currently under
construction and the land on which it is located in the city of Redenção, in the State of Pará, which when
constructed is expected to have a daily slaughtering capacity of 1,700 head of cattle and a daily processing
capacity of 250 tons of beef, for a total purchase price of R$10.0 million. We expect to invest approximately
R$60.0 million to finalize the construction of this slaughtering plant and processing unit through the end of
the first quarter of 2008.

Production and Products

     Our operations are catered to the demands of our clients according to the seasonality of our products and
to regional, ethnical and other specific preferences. Our product mix is based on the prices of a number of goods
in several markets, as well as the price of cattle and cattle quarters, and is targeted to optimize our product
portfolio, increasing our profitability.




                                                         81
     We have high quality products, since we monitor the health of our cattle and use a strict tracking system
to safely monitor our cattle from birth to slaughter. In addition, we also offer a controlled, certified and audited
process that enables us to trace our products to verify the source and quality of our products.

     We produce approximately 4,000 items due to our high capacity level of customization. The following chart
sets forth the main by products that can be produced from cattle:




Our plants operate under strict food-safety and quality controls to comply with the requirements set by our
domestic and international clients and to safety standards set by both the Brazilian government and
foreign governments. We have strict quality control procedures for each step of our production process and
we are committed to the humane treatment and slaughtering of cattle.




                                                         82
Fresh and Processed Beef, and Beef byproducts

     Our fresh beef products, chilled or frozen, represent over 95% of our beef sales revenue and the products
in this category can be divided in two segments:

    High added value products: highly customized portions of fresh beef cuts, such as beef with established
weights and chilled beef that because of strict sanitary control has a maximum shelf life of 150 days. These
products are sold with profit margins higher than traditional cuts and are destined primarily to the food
production industry and food services companies, such as fast food, catering, restaurants, hotels and retail stores.

    Traditional cuts: traditional cuts of beef that are commodities, they include hind and fore cuts.

    In 2006 our sales of fresh beef, chilled and frozen, increased by 20.9%, from a total of 199.3 tons sold in
2006 compared to 164.8 tons sold in 2005.

    The following illustration sets forth traditional cuts of beef:




1 – Neck               2 – Full Chuck          3 – Briskets            4 – Shoulder / Blade   5 – Trim Skirts
6 – Tenderloin         7 – Rib                 8 – Striploin           9 – Shank              10 – Flank
11 – Rump Tail         12 – Topside            13 – Eyeround           14 – Knuckle           15 – Thin Rib
16 – D–Rumps           17 – Cap of Cube Roll 18 – Silverside           19 – Hump              20 – Cube Roll


     We produce processed beef products such as canned beef, cubed and roast beef that are sold in
supermarkets in foreign markets. In 2006, our sales of processed beef increased by 40.4%, from 0.94 thousand
tons in 2005 to 1.3 thousand tons in 2006, representing approximately 1.0% of our total exports in 2006.
Moreover, in January 2007, we began construction of a plant to produce cooked and frozen meat through a
50/50 joint-venture with the Dawn Farms Group.

    We also sell beef byproducts such as meat, bone and blood meats, and fat. In 2006, our sales revenue
from these products represented approximately 1.5% of the beef sales revenue.

    Our products are sold in the domestic and international markets under the brand names “Minerva,”
“Brasília,” and “Supreme.” These last two brand names are utilized mostly in the international market.




                                                         83
   The following chart sets forth our beef production by volume of sales and divided between the domestic
market (DM) and international market (IM):

                                                              Beef - Sales Volume
                       (in thousands of tons)

                            250
                            200
                            150
                            100
                              50
                                -
                                     December 31, 2004   December 31, 2005   December 31, 2006   Three-months ended   Three-months ended
                                                                                                 March 31, 2006       March 31, 2007

                       Fresh Beef - IM                              Processed Beef - IM                          Others - IM

                       Fresh Beef - DM                              Processed Beef - DM                          Others - DM
   The following chart sets forth our beef production by volume of sales and by portion destined to the
domestic market (DM) and international market (IM):

Volume                                                   For the Year ended December 31,     For the three months ended March 31,
                                                          2004         2005       2006              2006               2007
                                                                                 (in thousands of tons)
Fresh Beef – IM ...............................          103.0         135.5      151.0              31.6               40.5
Processed Beef – IM ........................                  –          1.0         1.3              0.9                  –
Others – IM ......................................          6.6          7.7         7.0              1.6                2.9
Fresh Beef – DM..............................              30.1         29.3       48.1              10.8               10.9
Processed Beef – DM.......................                    –          1.8         1.2              0.3                0.4
Others – DM ....................................            3.3          2.8         4.5              0.8                1.0
Total ................................................    143.0        178.1      213.4              45.9               55.6

       Leather

    We sell wet blue, hide and leather shavings. We sell “wet blue” hides (processed leather sold for further
processing) to third party tanneries with a daily processing capacity of 3,400 hides.

    In 2006, our sales of leather products increased by 73.9%, a total of 42.8 million square feet compared to
24.6 million square feet sold in 2005.




                                                                                84
     The following chart sets forth our production of leather products by volume of sales and divided between
the domestic market (DM) and international market (IM):

                                                                     Leather – Sales Volume
                                                                   (in millions of square feet)


                                   50
                                   40
                                   30
                                   20
                                   10
                                     -
                                           December 31, 2004   December 31, 2005   December 31, 2006   Three-months ended    Three-months ended
                                                                                                         March 31, 2006        March 31, 2006


                         Leather – IM                  Byproducts – IM                      Leather – DM                    Byproducts – DM


     The following chart sets forth our production of leather products by volume of sales and by portion
destined to the domestic market (DM) and international market (IM):

                                                           For the Year ended December 31, For the three months ended March 31,
Volume                                                       2004        2005       2006              2006           2007
                                                                                  (in millions of square feet)
Wet Blue Hides – IM ...........................               25.4        20.9       31.7              7.2            9.6
Hides – IM ...........................................            –          –          –                –              –
Byproducts – IM ..................................                –       1.81      1.92              0.50              –
Wet Blue Hides – DM..........................                   4.8        0.6        0.7              0.0            0.3
Hides – DM..........................................            1.8          –        8.1              0.7            1.9
Byproducts – DM.................................                  –        1.2        0.3             0.02              –
Volume .................................................      32.0        24.6       42.8              8.3           11.8

       Live Cattle

     In 2005, to diversify our operations in the international market, we began exporting live cattle in
specially prepared ships that leave from the Port of Belém in the State of Pará to Beirut in Lebanon. In 2006,
we exported 27.1 thousand tons of live cattle, generating total net revenue of R$53.2 million compared to
R$25.2 million in 2005. In the second half of 2007, we will export live cattle through Eurominerva Comércio
e Exportação Ltda.. a 50/50 joint-venture with Eurofrance, one of Europe’s largest trading company of live
cattle. We believe the international market for exporting live cattle from Brazil has the potential to surpass
U.S.$1.5 billion a year.




                                                                                   85
    The following chart sets forth our exports of live cattle to Lebanon:

                                                Live Cattle – Sales Volume
                                                  (in thousands of tons)


                                                      27.18
                     30
                     25
                     20
                     15          11.94                                                          9.38
                     10
                                                                           2.41
                      5
                       -
                            December 31, 2005     December 31, 2006   Three-months ended   Three-months ended
                                                                        March 31, 2006       March 31, 2006
Sales and Markets

     Our efficient and diversified distribution network allows us to distribute our products all over Brazil and
to all the countries Brazil can export beef to.

Beef – International Market

     We are the third largest Brazilian exporter of beef and its byproducts according to SECEX information
for 2006, with an approximate 12.7% share of the Brazilian beef export market in 2006. Exports sales
accounted for R$1,007.6 million or approximately 76.8% of our gross sales revenue in 2006.

    We mainly export fresh beef (chilled and frozen) to approximately 600 clients in approximately
80 countries, among them the United Kingdom, Russia, the Netherlands, Germany, Italy, Egypt, Algeria,
Lebanon and Hong Kong.

    Our exports can be divided into two channels:

    •    Developed markets: in each market, we usually use two or three strong distributors in the region.
         In addition, in order to ensure close proximity to our final end consumers, our sales in developed
         countries are carried out through three different channels: (1) “Industry”: processed food companies;
         (2) “Food service”: companies in the food industry, such as catering services, fast-food chains,
         restaurants and hotels; and (3) “retail customers”, including supermarket and retail chains.

    •    Developing markets: in emerging markets, we focus on geographical and ethnic coverage. For
         instance, we export kosher beef products to Israel. In order to consolidate our market share in
         important markets and provide customized service, we maintain our own sales offices in Moscow
         (Russia) and in Beirut (Lebanon).




                                                              86
    The following chart sets forth the primary countries to which we exported our products in 2006:


                              Others America,
                                     3%           Others Asia, 10%

                           Others Africa, 0%
                                                             Australasia, 0%
                         Libya, 2%
                                                                                    Russia, 24%
                Hong Kong, 3%
                   Lebanon, 5%

                          Algeria, 6%

                                                                                European Union,
                                      Egypt, 8%
                                                                                      39%


      Source: Minerva.

    The following chart sets forth our EU exports (by country) in 2006:




                                  Others, 13%                    Romania, 14%
                Portugal, 5%
                                                                                Denmark, 10%
                Finland, 7%

                                                                                   Hungary, 10%
                 Spain, 7%
                                                                                   United
                         France, 8%
                                                                               Kingdom, 9%
                                        Bulgaria, 8%    Switzerland,
                                                             9%


      Source: Minerva.

    Only two of our customers (both located in Russia) accounted for over 5% of our gross sales revenue in
2006: Rio Verde with 7.7% and Interfood with 5.2%.




                                                        87
Beef - Domestic Market

       Sales in the domestic market reached R$304.7 million or approximately 23.2% of our gross sales revenue in 2006.

       Our sales in the domestic market are divided into the following two channels:

     Wholesales (large clients): We sell our products to wholesalers such as distributors, supermarkets,
catering companies, industries and food chains.

     Retail (small and medium sized clients): Under our one-stop-shop concept, we offer perishable chilled
and frozen products that are produced by us or by third parties, allowing for a better use of our transportation
fleet with a larger product mix. Our efficient distribution logistics allows for at least bi-weekly deliveries to
approximately 12,500 small and medium-sized retail customers located in approximately 600 cities. Distribution
is carried out through two distribution centers in the cities of Olímpia and São Bernardo, each located in the
State of São Paulo. In the second quarter of 2007, we will begin distribution in the State of Goiás and the
Federal District of Brazil through our plant in Palmeiras de Goías in the State of Goiás. Our retail client
portfolio include small restaurants, grocery stores, small-sized supermarkets and bakeries.

       In 2006, our ten main clients for beef products accounted for approximately 37.7% of our gross sales revenue.

     The following chart sets forth our gross sales revenue for beef products in domestic market (DM) and
international market (IM):

                                                              Beef – Gross Sales Revenue
                                                                 (in millions of reais)


                                    1.500

                                    1.000

                                      500

                                          0
                                               December 31, 2004 December 31, 2005 December 31, 2006 Three-months ended Three-months ended
                                                                                                       March 31, 2006     March 31, 2007


                        Fresh Beef – IM                                Processed Beef – IM                          Others – IM
                        Fresh Beef – DM                                Processed Beef – DM                          Others – DM

       The following table sets forth our gross sales revenue for beef products in domestic and international markets:

                                                            For the Year ended December 31, For the three months ended March 31,
Revenue                                                       2004        2005       2006              2006           2007
                                                                                      (in millions of reais)
Fresh Beef – IM ..................................            625.0       704.9       838.4           150.0          219.4
Processed Beef – IM ...........................                   –         7.9        11.7             8.4              –
Others – IM .........................................          24.1        27.4        23.9             5.3           10.4
Fresh Beef – DM.................................              135.8       152.8       214.6            48.5           52.2
Processed Beef – DM..........................                     –        10.0          7.8            1.5            2.7
Others – DM .......................................            32.7        36.2        27.1             5.1            8.6
Total ...................................................     817.6       939.2     1,123.5           218.8          293.3

DM – Domestic Market.
IM – International Market.




                                                                                   88
Leather

    In 2006, our leather division exported 33.6 million square feet of “wet blue” hides, a 47.8% increase
compared to 2005. Our main clients in the leather division are leather processing companies in Italy
and countries in Asia. Our leather exports totaled R$80.4 million in 2006, accounting for
approximately 4.1% of the total “wet blue” hide exports in Brazil.

     Our exports of “wet blue” hide increased by 33.3% during the three-month period ended March 31, 2007,
from 7.2 million square feet during the three months ended March 31, 2006 to 9.6 million square feet during
the corresponding period in 2007. Our leather exports increased by 30.3% during the three-month period
ended March 31, 2007, from R$18.5 million, during the three months ended March 31, 2006, to R$24.1
million during the corresponding period in 2007.

     The following chart sets forth our gross sales revenue for leather in the domestic market (DM) and
international market (IM):

                                                                   Leather- Gross Sales Revenue
                                                                       (in millions of reais)


                                           100
                                             80
                                             60
                                             40
                                             20

                                                   December 31, 2004 December 31, 2005 December 31, 2005 Three-months ended Three-months ended
                                                                                                           March 31, 2006     March 31, 2007

                                              Leather – IM                                             Byproducts – IM
                                              Leather – DM                                             Byproducts – DM


     The following table sets forth our gross sales revenue for leather in the domestic market (DM) and
international market (IM):

Revenue                                                       For the Year ended December 31, For the three months ended March 31,
                                                                2004        2005      2006              2006            2007
                                                                                       (in millions of reais)
Wet Blue Hides – IM ...........................                  75.6        46.4     76.9              17.5            24.1
Hides – IM ...........................................            –           –        –                    –              –
Byproducts – IM ..................................                –           3.5      3.5               1.0               –
Wet Blue Hides – DM..........................                     7.1         1.4      1.6               0.0             1.0
Hides – DM..........................................              2.0         –       14.3               1.1             4.2
Byproducts – DM.................................                  –           1.4      0.6                  –              –
Total .....................................................      84.7        52.7     96.9              19.6            29.3

Live Cattle

     The market for live cattle is restricted and currently dominated by Australia, for which we estimate annual
sales to be over U.S.$1.5 billion. We began our live cattle exports in 2005, exporting 27.2 thousand tons of live
cattle and in 2006 our gross sales revenue for live cattle was R$53.2 million. Export of live cattle requires an
efficient logistics network to guarantee the quality of the cattle. Therefore, it offers higher margins with an average
price of U.S.$0.90 per kilogram of live cattle, compared to U.S.$0.80 per kilogram of slaughtered cattle. We export
live cattle to the Middle East from the Port of Belém located in the State of Pará, where we maintain a sales office
for these activities. We believe that we are the leading exporter of live cattle in Brazil.




                                                                                   89
    The following chart sets forth our gross sales revenue of live cattle in the international market:

                                          Live Cattle – Gross Sales Revenue
                                                (in millions of reais)


                                                       53.2
                       60
                       50
                       40
                                   25.2
                       30                                                                       17.9
                       20
                                                                            4.8
                       10
                         -
                              December 31, 2005   December 31, 2006   Three-months ended   Three-months ended
                                                                        March 31, 2006       March 31, 2007




Logistics

    Our efficient distribution logistics allows us to add value to our products with high quality services. In
order to control and monitor all stages of our logistics network, from storage to road and naval transportation,
we hire and coordinate partners to transport live cattle, slaughtered cattle, raw materials and other finished
products.

   All the vehicles we use are equipped with a global satellite positioning system and with temperature
monitoring devices, allowing us to accurately and precisely monitor product movement and storage conditions.

International Market

     Our efficient distribution logistics allows us to obtain greater gains in scale and to export most of our
products on a CIF (cost insurance and freight) basis. This approach enables us to negotiate lower freight and
insurance costs and provides us with considerable bargaining power with shipping and insurance companies.
We ship our products from the Port of Santos, in the State of São Paulo, which is one of Latin America’s
largest port facilities, the Port of Paranaguá, located in the State of Paraná, and the ports of Itajaí and
Imbituba, located in the State of Santa Catarina. In markets where logistics infra-structure is weak or non-
existent, we generate significant economies of scale, as our logistic efficiency gains in importance.

     In addition, we export live cattle from the Port of Belém, in the State of Pará, through a special logistics
system in which we utilize road and water transportation in the shipment of cattle in the port and ship charter
special ships to transport live cattle.

Domestic Market

    We distribute our products domestically according to the channels we use to classify our clients.

    Wholesales (large clients): Through our distribution centers or our production facilities directly to
wholesalers, supermarkets and supermarkets chains in Brazil. We use third parties to transport our finished
products to wholesale clients.




                                                               90
     Retail (small and medium sized clients): through the one-stop-shop concept, we offer perishable chilled
and frozen products that are produced by us or by third parties. We also operate two distribution centers in the
cities of São Bernardo do Campo and Olímpia, both in the State of São Paulo, that distribute our beef products
and food from third parties to customers in the State of São Paulo, as well as parts of the States of Minas
Gerais and Paraná, among them supermarkets, grocery stores, steak houses, fast-food chains, restaurant,
industrial kitchens and hotels. Through strict monitoring of our transportation fleet, that is operated by third-
parties, we ensure our retail customers at least two weekly deliveries and an after-sales service (delivery
monitoring), contributing to increasing customer loyalty. Our plants are located near the principal domestic
markets and allow for significant gains in logistic efficiency.

Distribution of Third-Party Products

     Through our efficient distribution network, we distribute our beef products and other products produced
by third party manufacturers, including Sadia S.A., McCain Food (potatoes and frozen vegetables), General
Mills (Forno de Minas, Frescarini and Haagen-Dazs) and Luxon-Minerva (lamb imported from Uruguay), that
enable us to generate economies of scale related to our domestic delivery costs.

Revenue                              For the year ended December 31,          For the three months ended March 31,
                                    2004           2005          2006                2006               2007
                                                              (in millions of reais)
Gross Revenue ...................   36.9            33.5         34.5                 7.9                6.3

Raw Material

     Our processing capacity is greater than our slaughtering capacity, which provides us with processing
flexibility and allows us to process both cattle and cattle quarters purchased from third parties. We believe this
processing flexibility enables us to maximize our profitability levels as processed beef provides higher
margins than fresh beef. In addition, this allows balancing of our production lines to seasonality as we can
buy the necessary cattle quarters to cater for demand.

     We generally purchase cattle in spot market transactions, but we also use future market instruments to fix
the prices that we pay for cattle protecting us and cattle farmers from fluctuations.

     Our shareholders owned the largest cattle transporting business in Brazil during the 1960’s and 1970’s,
creating strong relationships based on trust with cattle farmers. We believe this relationship allows us to have
better access to the cattle we purchase and encourages our suppliers to tailor their production to our needs.

     The cattle we purchase comply with the primary legal requirements and certifications that guarantee the
quality standards of the markets to which they are destined. In order to ensure the quality of our products, all of
the cattle slaughtered in Brazil for sale in international markets and for sale in the domestic market are part of
SISBOV, the national cattle tracking system. Additionally, we believe we are one of the largest buyers of non-
processed beef in Brazil.

    We currently purchase most of our cattle from approximately 5,500 cattle farmers located in the States of
São Paulo, Minas Gerais, Mato Grosso do Sul, Goiás and Mato Grosso. No single cattle supplier supplied us
with more than 5% of the cattle we purchased in 2006.




                                                          91
    The following chart sets forth an example of tracking system to produce organic beef:




Care for Cattle

    In accordance with Brazilian law, our cattle suppliers are required to document the quality of their
operations and verify that their use of antibiotics and agricultural chemicals follows the respective
manufacturer’s standards. All cattle that we purchase are inspected by veterinarians and doctors from the
Federal Inspection Service of the Brazilian Ministry of Agriculture who authorize cattle production and
processing. In addition, in connection with a sales agreement that we have with certain European customers,
we comply with the agricultural practices of the EUREP Guide of Agricultural Practices, or EUREPGAP, a
global association of European beef retailers and producers that have developed a series of standards to
address cattle and animal feeds.

Labor

     Our slaughterhouses are equipped with highly automated equipment and our operations depend on
qualified labor to operate this advanced technology, in order to comply with our food safety standards and
regulations, considering our concern for optimal sanitary condition in our plants. We offer constant training to
the employees at all of our slaughterhouses. See “–Employees”.

Plants

     All of our slaughterhouses and processing facilities are certified for exports to the main importing countries to
ensure high competitiveness and access to the primary markets. Together our plants are authorized to export to
almost all countries that authorize imports from Brazil. Our production facilities are strategically located close to
large cattle herds in Brazil, enabling us to efficiently acquire live cattle. Each of our production facilities is
highly automated to process and package beef products.

    We are currently operating at approximately 80% of our total production capacity.

Production Facilities

    We own and lease seven production facilities located in the States of São Paulo, Goiás, Mato Grosso do
Sul and Tocantins, and are currently constructing two other production facilities in the States of Pará and
Rondônia. The following table shows the location of our production facilities and their respective slaughtering
and processing capacity:




                                                         92
         Installed Capacity
                                                                                                                             Conversion
                                                                                                                            Processing in     Year in which
Production                                                                                Slaughter          Processing       number of        Operations
Facilities                             State                      Region                  Capacity            Capacity      heads of cattle      began        Ownership
                                                                                        (head per day)     (tons per day)
Palmeiras
 de Goiás............             Goiás                    Mid-West                          1,500               400              2,532            2004        Owned
Barretos ..............        São Paulo                    Southeast                        1,000               265              1,677            1992        Owned
José Bonifácio......           São Paulo                   Mid-West                            900               220              1,392            1999        Owned
Batayporã ...........       Mato Grosso
                                  do Sul                    Southeast                          900               200              1,266            2006        Leased
Cajamar ..............         São Paulo                    Southeast                            –               100                633            2001        Leased
Araguaína...........           Tocantins                       North                         700(1)                –                  –            2007        Owned
Total ..........................................................................             5,000             1,185              7,500

(1) We expect to increase our slaughter capacity to 850 heads per day by the end of 2007.

     As of January 2007, we began constructing a slaughterhouse in the city of Rolim de Moura, in the State
of Rondônia, with slaughter capacity of 1,000 head of cattle per day. As of April 2007, we acquired a
slaughterhouse for R$20.0 million with a slaughter capacity of 700 head of cattle per day, in the city of
Araguaína, State of Tocantins. In addition, we purchased a slaughterhouse under construction for R$10.0
million with a slaughter capacity of 1,700 head of cattle per day, in the city of Redenção, State of Pará.

                                                         Projected Installed Capacity in the Second Half of 2008

                                                                                                                              Conversion
                                                                                                                             Processing in    Year in which
Production                                                                                Slaughter          Processing     number of heads    Operations
Facilities                             State                      Region                  Capacity            Capacity         of cattle         began        Ownership
                                                                                        (head per day)     (tons per day)
Palmeiras
 de Goiás.............              Goiás                       Mid-West                      1,500               400             2,532           2004         Owned
Barretos ...............          São Paulo                     Southeast                     1,000               265             1,677           1992         Owned
José Bonifácio.....               São Paulo                     Southeast                       900               220             1,392           1999         Owned
                                 Mato Grosso
Batayporã ............             do Sul                      Mid-West                        900               200              1,266           2006         Leased
Cajamar ...............           São Paulo                     Southeast                         –              100                633           2001         Leased
Araguaína............             Tocantins                        North                     850(1)            140(5)               886           2007         Owned
Redenção.............               Pará                           North                   1,700(2)              250              1,582          2008(3)       Owned
Rolim de
 Moura ................         Rondônia                           North                   1,000(4)                250            1,582          2008(5)       Owned
Subtotal ..............                                                                       7,850              1,825           11,551
Barretos
 (Cooked
 Frozen)..............          São Paulo                       Southeast                         –               38.4                –           2008         Owned
Subtotal ............................................................................         7,850              1,863           11,551

(1)   We expect to increase our slaughter capacity to 850 head per day by the end of 2007.
(2)   Estimated slaughter capacity by the end of 2008.
(3)   Operations expected to begin in the first quarter of 2008.
(4)   Estimated slaughter capacity by the end of 2008.
(5)   Operations expected to begin in the second quarter of 2008.




                                                                                                      93
    The following chart sets forth the growth of our processing capacity compared to the growth of our
slaughtering capacity:


                             Growth of Slaughtering and Deboning Capacity
                                               (by head of cattle)

         12,000

         10,000

          8,000

          6,000

          4,000

          2,000

             -
                   1992         1999          2001          2004         2006          2007         2008


                                             Slaughtering            Deboning



    •   Palmeiras de Goiás. Our slaughterhouse and processing facility in the city of Palmeiras de Goiás,
        State of Goiás, commenced slaughtering operations in August 2004 and processing operations in
        June 2005, and we believe it is one of the most advanced slaughtering and processing facilities in
        Latin America. Palmeiras de Goiás is our largest facility and has numerous efficiency enhancing
        features, including advanced processing technology and sanitary equipment, a floor layout that
        permits the simultaneous de-boning of cattle, provides integrated logistics, a freezing system that
        rapidly freezes the beef throughout most of the processing stages and automated packaging equipment.
        We believe that this state-of-the-art facility enables us to improve our performance, lower our
        operating costs and produce a wide range of product offerings. We own this facility and it is not
        subject to any registered lien.
    •   Barretos. In 1992, we acquired our first slaughterhouse and processing facility in the city of Barretos,
        State of São Paulo. In addition to fresh beef, we produce cubed beef and roast beef at this facility,
        and it is our primary facility from which we export processed beef products to the United States.
        This facility is located on real property we own that is subject to a lien granted to secure a loan
        from BNDES. See “Management’s Discussion and Analysis of Financial Condition and Results
        of Operations – Long-Term Indebtedness”.
    •   José Bonifácio. The José Bonifácio production facility is located in the State of São Paulo and
        commenced operations in 1999 and is owned by us.
    •   Batayporã. Our leased plant in the State of Mato Grosso do Sul benefits from the high quality cattle
        herd in the State of Mato Grosso do Sul compared to certain other states in Brazil. The State of Mato
        Grosso do Sul has the second largest cattle herd of Brazil, with approximately 25 million head of
        cattle. We lease this facility from Camanche Assessoria de Bens Ltda. Title to this facility is the
        subject of a lawsuit, and the facility itself is subject to two outstanding liens. See “Risk Factors—The
        unfavorable outcome of pending litigation related to our Batayporã production facility could result
        in an early termination of our lease, which could in turn adversely affect our business, financial
        condition and results of operations.”
    •   Cajamar. Our processing facility located in the city of Cajamar, State of São Paulo, is also mainly
        focused on serving international markets. This facility is leased from Brausa Empreendimentos Ltda.




                                                      94
    •   Araguaína. We acquired this slaughterhouse located in the city of Araguaína, State of Tocantins, in
        April 2007. It offers some competitive advantages as it is located close to new cattle raising areas in
        Brazil. Currently this slaughterhouse does not process beef. Processing is estimated to begin after the
        second phase of its expansion, after which it will be certified to export beef. We own this facility,
        and title to the facility is currently being registered with the applicable governmental registry.
Joint Ventures

    •   Minerva Dawn Farms S.A. In January 2007, we entered into a joint-venture agreement, with the Irish
        company Dawn Farm Foods Ltd., one of the largest beef processing companies in Europe. This joint
        venture will build, operate and own a beef and cooked frozen processing facility close to our plant in
        Barretos. Each party holds 50% of the joint venture. We can export these products throughout the world
        because they are free of sanitary risks applicable to fresh beef and export quotas. In January 2007, we
        began construction of this plant with production expected to start in the second quarter of 2008.
    •   Brascasing Comercial Ltda. On May 8, 2007, we purchased 50% of the share capital of Brascasing
        from MAG Participações Ltda., a corporation owned by our controlling shareholders, for R$50,000.
        Brascasing was incorporated in January 2001 and processes tripe for sausages. It is a joint venture
        with Interfarma (Argentina) and each party holds 50%. In 2006, Brascasing had gross sales revenue
        of R$2.6 million.
    •   EuroMinerva Comércio e Exportação Ltda. EuroMinerva is a joint venture incorporated in 2006 with
        Eurofrance, one of the largest traders of live cattle in Europe, to export live cattle. EuroMinerva is
        still in its pre-operation phase. We intend to transfer all our exports of live cattle to EuroMinerva as
        of the second half of 2007.
Subsidiaries

    Currently, we have three subsidiaries:

    •   Redi Neto Construções Ltda. We hold 99.9% of the capital stock of Redi Neto Contruções Ltda.,
        a subsidiary incorporated in 2000 to construct production facilities and residential units. This
        subsidiary is currently not in operation.
    •   Minerva Indústria e Comércio de Alimentos Ltda. We incorporated Minerva Indústria e Comércio
        de Alimentos Ltda. in 2006 to develop a slaughterhouse in the city of Rolim de Moura, in the State
        of Rondônia, in the North of Brazil. We hold 98% of the share capital of this subsidiary and
        members of the Vilela de Queiroz family hold the remaining 2%.
    •   Minerva Overseas Ltd. We incorporated Minerva Overseas Ltd. in the Cayman Islands in 2006 to issue
        the notes. We issued 9.50% notes due 2017 in an aggregate principal amount of US$150.0 million on
        January 19, 2007 and US$50.0 million on February 6, 2007, through this subsidiary. These notes are
        unconditionally and irrevocably guaranteed by us. Interest on these notes accrues at a rate of 9.50% per
        annum and is payable semi-annually on February 1 and August 1 of each year, beginning on August 1,
        2007. The principal amount of these notes is payable in full on February 1, 2017.
Marketing

     We invest to enhance our image as a consistent supplier that offers high value added products based on
tradition and credibility as a high quality brand. The brands we market in the foreign market are “Brasília,”
“Supreme” and mainly “Minerva,” brands which we believe are well known in their markets. In the domestic
market, our main brand is “Minerva.” We invest in relationship marketing through which we develop
customized products in partnership with our customers. We regularly take part in the main beef fairs and
events in Brazil and abroad.




                                                      95
Seasonality

     Seasonality affects both the purchasing of cattle and the sale of our products. However these effects
cannot be analyzed through their impact on our gross sales revenues as it is affected by other factors, such as,
fluctuations in the exchange rates.

    Purchase of raw material. Availability of cattle in the northern and center-western regions of Brazil generally
decreases in the second half of the year because of drought, and cattle losing weight during this period. In the
southern parts of Brazil, where cattle raising activities are more widely developed and feed is available to
supplement a cattle’s diet in the dry season, cattle are more widely available in the second half of the year.

     Sale of our products. Demand for beef and per capita income are strongly correlated, and beef demand
has been increasing the past few years. Demand for beef suffers the impact of seasonal variations due to
religious, cultural and climate factors. In the Middle East, beef consumption increases during the Ramadan
religious holidays. In Eastern Europe, beef consumption increases during the winter months, when protein
consumption increases. In Western Europe, beef consumption is higher during the summer months. In Brazil,
beef consumption increases during national and other holidays, especially the year-end holidays.

Awards

   In 2006, our facility in the city of Palmeiras de Goiás was considered the 11th best Brazilian company in
employee management among companies with 1001 to 2000 employees by the research of the “best
companies in employee management” conducted by Valor Econômico newspaper.

Competition

     The beef industry is highly competitive, both in the purchase of live cattle, as well as in the sale of fresh
and processed beef products. Our products also compete with a large number of other protein sources,
including chicken and pork, but our principal competitors are other beef processors. In Brazil, our major beef
competitors are JBS (Friboi), Bertin, Marfrig and Independência.

    According to 2006 data from SECEX and MDIC, we were the third largest beef exporter in Brazil in
2006, as set forth by the following chart:

                                                                                                                                  2006
 Company                                                                                                       Total (in U.S.$)           (%)
 JBS (Friboi)...........................................................................................              922.4               16.0%
 Bertin ....................................................................................................          838.1               14.6%
 Minerva.................................................................................................             438.4                7.6%
 Marfrig..................................................................................................            416.4                7.2%
 Independência .......................................................................................                243.5                4.2%
 Margen..................................................................................................             102.2                1.8%
 Quatro Marcos ......................................................................................                 133.0                2.3%
 Mercosul ...............................................................................................             173.6                3.0%
 Mataboi .................................................................................................            117.8                2.0%
 Others....................................................................................................         2,371.8               41.2%
 Total .....................................................................................................        5,757.2              100.0%
 Fresh Beef .............................................................................................           3,134.4               54.4%
 Processed Beef ......................................................................................                744.4               12.9%
 Leather ..................................................................................................         1,878.4               32.6%

Source: SECEX and MDIC.

    Our principal direct competitors are JBS, Bertin, Marfrig and Independência which are, respectively,
Brazil's first, second, fourth and fifth largest beef exporters.




                                                                                          96
Information Technology

    Our integrated system of accounts receivables, accounts payable, inventory, accounting, payroll and
purchases, operates in all our facilities and ensures a precise management of our global cash flow, accounts
receivable and accounts payable. We continue to explore new alternatives to increase our efficiency and cut
costs through additional investments in information technology.

Employees

    As of March 31, 2007, we had approximately 5,350 full-time employees. The following table sets forth
our number of employees by industrial facility:

Number of Full-Time Employees
                                                                                                December    December    December    March 31,
                                                                                                 31, 2004    31, 2005    31, 2006     2007
Barretos..................................................................................        1,664       2,169       1,717       1,752
Palmeiras de Goiás.................................................................                 528         528       1,417       1,517
José Bonifácio........................................................................            1,217         986         962         994
Batayporã ...............................................................................             –           –         418         493
Olímpia ..................................................................................            –           –         254         306
Cajamar/SBC .........................................................................                49         239         300         294
Total ......................................................................................      3,458       3,922       5,068       5,356

     As of March 31, 2007, our total employee payroll was R$4.8 million. We continually invest in the
training and qualification of our employees. In addition to our own employees, as of March 31, 2007, we had
23 third party employees that provide food services through an unrelated company.

    The unions that represent our employees are: (i) Sindicato dos Trabalhadores nas Indústrias de Carne e
Derivados de Goiás e Tocantins; (ii) Sindicato dos Trabalhadores nas Indústrias de Alimentação de Nova
Andradina; (iii) Sindicato dos Trabalhadores nas Indústrias de Alimentação de São José do Rio Preto; (iv)
Federação dos Trabalhadores nas Indústrias de Alimentação de São Paulo; (v) Sindicato dos Trabalhadores
nas Indústrias de Alimentação de Olímpia; and (vi) Sindicato dos Trabalhadores nas Indústrias de
Alimentação de Barretos. We believe that we have good relations with our employees and the unions that
represent them. We are party to several collective bargaining agreements, which have either one-year or two-
year terms and are subject to annual renewal at the end of each calendar year (including annual salary
adjustments). During the last three years, we have not been subject to any strikes by our employees.

     We offer various benefits to our employees, including a basket of staple products (cesta básica) to all
employees with salaries up to R$2,500 per month, medical assistance, meal vouchers, transportation vouchers
and agreements with commercial establishments in the cities where our facilities and offices are located
(including pharmacies, gas stations, butcher shops, dentist and hairdressers) under which these commercial
establishments agree to grant discounts to our employees. We grant no additional benefits to our executive
officers or members of our senior management. We currently do not maintain a profit sharing plan.

Insurance

     Our insurance coverage is underwritten by Companhia Aliança Brasil and covers a variety of risks,
including losses and damages caused by fire, lightening, flood, explosion, spoiling of refrigerated goods, theft
and robbery, wind, furniture, machinery, goods and raw material. Our management believes that our
insurance coverage is enough to cover the risks incurred by us.




                                                                                           97
Legal and Regulatory Matters

Intellectual Property

     We have registered most of our trademarks, including “Minerva,” with the Brazilian Intellectual Property
Institute. We expect to renew the trademark registrations when they expire at the end of their respective
terms, normally every 10 years. The “Minerva” trademark has also been registered in a number of other
countries in which we sell our products using the “Minerva” trade name.

Legal and Administrative Proceedings

    The following chart summarizes our legal and administrative proceedings and the amounts provisioned
under the terms of our policy:

                                                                                                    As of March 31, 2007
                                                                             Number of                               Total        Total Judicial
                                                                             proceedings      Total Claims         Provisions        deposits
                                                                                  (in millions of reais, other than number of proceedings)
Tax proceedings ...................................................                 1               89.8              27.5             1.9
Labor proceedings................................................                595                23.8               2.9             1.0
Civil proceedings .................................................               31                 1.7                 –               –
Social security proceedings..................................                       1               32.6                 –             0.5
Total ....................................................................       628              147.9               30.4             3.4

    We record provisions only for the contingencies evaluated by our legal counsel as probable losses.
We follow the following criteria to establish provisions for our contingencies: (1) 100% of the amount of the
claim for the proceedings we evaluate as probable losses; and (2) no provisions for the proceedings we
evaluate as possible loss;

Tax proceedings

       As of March 31, 2007, we were party to several tax proceedings, the most significant include the following:

       •       On January 24, 2006, we filed a legal proceeding to enable us to utilize credits from PIS and
               COFINS contributions that we made in connection with our acquisition of raw materials for the
               production of goods that we exported, as the Federal Revenue refused to refund us these amounts in
               cash. This suit is pending, and based on the advice of our outside legal counsel, we believe that it is
               reasonably possible that we will prevail in the proceeding. We have yet to apply any tax credit that
               may arise from this dispute.
       •       On January 23, 2004, we filed a claim against the Brazilian tax authorities requesting IPI tax credits
               in connection with our exports from 1995 to 2003, as well as exports made subsequently. This suit is
               pending, and based on the advice of our outside legal counsel, we believe that it is possible that we
               will prevail in this proceeding. The amount in controversy is R$237.0 million, but we have yet to
               apply any tax credit that may arise from this dispute. If a final decision is rendered against us, we
               may be required to pay attorneys’ fees incurred by the Brazilian federal government up to a
               maximum amount of 20% of the amount in controversy. We have not recorded any provisions
               relating to any possible claim for these attorneys’ fees.




                                                                                   98
    •    On December 17, 2003, we filed a claim seeking a credit for IPI taxes as a refund for PIS and COFINS
         contributions that we made, in 2003 and 2004, in connection with our acquisition of raw materials for the
         production of goods that we exported. We filed a claim to record these IPI credits as the Federal Revenue
         raised illegal restrictions to the use of these credits. Although this decision is not final, we have applied a
         portion of the R$89.8 million credit involved in this proceeding, in an aggregate amount of R$19.5
         million. This suit is pending, and based on the advice of our outside legal counsel, we believe that it is
         probable that we will prevail in this proceeding. In the event of an unfavourable decision by the Superior
         Courts, we will have to revert the assumed credits of IPI that we used as compensation of other taxes for a
         total of R$19.5 million and any other tax credits of IPI that we may subsequently use to offset for other
         taxes. In addition we will have to revert the IPI credits recorded as non-current assets in our balance sheet.
         However, as this credit is provisioned as a loss for the same amount, in case of a loss in a final court
         decision there will be no accounting or financial effect.

Labor Proceedings

    As of March 31, 2007, we were party to approximately 596 labor claims that involved an aggregate of
approximately R$23.8 million. Based on the opinion of our legal counsel, we have established provisions for
labor contingencies in our financial statements of R$2.9 million as of March 31, 2007.

     594 of these labor claims were filed by former employees, one was filed by a former employee of a third
party company and one claim was filed by the Union of the Employees of the Food Industry of Nova
Andradina, in the State of Mato Grosso do Sul. Most of these labor claims involve claims for overtime,
unpaid vacation, salary, other employee-benefit issues and indemnity for work-related accidents. The claim
filed by the union is for an aggregate amount of R$0.1 million relating to a health hazard and based on the
advice of our outside legal counsel, we believe that it is probable that we will not prevail in this proceeding.
As of March 31, 2007, we had a total of R$1.0 million in judicial deposits and had established provisions of
R$2.9 million for contingencies.

Civil Proceedings

    We are party to approximately 31 civil lawsuits that involved an aggregate of approximately R$1.7 million.
None of these claims, on an individual basis, is material to our business or results of operations. Based on the
opinion of our outside legal counsel, we have not recorded any provision in relation to these civil claims.

Social Security Proceedings

    As of March 31, 2007, we were not involved in any social security lawsuits and administrative
proceedings, except for the proceedings described below.

     On April 14, 2004, the INSS filed several claims against us. These claims total approximately R$32.6
million in respect of several social security debit notices from the INSS (NFLD) related to certain
differentiated payroll contributions required to be made to rural employees from 1999 to January 2003. These
claims were filed to avoid the loss of the right to demand such contribution. The enforceability of these social
security debit notices has been suspended by a decision granted in a writ of mandamus that we filed on
December 2001 coupled with an injunction, seeking that payment of a contribution called “Novo Funrural” be
deemed unconstitutional. In January 2002, the Regional Federal Court suspended payment. Based on the
advice of our outside legal counsel we believe that the possibility of success is likely. We have not established
a provision for these contingencies. However, we cannot assure investors that new social security notices
related to the suspension of payment of the Novo Funrural in previous fiscal years will not be charged. An
unfavorable ruling in such civil proceedings in the present or future, may adversely affect us.

Installments

    In 2004, under the special installment program, or PAES, we agreed to pay unpaid social security taxes in
an aggregate amount of R$26.7 million. The current outstanding balance was approximately R$26.9 million as of
March 31, 2007. We are regularly paying the installments, and there are currently 135 installments outstanding.




                                                          99
Antitrust Proceedings

     According to the official report made available to us on June 21, 2005, the SDE initiated administrative
proceedings against 11 Brazilian beef companies, including us and certain other large beef producers. The
proceedings relate to allegations that these beef companies may have breached Brazilian antitrust regulations
by entering into agreements to establish the price of cattle purchased by them for slaughter. In August 2006,
the SDE concluded that eight of these companies, including us, breached the law and suggested that CADE
should consider us guilty under Brazilian antitrust laws. On January 30, 2007 and April 25, 2007, CADE and
the Public Attorney’s Office, respectively, issued their opinions and suggested the condemnation of the 11
companies, including us. These opinions are not binding and CADE shall make the final decision. If CADE
accepts the decisions from the opinions issued and also concludes that we violated these antitrust regulations,
CADE may impose administrative penalties on us, including an administrative fine in the amount of between
1% and 30% of our annual gross operating revenue of 2004 (for the year prior to the administrative
proceeding, the period in which CADE calculates such fines) and fines imposed on the directors directly or
indirectly responsible for such violations in an aggregate amount ranging from 10% to 50% of the fine
imposed on us. In addition, criminal proceedings may be commenced against our officers and directors by a
Brazilian public prosecutor. If CADE were to render an unfavorable decision, we would be entitled to
challenge such decision in Brazilian courts. An adverse decision by the courts, if upheld, could result in a
material adverse effect on our results of operations and financial condition. See “Risk Factors – Certain
Factors Relating to our Business and Industries – We might be subject to penalties for antitrust violations.”

Legal and Regulatory Matters

    Environmental Regulations

     Our beef operations are subject to extensive regulation by the Brazilian Ministry of Agriculture and other
state, local and foreign authorities regarding the processing, packaging, storage, distribution, advertising and
labeling of our beef products, including food safety standards. Recently, the food safety practices and
procedures in the beef processing industry have been subject to more intense scrutiny and oversight by the
Brazilian Ministry of Agriculture. We have historically worked, and will continue to work, closely with the
Brazilian Ministry of Agriculture and regulatory agencies to ensure that our operations comply with all
applicable food safety laws and regulations.

     The Brazilian federal constitution grants the Brazilian federal, state and municipal governments the
power to enact environmental protection laws and to issue regulations under such laws. While the Brazilian
federal government has the power to promulgate environmental regulations setting forth minimum standards
of environmental protection, state and municipal governments have the power to enact more stringent
environmental regulations. Most of the environmental regulations in Brazil are in effect at the state and local
levels rather than at the federal level, with additional environmental standards established in the operating
permits issued to each plant rather than through general regulations.

     In 1998, the Brazilian federal government enacted an environmental crimes law that imposes criminal
penalties on companies and individuals who violate environmental laws. Individuals (including corporate
officers and directors) may be imprisoned for up to five years for environmental crimes. Criminal penalties
against companies include fines, community service and certain other penalties, including the cancellation of
financings with government entities. At the administrative level, corporations found to be violating
environmental laws can be fined up to R$50 million, have their operations suspended, be barred from entering
into certain types of government contracts, be required to repair or indemnify any environmental damages
they cause and be required to forfeit tax benefits and incentives.

    Law No. 6,938 of August 31, 1981, in conjunction with CONAMA Resolution 237, of December 19,
1997, requires businesses that use environmental resources or that are deemed effectively or potentially
polluting to complete an environmental licensing process.




                                                      100
     Under federal and state environmental laws and regulations, we are required to obtain environmental
licenses to install and operate each of our production facilities. The environmental licensing process includes
an initial license, an installation license and an operating license. The initial license is issued during the
preliminary phase of the project planning and authorizes the location and basic development of the
undertaking or activity. The installation license authorizes the beginning of the construction of the facilities.
The operating license authorizes the commencement and continuation of operational activities. Operating
licenses are subject to compulsory renewal as established by the relevant state environmental departments.

    Environmental Policy

     Strict compliance with all environmental laws, whether federal, state or municipal, including maintaining
our licenses in full force and effect, is one of our most important priorities. To control the environmental
impact of our operations, we maintain a preventive maintenance process for our equipment and filters, as well
as programs for the efficient use of water. Environmental laws and regulations require us to regularly monitor
the furnace air quality and emissions and the management and treatment of liquid effluents from our plants to
determine if we are in compliance with the permitted emissions and discharge levels.

    We have our own team of trained professionals and retain consultants that specialize in environmental
management, which periodically evaluate the environmental impact of our products, processes, operations,
and services, in order to determine those that cause or could cause material environmental damages. Through
our environmental management programs, we seek to identify opportunities for improving our production
process, as well as to prevent the occurrence of environmental impacts and/or legal claims.

     We believe that we currently are in substantial compliance with all material governmental laws and
regulations, including sanitary and environmental laws and regulations, and maintain all material permits and
licenses relating to our operations, including sanitary and environmental permits. We have valid
environmental licenses for the Palmeiras de Goiás, Cajamar, José Bonifácio, Batayporã and Barretos
facilities. Our Barretos facility is in the process of renewing its environmental license and it has been
submitted to the relevant environmental agencies.

     We are involved in two civil public actions initiated by the Public Ministry of São Paulo (Ministério
Público do Estado de São Paulo) with respect to certain environmental violations that alleges that we (i)
altered the course of a water current and (ii) disposed of liquid effluents without properly treating them. In
both cases, we were condemned to repair the damage done to the environment and we are working together
with the Serviço Autônomo de Água e Esgoto – SAAE of the city of Barretos in the state of São Paulo to reach
an amicable solution for both cases.




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                                                                           MANAGEMENT

    Pursuant to our bylaws, we are managed by a board of directors and by a board of executive officers. Our
bylaws also provides for a non-permanent fiscal council, established upon request of our shareholders.

Board of Directors

     In accordance with articles 16 and 17 of our bylaws, our board of directors is currently comprised of
seven members, as follows: one president, one vice-president, three members and two independent members.
During periods of absence or temporary unavailability of the president, the vice-president will substitute for
him. During periods of absence or temporary unavailability of the president and of the vice-president, the
president’s activities will be performed by another member of the board of directors, previously appointed by
the president. Our board of directors is responsible for, among other matters, determining the policies and
guidelines of our business, supervising the board of executive officers and monitoring the implementation of
the policies and guidelines periodically established by the board of directors. According to Brazilian
Corporate Law, the board of directors is also responsible for hiring our independent auditors.

     The members of our board of directors are elected at a general shareholders’ meeting, serving for a one-year
term and are eligible for reelection. The term of office of the current members of our board of directors will
expire at our general shareholders’ meeting to be held on May 2, 2008. The members of our board of directors
are subject to removal at any time, with or without cause, at a general shareholders’ meeting.

       The members of our board of directors must be our shareholders but are not required to reside in Brazil.

     Our board of directors meets every three months and whenever an extraordinary shareholders’ meeting
is called by the president or by any other member. Each member will have the right of one vote on the
resolutions, and the resolutions of the board of directors are voted by a majority of its members.

       The following table lists the current members of our board of directors:

Name                                                                                                                             Position
Edivar Vilela de Queiroz...............................................................................................          President
Antônio Vilela de Queiroz ............................................................................................         Vice-President
Ibar Vilela de Queiroz...................................................................................................         Member
Edvair Vilela de Queiroz...............................................................................................           Member
Fernando Galletti de Queiroz ........................................................................................             Member
José Roberto Mendonça de Barros................................................................................             Independent Member
Wladimir Antonio Puggina ...........................................................................................        Independent Member

     The independent members were elected on June 14, 2007, and all of the other members of our board of
directors were elected on May 2, 2007.

       The following is a summary of the business experience of the current members of our board of directors.

    Edivar Vilela de Queiroz. Mr. Edivar de Queiroz has been a member of our board of directors since
May 2, 2007. He serves as the president of the Beef Industry Syndicate of the State of São Paulo
(Sindicato das Indústrias Frigoríficas do Estado de São Paulo), or SINDFRIO, and has also served as the
president of ABIEC. Mr. Edivar de Queiroz holds a law degree from Faculdade Municipal de Franca.

     Antônio Vilela de Queiroz. Mr. Antônio de Queiroz has been a member of our board of directors since
May 2, 2007. Mr. Antônio de Queiroz began his professional career in 1966 at Expresso Barretos Ltda., where he was
a shareholder and a director since 1972. In 1976, he started developing agricultural and cattle raising business activities
and founded Agropecuária Vilela de Queiroz Ltda. In 1982, he founded Agropecuária Corumbiara S.A. In 1983, he
founded Agropecuária Pimenta Bueno S.A. Mr. Antônio de Queiroz became our shareholder in 1992, and served as
our general director until May 2, 2007, when he became a member of our board of directors.

     Ibar Vilela de Queiroz. Mr. Ibar de Queiroz has been a member of our board of directors since May 2, 2007.
Mr. Ibar de Queiroz began his professional career in 1966 at fleet “C” of Transportes de Gado Ltda., where he was a
shareholder and a director since 1972. He became our shareholder in 1992. He has served as our supplies officer since
1993 and is responsible for the purchasing of cattle.




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     Edvair Vilela de Queiroz. Mr. Edvair de Queiroz has been a member of our board of directors since
May 2, 2007. From 1980 to 1986, he was the mayor of Rio Maria in the State of Pará. In addition, he served
as the director of Hospital São Francisco de Assis. Mr. Edvair de Queiroz holds a bachelor’s degree in
medicine from Faculdade Universidade Sul Fluminense.

    Fernando Galletti de Queiroz. Mr. Galletti has been a member of our board of directors since May 2, 2007
and has also been serving as our commercial officer since 1992. He served as a trader with Cargill Agrícola
S.A. and as an intern with Cotia Tradings S.A. Mr. Galletti holds a bachelor’s degree in business
administration from Escola de Administração de Empresas de São Paulo of Fundação Getúlio Vargas.

      José Roberto Mendonça de Barros. Mr. Barros was the managing partner of Mendonça de Barros
Associados S/C Ltda. from 1978 to 1994, Brazil’s Minister for Economic Policy of the Federal Revenue
Office from January 1995 to March 1998 and executive secretary of the Foreign Trade Chamber of the
Brazilian government from April 1998 to November 1998. He is a member of the board of directors of
Fundação BUNGE, Souto Vidigal and GP Investments and a member of the consulting board of Tecnisa and
Pão de Açúcar. He was a member of the strategic committee of Companhia Vale do Rio Doce from February
2002 to March 2006. He holds a bachelor’s and doctorate’s degree in economics from Universidade de
São Paulo and a post graduate degree from the Economic Growth Center of Yale University. In 1980, he was a
visiting professor with the Department of Agricultural Economics and Rural Sociology at Ohio State University,
and was an assistant professor at Faculdade de Economia da Universidade de São Paulo from 1967 to 2001.

     Wladimir Antonio Puggina. Mr. Puggina is a member of the board of directors and chief executive officer
of Fertifos Administração e Participação S.A. He is also a member of the board of directors of Agrofertil S.A
Indústria e Comércio de Fertilizantes and Fertimar Fertilizantes do Maranhão S.A. He is the president of the
board of directors of IFC Indústria de Fertilizantes de Cubatão and a member of the board of directors of
Banco Indusval S.A. He is the chief executive officer of Helma Administração e Participações S.A. and
WD – Participações Ltda. During the last 14 years, he has served as the president of the board of directors of
Ultrafertil S.A., chief executive officer and president of the board of directors of Fertibras S.A., chief executive
officer and member of the board of directors of Benspar S.A., chief executive officer of Agrofertil S.A Indústria
e Comércio de Fertilizantes and Fertimar Fertilizantes do Maranhão S.A. and member of the board of
directors of Fosfertil – Fertilizantes Fosfatados S.A. He is an active member of the International Fertilizer
Industry Association, or IFA (the sole Latin American who served as president, vice-president and working
group coordinator of the IFA). He was the president of the National Association for the Promotion of
Fertilizers and Lime, for approximately eight years and the president of the Brazilian Association of Manure
Mixers, for approximately six years. He holds a bachelor’s degree in business administration from Fundação
Getúlio Vargas, a post-graduate degree in finance and business administration from Michigan State
University. Since 1965, he has been the head professor of finance of Escola de Administração de Empresas
da Fundação Getúlio Vargas.

     Mr. Edivar Vilela de Queiroz, Mr. Antônio Vilela de Queiroz, Mr. Ibar Vilela de Queiroz and
Mr. Edvair Vilela de Queiroz are brothers and our indirect controlling shareholders. Mr. Edivar Vilela de Queiroz
is the father of Mr. Fernando Galletti de Queiroz who is also our indirect controlling shareholder.

Board of Executive Officers

    Our board of executive officers is our executive management body. The members of our board of
executive officers are our board of directors’ legal representatives and are responsible for the internal
organization, decision-making, day-to-day operations and the implementation of the general policies and
guidelines established from time to time by the board of directors.

     In accordance with article 20 of our bylaws, our board of executive officers is currently comprised
of three members who were elected by our board of directors at a meeting held on May 2, 2007 and June 14,
2007 and will serve for two-year terms.




                                                        103
     The members of our board of executive officers are elected by the board of directors, with two-year terms
and are eligible for reelection. The board of directors may remove any executive officer at any time with or
without cause. According to Law No. 6,404/76, the members of our board of executive officers must be
residents of Brazil, but do not need to be our shareholders. Our board of executive officers meets whenever
called by the chief executive officer or by the majority of its members and whenever deemed necessary.

       The following table lists the current members of our board of executive officers:

Name                                                                          Election Date                                      Position
Fernando Galletti de Queiroz ...................                               May 2, 2007                               Chief Executive Officer
Carlos Watanabe ......................................                         May 2, 2007                        Finance and Investors Relations Officer
Ibar Vilela de Queiroz..............................                           June 14, 2007                                 Supply Officer

     The following is a summary of the business experience of the current members of our board of executive
officers that are not members of our board of directors.

     Carlos Watanabe. Mr. Watanabe has been serving as our finance officer since July 2006 and was elected
our finance and investors relations officer on May 2007. He served as the finance officer of Laboratório Teuto
Brasileiro S.A. for four years at the Corporate Banking division of HSBC Bank and for 12 years at Lloyds
TSB Bank. Mr. Watanabe holds a bachelor’s degree in business administration and a post-graduate degree in
finance from Escola de Administração de Empresas de São Paulo of Fundação Getúlio Vargas.

Non-Statutory Officers

       The following table lists two of our senior officers that are not members of our board of executive officers:

Name                                                                                                                           Position
Wagner José Augusto........................................................................................              Commercial Officer
Walter Luis Lene...............................................................................................              Officer

       The following is a summary of the business experience of Mr. Wagner José Augusto and Mr. Walter Luis Lene.

    Wagner José Augusto. Mr. Augusto has been our commercial officer since the beginning of 2007.
During 2006, he served as our supply officer and before that, since 1999, has served as purchase manager.
Mr. Agusuto worked for other companies of the beef sector from 1990 to 1999. From 1974 to 1990, he served
as manager of Expresso Barretos. Mr. Augusto holds a bachelor’s degree in business administration from the
Faculdade de Administração de Empresas de São José do Rio Preto – FADIR/SP.

     Walter Luis Lene. Mr. Lene has been our industrial officer since the beginning of 2007. From 2005
to 2006, he served as the manager of our leather division. Mr. Lene graduated from a technical school with a
degree in chemistry and undertook a specialization course in leather at Escola de Curtimento de Estância
Velha, Rio Grande do Sul. Mr. Lene has been working in the leather sector for more than 20 years.

Fiscal Council

    Brazilian Corporation Law does not require that we have a fiscal council operating permanently and
it must only be established by request of the shareholders. The principal responsibilities of the fiscal
council are to monitor the management’s activities, opine on certain proposals of the management that will
be submitted to a general shareholders’ meeting, examine our financial statements and point out any
misconducts, fraud or crimes that they are aware of. We have not yet established a fiscal council.




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Shares Ownership

    The following table sets forth the direct or indirect shareholding of the members of our board of directors
and board of executive officers, as of the date of this Offering:

Managers                                                                                                    Quantity    Holding %
Edivar Vilela de Queiroz .....................................................................              1,760,000     3.20
Antônio Vilela de Queiroz...................................................................                  840,000     1.52
Ibar Vilela de Queiroz .........................................................................              600,000     1.08
Edvair Vilela de Queiroz .....................................................................                200,000     0.37
Fernando Galletti de Queiroz...............................................................                   200,000     0.37
José Roberto Mendonça de Barros ......................................................                              1     0.00
Wladimir Antonio Puggina..................................................................                          1     0.00
Carlos Watanabe..................................................................................                   0     0.00
Total....................................................................................................   3,600,002     6.54

      See “Principal and Selling Shareholders.”

Compensation

    According to Brazilian Corporation Law and our bylaws, the aggregate or individual compensation of the
members of our board of directors, board of executive officers and fiscal council, if established, is annually
established by our shareholders at our general shareholders’ meeting.

    For fiscal year 2007, the annual aggregate compensation paid to our management is R$2.0 million, and it
was established at the general shareholders’ meeting held on May 2, 2007.

Stock Option Plan

      We have not implemented any stock option plan for our managers.

     We are currently considering the possibility of implementing a stock option plan, but as of the date of this
offering circular, we have not yet defined the structure and characteristics of such a plan. If we decide to
implement a stock option plan, we intend to engage specialized consultants to assist us in adopting a stock
option plan which is structured in accordance with best corporate governance practices.




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                                                   PRINCIPAL AND SELLING SHAREHOLDERS

   Our capital stock is comprised of 55,000,000 common shares with voting rights, without par value.
We are controlled by the Vilela de Queiroz family.

     The following table shows the number of common shares held by our shareholders as of the date of this
offering circular and after giving effect to the offering and without giving effect to the exercise of the
over-allotment option:

                                                                   Before the Offering            After the Offering
Shareholders                                                  Common Shares         (%)     Common Shares          (%)
VDQ Holdings S.A.(1)..........................                  50,999,993          92.73     50,999,993         68.00
Edivar Vilela de Queiroz.......................                  1,760,001           3.20              1             –
Antônio Vilela de Queiroz ....................                     840,001           1.53              1             –
Ibar Vilela de Queiroz...........................                  600,001           1.09              1             –
Fernando Galletti de Queiroz ................                      200,001           0.36              1             –
Ismael Vilela de Queiroz.......................                    200,000           0.36              0             –
Izonel Vilela de Queiroz .......................                   200,000           0.36              0             –
Edvair Vilela de Queiroz.......................                    200,001           0.36              1             –
Independent members of the board
  of directors .........................................                2              –               2             –
Market...................................................                                     24,000,000         32.00
Total .....................................................     55,000,000         100.00     75,000,000        100.00

(1) The members of the Vilela de Queiroz family own 100% of the capital stock of VDQ Holdings S.A., as follows:
    (1) Edivar Vilela de Queiroz, 44.00%; (2) Antônio Vilela de Queiroz, 21.00%; (3) Ibar Vilela de Queiroz, 15.00%;
    (4) Fernando Galletti de Queiroz, 5.00%; (5) Ismael Vilela de Queiroz, 5.00%; (6) Izonel Vilela de Queiroz, 5.00%;
    and (7) Edvair Vilela de Queiroz, 5.00%.

     After the conclusion of this offering, VDQ Holdings S.A. will hold common shares representing 68.00% of our
voting capital stock, assuming that the over-allotment option is not exercised. As a result, VDQ Holdings S.A. will
continue to be the controlling shareholder of our company. See “Risk Factors—We will continue to be controlled
by our current controlling shareholders, whose interests may differ from those of our other shareholders.”

Shareholders’ Agreement

       There is currently no shareholders’ agreement in effect among any of our shareholders.




                                                                             106
                                   RELATED PARTY TRANSACTIONS

     Except for the transactions described below, we did not enter into any material transactions with related
parties during the last three fiscal years.

Loans

    We have an outstanding intercompany loan to Brascasing Comercial Ltda., or Brascasing. The Vilela de
Queiroz family indirectly owed 50% of the equity interest in Brascasing until May, 2007 when our company
acquired their 50% equity interest in Brascasing. Brascasing’s main business activity consists of exporting
processed tripes for sausages, and it is located in José Bonifácio in the State of São Paulo. The outstanding
principal amount of this loan is R$2.3 million as of March 31, 2007, and interest on this loan accrues at a rate
equal to 110.0% of the CDI rate.

    We have outstanding loans with certain other affiliated companies. The outstanding principal amount of
these loans is R$2.2 million as of March 31, 2007, and interest on these loans accrue at market rates.

Guarantees

    Certain members of the Vilela Queiroz Family have provided guarantees under our debt agreements. We
have not paid them any consideration for the granting of such guarantees. If we fail to comply with our
obligations under these agreements, the creditors under these agreements will have the right to request
payment directly from the guarantors.

Purchase of Cattle

     We regularly purchase cattle for slaughter from certain members of the Vilela Queiroz Family, including
certain members of our board of executive officers, at market prices and conditions based on prices
disclosed by ESALQ’s Center of Advanced Studies of Applied Economics, or CEPEA. These purchases
represent less than 3% of the total cattle we purchase per year.

   Other than these purchases of cattle, there are no other material agreements in place between us and any
member of our board of directors or board of executive officers.

Provisions in our Bylaws relating to Related Party Transactions

     Pursuant to Article 19(XXV) of our bylaws, our board of directors must approve any agreements,
contracts or arrangements between us and any parties related to, or affiliated with, members of our board of
directors or board of our executive officers (as defined in the applicable Brazilian income tax law). If any of
such agreements, contracts and arrangements are not approved by our board of directors, such document will
be null and void.




                                                      107
                                    DESCRIPTION OF CAPITAL STOCK

    Set forth below is a summary of certain significant provisions of our bylaws, the Brazilian Corporation
Law, and the rules and regulations issued by the CVM. This summary does not purport to be complete and is
qualified by reference to our bylaws, the Brazilian Corporation Law and the rules and regulations of CVM.
Our bylaws are our principal governing document.

    On June 29, 2007, we entered into the Novo Mercado Participation Agreement with the BOVESPA.
This agreement will be effective as of the publication date of the Commencement Notice (Anúncio de Início).
As long as our shares are listed on the Novo Mercado, we may only issue common shares. In order to delist
from the Novo Mercado, we must conduct a public offering for the purchase of our common shares.
See “—Delisting from the Novo Mercado.”

General

     We are currently a privately held corporation incorporated under the laws of Brazil on March 9, 1992.
Our headquarters are located at Avenida Antônio Manço Bernardes, s/n°, CEP 14781-545, in the City of
Barretos, State of São Paulo. We are duly registered with the Commercial Registry of the State of São Paulo
under NIRE 35.300.344.022. After the approval by the CVM of our listing as a public company and the
registration statement for our public offering in Brazil, we will be a publicly held corporation incorporated
under the laws of Brazil.

Capital Stock

   As of the date of this offering, our capital stock was R$18,728,486.89, divided into 55,000,000 common
nominative shares, without par value.

    Our capital stock is comprised of common shares only. In accordance with our bylaws, our board of directors
may increase our capital stock up to the limit of 30,000,000 common shares without having to amend our bylaws.
Our shareholders must approve any capital increase above the authorized capital at a shareholders’ meeting.

     There have been no material changes in the ownership by our shareholders during the last three fiscal
years, except for the corporate reorganization held on June 14, 2007, according to which the members of the
Vilela de Queiroz Family transferred a material portion of their holdings in our capital stock to VDQ Holdings S.A.

Treasury Shares

    We do not have any treasury shares retained in our treasury account.

Corporate Purpose

     According to Article 3 of our bylaws, our business is the exploitation of the meat industry and the
agricultural and livestock industry, in all its aspects, including the agroindustry, including to: (1) produce,
purchase, sell, import and export meat, offal, beef, pork and poultry products and byproducts and meat products
and byproducts from other animals; (2) establish, install and exploit slaughterhouses and companies that process
meat and meat byproducts; (3) buy, sell, import or export livestock (cattle, pigs, poultry and other live or
slaughtered animals) and fresh or processed meat and its byproducts; (4) construct and install, personally or
through third parties, machines and equipment used to process meat and its byproducts; (5) purchase, sell, rent or
lease, exchange, buy, dispose of any assets or fixtures; (6) transport and enter into agreements to transport our
products and resale products by road, water or air; (7) purchase, sell and exploit, borrow and lease cattle raising
farms and other types of agricultural ranches, as well as companies that prepare, cool and freeze food; (8) exploit
the business of warehouses, especially cold warehouses, that store meat and meat byproducts and other
perishable food; (9) manufacture, purchase, sell and market animal feed and agricultural products; (10) purchase,
built, buy, sell, lease, maintain and exploit tank trucks, refrigerated trucks, bulldozers, trucks for transportation of
people and/ or cargo; (11) purchase goodwill, business and assets, corporations, associations or companies and
assume liabilities or burdens, in full or in part (paying for them with cash, shares, obligations and other
securities); (12) build, acquire or represent slaughterhouses, warehouses, plants and producers; (13) produce,




                                                          108
buy, sell, import and export fish and seafood; (14) provide services to third parties; and (15) carry out all
necessary acts directly or indirectly linked to our corporate purpose.

Directors

     In accordance with our bylaws, our board of directors consists of a minimum of five and a maximum
of seven members. The exact number of directors is set at a shareholders’ meeting by the vote of shareholders
holding a majority of our common shares.

    The directors are elected at the annual shareholders’ meeting. The Brazilian Corporation Law allows
cumulative voting for the election of members of the board of directors, at the request of at least 10% of our
voting capital stock. If shareholders fail to request cumulative voting, our directors are elected by a majority
vote of the holders of our common shares. Several or joint holders of shares representing a minimum of 15%
of our common shares are entitled to elect one director. Our directors are elected for a one-year term of office.

    Pursuant to the Brazilian Corporation Law, each member of our board of directors must hold at least one
share of our Company. Our directors are not subject to a mandatory retirement age.

     Pursuant to the Novo Mercado Rules and our bylaws, at least 20% of the members of our board of
directors must be independent directors.

Rights of Common Shares

    Each of our common shares entitles its holder to one vote at any annual or extraordinary shareholders’ meetings.

     Holders of our common shares are entitled to dividends or other distributions made in respect of our
common shares in proportion to their ownership of our shares. In addition, upon our liquidation, holders of
our common shares are entitled to a return of capital in proportion to their share of our net shareholders’
equity, after the payment of our liabilities. Holders of our common shares are not obligated to subscribe to
future capital increases.

   According to the Brazilian Corporation Law, neither our bylaws nor actions taken at a shareholders’
meeting may deprive a shareholder of the following rights:

    •    the right to participate in profit sharing distributions;

    •    the right to participate in the distribution of any residual assets upon our liquidation;

    •    the right to supervise, pursuant to the applicable legislation, the management of our business;

    •    preemptive rights for the subscription of shares, debentures convertible into shares or subscription
         warrants, except under certain circumstances as set forth by Brazilian law, and as described under
         “—Preemptive Rights”; and

    •    the right to withdraw from the company, pursuant to the Brazilian Corporation Law, as described
         under “—Withdrawal and Redemption Rights.”

     Pursuant to the agreement entered into by us, our directors and executive officers, and the BOVESPA,
in respect of the listing of our shares on the Novo Mercado, we are forbidden to hold shares without voting
rights or with restricted voting rights, unless we are delisted from the Novo Mercado.

Allocation of Results of the Fiscal Year

     In accordance with the Brazilian Corporation Law, we must first deduct from our year-end results
the accumulated losses from previous fiscal years and the provision for income tax and social contributions.
After these deductions, we must apply the remaining balance to the payment of amounts allocated to our
employees’ sharing in our profits. Net income is defined as the remaining result of the fiscal year after
these deductions.



                                                         109
Allocation of Net Profit

     At each annual shareholders’ meeting, our board of directors is required to allocate the net profit from the
preceding fiscal year. This allocation is subject to a resolution by all the shareholders. Our net profit may be
allocated to our reserve accounts and to payment of dividends or interest attributable to shareholders’ equity.

Reserve Accounts

     Our reserve accounts contain a legal reserve and a reserve for profit retention. The balance of all profit
reserves may not exceed our capital stock, and any excess must be applied to increase the capital or to be
distributed to our shareholders as dividends. Currently, we do not have any other reserve accounts.

     Legal Reserve. In accordance with the Brazilian Corporation Law and our bylaws, we are required to
allocate 5% of our net profit for each fiscal year to our legal reserve. Our legal reserve may not exceed 20% of
our paid-in capital. However, we are not required to make any allocations to our legal reserve in a fiscal year
in which our legal reserve, together with our capital reserves, exceeds 30% of our capital stock.

     Bylaws Reserve. Pursuant to the Brazilian Corporation Law, our bylaws may create reserves, provided
that the purpose of such reserves is fully and precisely indicated, the percentage of the net income to be
allocated is determined, and a maximum limit is established. The allocation of resources to such reserves may
not be approved if it adversely affects the mandatory dividend. See “Dividends and Dividend Policy.”
According to our bylaws, we are required to maintain an Investment Reserve, in order to finance additional
investments in operating assets and that will be comprised of up to 75% of the remaining net income after
legal and statutory deductions, provided that such reserve may not exceed the amount of our capital stock.

     Contingency Reserves. According to the Brazilian Corporation Law, our net profit may be allocated to
a contingency reserve for any anticipated loss that is deemed probable in future years. The reserve will be
reverted in the fiscal year in the event that the reasons that justify its constitution cease to exist or if a loss
is incurred.

     Retained Profits Reserves. Under the Brazilian Corporation Law, our shareholders may deliberate at a
shareholders’ meeting on the retention of a part of the net profit to be allocated in investments made by us.
The retained amount must be employed in investments according to a capital expenditure budget approved at
the shareholders’ meeting. The budget must be reviewed annually if it extends longer than a fiscal year. The
allocation of resources to such reserves may not be approved if it adversely affects the allocation of the
mandatory dividend.

     Unrealized Profits Reserves. Under the Brazilian Corporation Law, the amount by which the mandatory
distributable amount exceeds the “realized portion” of net profit for the fiscal year may be allocated to the
unrealized profits reserve, upon approval at a shareholders’ meeting. The “realized” portion of net income is
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 profits, gains or income obtained on transactions realized after the end of the
applicable fiscal year. The unrealized profits reserve may only be used for payment of the mandatory
dividends. As amounts allocated to the unrealized income reserve are realized in subsequent years, such
amounts must be added to the first dividend payment relating to the year of realization.

Dividends and Dividend Policy

     In accordance with the Brazilian Corporation Law, we are required to hold a general shareholders
meeting no later than April 30 of each year, wherein the shareholders are required to deliberate on the
distribution of our annual dividends. In addition, the interim dividends can be declared by the board of
directors at a shareholders’ meeting.

    Consistent with the Brazilian Corporation Law, our bylaws provide that an amount, known as the
mandatory distributable amount, equal to at least 25% of our adjusted net annual profits, as further reduced by
amounts allocated to our unrealized profit reserve, if any, and increased by any reversals of the profit reserves,
should be available for distribution to our shareholders as mandatory dividends in any particular fiscal year.




                                                         110
    Adjusted net profit is the net annual profits minus (1) amounts allocated to legal reserves and
contingencies, and (2) reversals of the contingency reserve. The payment of dividends shall be limited to the
sum of the realized net income, if the difference is registered as future net reserves, as discussed below.

     Dividends may be distributed from net profit from the relevant fiscal year, accrued profits and profit
reserve. Furthermore, any net profits not allocated to profit reserves shall be distributed as dividends.

     Under the Brazilian Corporation Law, dividends are generally required to be paid within 60 days of
the declaration date, unless the shareholders’ resolution establishes another date of payment, which, in any
case, must occur before the end of the fiscal year in which the dividend is declared.

     Each shareholder has a three-year period from the date of payment of dividends to claim dividends, after
which the aggregate amount of any unclaimed dividends with respect to its shares legally reverts to us. We are
not required to adjust the amount of the declared dividends for inflation for the period between the date of
declaration and the payment date. Consequently, the actual amount of dividends paid to shareholders, without
giving effect to any adjustment for inflation, may be substantially reduced.

   In accordance with our bylaws, the minimum 25% of our adjusted net profit must be distributed as
mandatory dividend.

     Under the Brazilian Corporation Law, we are allowed to suspend the mandatory distribution of dividends
if the board of directors reports to our annual shareholders’ meeting that the distribution would be inadvisable
given our financial condition. Any suspension of the mandatory distribution must be reviewed by the fiscal
council, if one is in place at the time. In addition, management must submit a report setting out the reasons for
the suspension to the CVM. Net profits not distributed by virtue of a suspension are allocated to a separate
reserve and if not absorbed by subsequent losses, are required to be distributed as soon as the financial
condition of the company permits such payments.

    According to our bylaws, we are required to maintain an Investment Reserve, in order to finance
additional investments in operating assets and that will be comprised of up to 75% of the remaining net
income after legal and statutory deductions, provided that such reserve may not exceed the amount of our
capital stock.

     According to our bylaws, our directors and executive officers may, if resolved by a shareholders’
meeting, have a share in our profits, not exceeding 10% of the remaining result of the year and limited to the
aggregate annual compensation of directors and executive officers. From our results, we shall deduct accrued
losses, if any, and the provision for income tax and social contribution before any payment of dividends.

    Before any profit share is paid shareholders must be paid mandatory dividends. Whenever interim
dividends are paid, based on interim balance sheets at an amount equal to at least to 25% of the year’s net
income, adjusted according to our bylaws, our board of directors may resolve, at a shareholders’ meeting, to
pay our directors and executive officers an interim profit share.

Interest Attributable to Shareholders’ Equity

     Since January 1, 1996, Brazilian companies are permitted to pay interest to shareholders and treat those
payments as a deductible expense for purposes of calculating Brazilian income tax and, since 1998, for the
purpose of social contribution tax. The amount of the deduction is limited to the variation of the Brazilian
long-term interest rate, or TJLP, for the period and the greater of: (1) 50% of our net profit (after deduction of
social contribution and before payment of any interest or any deduction for income taxes) and; (2) 50% of our
accumulated profits and profit reserves, for the relevant period in each case. Under our bylaws, payment of
interest attributable to shareholders’ equity, net of withholding income tax, may be considered as part of the
mandatory dividend distribution. In accordance with applicable law, we are required to pay to shareholders an
amount sufficient to ensure that the net amount they receive in respect of interest attributable to shareholders’
equity, after payment of any applicable withholding tax plus the amount of declared dividends, is at least
equivalent to the mandatory dividend amount.




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Meetings of Shareholders
    Our shareholders are generally empowered at our shareholders’ meetings (held according to our
bylaws and Brazilian Corporation Law) to take any action relating to our corporate purposes and to pass
resolutions that they deem necessary.
     Our shareholders have exclusive powers with respect to: (1) amendments to our bylaws; (2) election and
dismissal of the members of our board of directors and fiscal council, if one is instituted; (3) approval of
management accounts and the financial statements prepared by our management, including use of net profits;
(4) authorization of the issuance of convertible debentures or secured debentures; (5) suspension of the rights
of a shareholder; (6) acceptance or rejection of the valuation of in-kind contributions offered by a shareholder
in consideration for issuance of shares of our capital stock; (7) approval of our transformation, merger with
another company or a spin-off or our dissolution or liquidation, appointment and dismissal of our liquidators
and approval of our accounts; and (8) authorization to petition for bankruptcy.
     According to the Brazilian Corporation Law, neither our bylaws nor actions taken at a shareholders’
meeting may deprive a shareholder of the following rights: (1) to vote at shareholders’ meetings; (2) the right
to participate in the distribution of profits; (3) the right to participate in any remaining residual assets in the
event of our liquidation, in proportion to their respective interests in our share capital; (4) preemptive rights in
the subscription of our shares, debentures convertible into our shares or stock warrants, except under
circumstances specified in the Brazilian Corporation Law. See “—Preemptive Rights” and (5) the right to
withdrawal from our company in the cases specified under Brazilian Corporation Law, which are described in
“—Withdrawal Rights.”
     According to the Brazilian Corporation Law, notice of each of our shareholders’ meetings must be published at
least three times in the Diário Oficial do Estado de São Paulo, the official newspaper of the State of São Paulo, and
in another widely circulated newspaper, currently the Brazilian newspaper Valor Econômico and O Diário de
Barretos. 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. The notice must include the agenda of
the shareholders’ meeting and, in case of amendment to the bylaws, an indication of the proposed amendments.
    Except if otherwise provided in our bylaws and for shareholders’ meetings called to amend our bylaws, in
which the presence of shareholders representing 3/4 of the voting shares is required on first call, the Brazilian
Corporation Law establishes that a shareholders’ meeting may be held with the presence of shareholders
representing at least 25% of the voting shares on first call. However, if that quorum is not reached, a meeting
may be held by any percentage of shareholders on second call.
     Generally, the approval of measures at a shareholders’ meeting is reached by the majority
of the shareholders present with abstentions not taken into account. However, the affirmative vote of
shareholders representing not less than one half of our voting shares is required to: (1) reduce the percentage
of mandatory dividends; (2) consent to a merger with, or consolidation into, another company; (3) consent to
our participation in a centralized group of companies, as defined in the Brazilian Corporation Law;
(4) consent to a change in our corporate purpose; (5) apply for cancellation of any voluntary liquidation;
and (6) consent to our spin-off or dissolution.
     Annual shareholders’ meeting are called by the board of directors and chaired by the president of the
board of directors. If the president of the board of directors is absent, the meeting is chaired by an officer or
shareholder appointed by the president of the board of directors. Under Brazilian Corporation Law,
shareholders meetings may also be called by (1) our fiscal council, if one is created; (2) any shareholder, if
our board of directors fail to call our shareholders’ meetings within 60 days after the date they are required to
do so; (3) shareholders holding at least five percent of our shares if our directors fail to call a meeting within
eight days after receipt of a request to call the meeting and the proposed agenda; and (4) shareholders holding
at least five percent of our voting shares if the members of our board of 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.
     A shareholder may be represented at a shareholders’ meeting by a proxy appointed less than a year before
the meeting. Proxy must be a shareholder, a corporate officer or a lawyer. In public companies, proxy may
also be a financial institution.




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Preemptive Rights

     Our shareholders have a general preemptive right to subscribe for shares in any capital increase, debentures
convertible into shares and subscription warrants according to the proportion of their shareholdings. A period of
at least 30 days following the publication of notice of the capital increase is allowed for the exercise of the
preemptive right, issuance of debentures convertible into shares and subscription warrants. However, our board
of directors may exclude preemptive rights with respect to the issuance of new shares, debentures convertible
into our shares and warrants up to the limit of our authorized capital stock if the distribution of those shares is
effected through (1) a stock exchange, through a public offering or (2) an exchange of shares in a public offering
the purpose of which is to acquire control of another company.

Withdrawal Rights

     Shareholders who dissent from certain actions approved by our shareholders in a shareholders’ meeting
have the right to withdraw from our Company and to receive the economic value of their shares. According to
Brazilian Corporate Law, a shareholder’s withdrawal rights may be exercised in the following circumstances,
among others: (1) a reduction in the percentage of mandatory dividends; (2) a merger with, or consolidation
into, another company; (3) our participation in a centralized group of companies; (4) a change in our corporate
purpose; (5) a spin-off; (6) a consolidation involving our Company into another company, in order to make us
a wholly-owned subsidiary; or (7) the approval of certain corporate restructuring transactions between us and
our controlling shareholders, controlled companies or companies under common control, to the extent that the
acquisition price does not exceed the limits established in the Brazilian Corporation Law.

    In the event of (2), (3), (6) and (7) above, dissenting shareholders will not be entitled to withdraw if our
shares are part of the BOVESPA Index or another traded stock exchange index, as defined by the CVM, and
our controlling shareholders and their affiliates jointly hold less than 50% of our shares.

    A spin-off will not trigger withdrawal rights unless, as a result: (1) there is a change in our core business,
except if the equity is spun off to a company whose primary activities are consistent with our corporate
purpose; (2) there is a reduction in the percentage of our mandatory dividends; or (3) we join a centralized
group of companies, as defined in the Brazilian Corporation Law.

    The right to withdraw expires 30 days after publication of the minutes of the relevant shareholders’
meeting. We are entitled to reconsider any action giving rise to withdrawal rights for 10 days after the
expiration of this period if we determine that the redemption of shares of dissenting shareholders would
jeopardize our financial stability.

Redemption Rights

     Redemption consists of the payment of the value of the shares to permanently cancel them. According
to the Brazilian Corporation Law, we may redeem our shares, if approved by shareholders representing
at least 50% of our outstanding shares at an extraordinary shareholders’ meeting. The share redemption may
be paid with our profits or profit reserves.

Mechanism to Prevent Shareholder Concentration

     Our bylaws contain provisions that have the effect of avoiding concentration of our shares in the hands of
one small group of investors, in order to promote more widespread ownership of our shares. To this end, these
provisions require each shareholder that becomes the holder of (1) our shares or (2) other rights, including
enjoyment and entailment of shares, representing 20% or more of our capital stock, shall, within 30 days as of
the date of purchase, or date of the event resulting in ownership of 20% or more of our capital stock, conduct
a public offering for purchase of all of our shares, in accordance with the rules of the CVM, the BOVESPA
and our bylaws.




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     The mandatory public offering for the purchase of shares is not applicable if the person becomes the holder
of our shares in an amount exceeding 20% of our shares as a result of: (1) legal succession, provided that the
shareholder sells the shares in excess within 30 days of the relevant event; (2) merger with another company;
(3) share merger; or (4) the subscription of our shares issued in a single primary offering approved at a
shareholders’ meeting called by our board of directors, whose proposed capital increase determined the issuance
price of the shares based on the economic value determined by a valuation report on our economic and financial
condition prepared by a specialized institution of proven experience in appraisal of publicly held companies.

    In order to calculate 20% of our total shares, involuntary increases of equity interest resulting from
cancellation of treasury stock or reduction in our capital stock due to cancellation of shares will not
be considered.

     The public offering of shares must be (1) extended to all of our shareholders; (2) conducted through an
auction held at the BOVESPA; (3) set at the price established according to our bylaws; and (4) paid on
demand, in Brazilian currency, upon the purchase of our shares in the public offering. The purchase price in
the public offering may not be lower than the greater of (1) 135% of the economic value as determined by a
valuation report; (2) 135% of the share issuance price in any capital increase made in a public distribution
conducted during the 24-month period prior to the date on which the public offering becomes mandatory,
provided that such value must be adjusted by the IPCA as of the date of issuance of shares in a capital
increase until the settlement of the public offering; (3) 135% of the average quotation per share during the
90-day period prior to the public offering, weighted by the trading volume of the stock exchange on which
the highest volume of trading of our shares is recorded; and (4) 135% of the highest unit price paid by the
purchasing shareholder, at any time, per share or per lot of shares issued by us.

    If the CVM regulation applicable to the public offering sets forth a calculation criterion to determine the
purchase price per share issued by us that is higher than the purchase price, the price calculated as per the
CVM regulation should prevail in the public offering.

    Pursuant to applicable law, a public offering will not prevent other shareholders, or the company, as the
case may be, from simultaneously conducting another public offering.

   Pursuant to our bylaws, our shareholders’ meeting may release the purchasing shareholder from a
mandatory public offering, if it is deemed of interest to us.

Diluted Ownership

    There will be diluted ownership in the event our activities are controlled by a shareholder holding less
than 50% of our capital stock, or by various shareholders holding a percentage above 50% of our capital
stock, each shareholder holding, severally, less than 50% of our capital stock, and provided that such
shareholders have not entered into any voting agreement, are not under a common control and do not
represent a common interest. Pursuant to our bylaws, these shareholders will not be deemed controlling
shareholders for the following purposes, among others:

    •    if we delist as a publicly held corporation, we will be responsible for conducting a public offering for
         the purchase of shares, subject to legal restrictions, at a price at least equal to the economic value
         determined in a valuation report prepared by a specialized institution. However, we may only
         purchase shares held by those shareholders who have approved our delisting after we have purchased
         the shares of the other shareholders who have not approved such resolution and who have accepted
         such public offering;

    •    if we delist from the Novo Mercado as a result of our shareholders’ resolution, those shareholders
         who have approved our delisting will be responsible for conducting the public offering for the
         purchase of shares, at a price at least equal to the economic value determined in a valuation report
         prepared by a specialized institution; and




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    •    subject to legal restrictions, if we delist from the Novo Mercado as a result of noncompliance with
         the Novo Mercado Regulation, the shareholders who approved the resolution that implied such
         noncompliance will be responsible for conducting a public offering for the purchase of shares, at a
         price at least equal to the economic value determined in a valuation report prepared by a specialized
         institution, except if such noncompliance results from an act of management, in which case we will
         be responsible for conducting a public offering.

Tag Along Rights

     According to the listing rules of the Novo Mercado, the sale of control by means of a single transaction
or successive transactions is subject to a condition subsequent, as the acquirer must agree to offer to purchase all
shares of any remaining shareholders on the same terms and conditions granted to our controlling shareholders.

    The public offering is also mandatory when:

    •    there is an assignment for consideration of share subscription rights or other rights relating to
         securities convertible into our shares which ultimately results in the sale of our control;

    •    if our controlling shareholder is a company, the shareholding control of such company is transferred; and

    •    when an existing shareholder becomes a controlling shareholder, by means of entering into a private
         agreement for the purchase of our shares. In this case, the acquiring shareholder must effect the
         public offer for the purchase of our remaining shares on the same terms and conditions applicable to
         the selling controlling shareholder and is required to indemnify those shares which were bought on
         the BOVESPA within the six-month period preceding the date of sale of control. The amount of such
         indemnification is the difference between the amount paid for our shares to the selling controlling
         shareholder and the amount paid by investors in BOVESPA transactions, adjusted by the IPCA,
         published by the IBGE.

   The purchaser, if necessary, must take all actions required to maintain at least 25% of our shares in the
market within six months.

    The controlling shareholder will not transfer its shares and we will not register any transfer of our
shares to any shareholder that upon such transfer will acquire control of our Company, unless the controlling
shareholder executes a controlling shareholder’s agreement as set forth in the listing rules of the Novo
Mercado and in our bylaws.

Public Offerings for the Acquisition of Shares

     Pursuant to our bylaws, a mandatory public offering must occur in case more than one of the above
mentioned situations occur simultaneously. One sole public offering for the purchase of shares may be held
for more than one purpose, provided that the procedures are compatible, the intended beneficiaries of the
offering are not adversely affected, and the required CVM authorization is obtained.

     Our bylaws provide that we or the shareholders responsible for conducting any of the public offerings
referred to in this section may ensure its effectiveness through any shareholder, a third party, or us, as the case
may be. We or the shareholder, as the case may be, will not be discharged from the responsibility of conducting the
public offering for the purchase of shares, until such offering is finalized in accordance with the applicable rules.

Suspension of Rights of the Purchasing Shareholder for Non-Compliance with our Bylaws

     In the event of noncompliance with our bylaws, the purchasing shareholder who fails to conduct a public
offering in the case of shares representing 20% or more of our capital stock will be subject to suspension of
his rights as a shareholder by resolution taken at a shareholders’ meeting. The call is mandatory in the case of
noncompliance with our bylaws. The purchasing shareholder may not vote at a shareholders’ meeting that
approves the suspension of his respective rights.




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Restrictions on Certain Transactions by Us, Our Controlling Shareholders, Directors and Officers

     Under rules and regulations of the CVM, we, our controlling shareholders, members of our board of
directors, executive officers and members of our fiscal council (if we eventually constitute a fiscal council) or
any technical and consulting bodies, controlled companies, affiliated companies and controlling companies
that know any relevant information, as well as any person that knows any relevant information and is aware
that such information has not been disclosed to the market yet (including auditors, analysts, underwriters and
consultants) are considered insiders under Brazilian securities regulations and must abstain from trading our
securities under certain circumstances, including derivatives based on our shares.

    These restrictions include the following:

    •    before the public disclosure of any material act or fact with respect to our business;

    •    in the event that any executive officer, director, or member of our fiscal council is removed from
         office prior to the disclosure of any material information in respect to us, that has been attained
         during his/her term of office, such executive officer, director, or member of our fiscal council is
         forbidden to trade (1) for a period of six months from the date the officer, director or member of the
         fiscal council is removed from their respective offices, or (2) until public disclosure of the material
         fact, except if trading affects the terms of said business, adversely affecting our shareholders;

    •    if we intend to merge with another company, consolidate, spin-off all or part of our assets or
         reorganize (until such information is disclosed to the market);

    •    in the event that we enter into an agreement for the transfer of our control, or in the event an option
         or mandate for this purpose is granted, until such information is publicly disclosed;

    •    during the 15-day period prior to the disclosure of our quarterly and annual financial statements
         required by the CVM; or

    •    with respect to our controlling shareholders, members of our board of directors and executive officers,
         in the event of the acquisition or sale of our shares by us or the acquisition or sale of our shares by
         any of our controlling companies, subsidiaries or any other company under common control.

Restrictions to Foreign Investment

    There are no restrictions on ownership of our shares by individuals or legal entities domiciled abroad.
However, the right to convert dividend payments and proceeds from the sale of shares into foreign currency
and remit such amounts abroad is subject to exchange control restrictions and to foreign investment laws,
which generally require, among other things, an electronic certificate of registration with the Central Bank.

     Foreign investors may register their investments as direct foreign investment under Law No. 4,131/62,
or as portfolio foreign investment registered with the CVM, pursuant to CMN Resolution No. 2,689/00
and CVM Instruction No. 325.

     Foreign investors with direct foreign investments may sell their shares through private transactions in
stock exchanges or in the over-the-counter market; however, they are generally subject to less favorable tax
treatment as compared to foreign investors with investments in portfolios.

     Under CVM Resolution No. 2,689/00, foreign investors with investments in portfolios may only purchase
and sell shares on stock exchanges or in the organized over-the-counter market, except in certain cases, such
as the purchase of shares in public offerings, and they are usually entitled to a more favorable tax treatment as
compared to foreign investors with direct foreign investments.




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Arbitration

     Under our bylaws, we, our shareholders, our managers, and members of our fiscal council must commit
to resolve, by means of arbitration, any and all dispute or controversy which may arise amongst themselves
and BOVESPA relating to or resulting from the application, validity, effectiveness, interpretation, violation
and respective effects of provisions contained in the Brazilian Corporation Law, in our bylaws, rules and
regulations of the CMN, the Central Bank, and the CVM, as well as other rules and regulations applicable to
the Brazilian securities market, in addition to those set forth under the Listing Rules of the Novo Mercado,
Arbitration Regulations and the Novo Mercado Participation Agreement.

Going Private Process

    Under Brazilian Corporation Law and rules and regulations of the CVM, we may become a private
company if we or our controlling shareholders conduct a public offering for the acquisition of all our
outstanding shares, subject to the following conditions:

    •    the price offered must be the fair value of our shares, as determined in accordance with the valuation
         report prepared by a specialized company; and

    •    shareholders holding more than two-thirds of our outstanding shares must have expressly agreed to
         our decision to become a private company or accepted the offer to purchase.

    Under Brazilian Corporation Law, for companies listed on the Novo Mercado, in this public offer to be
conducted by us or by our controlling shareholders, the minimum price per share must be based on the book
value of our shares, according to a valuation report prepared by a specialized and independent company of
recognized experience. The institution will be chosen at a shareholders’ meeting from a list of institutions
presented by our board of directors, by an absolute majority of the votes of the outstanding shares of the
shareholders present at the meeting, excluding blank votes. The minimum quorum for this shareholders’
meeting is 20% on the first call and any number of shareholders on second call.

    Under the Novo Mercado Regulation, the decision to go private is revoked if the economic value of the
shares is higher than the value informed by the offeror, except if the offeror expressly consents to conduct a
public offering at the determined economic value. The offeror is then required to publicly disclose this decision.

     If we decide to go private, we must conduct a public offering for the acquisition of shares, subject to legal
restrictions. In such case, we may only purchase shares owned by those shareholders who have approved our
decision to go private at the shareholders’ meeting, after having purchased the shares of the other shareholders
who have not approved such decision and who have accepted such public offering.

Delisting from the Novo Mercado

    At any time, we may delist our shares from the Novo Mercado, provided that shareholders representing
the majority of our voting capital stock approve the action and that we give at least 30 days written notice to
the BOVESPA.

    We don’t have to become a private company if we delist from the Novo Mercado.

     If we delist from the Novo Mercado (1) in order for our shares to be tradable outside the Novo Mercado;
or (2) as a result of a corporate reorganization, in which the shares of the surviving company are not traded on
the Novo Mercado, our controlling shareholder must conduct a public offering for the acquisition of the shares
held by the other shareholders. The price per share must be equivalent to the economic value of those shares
as determined in a valuation report prepared by a specialized and independent company of recognized
experience, which will be chosen at a shareholders’ meeting from a list of 3 institutions presented by our
board of directors. Notice of the public offering must be given to the BOVESPA and disclosed to the market
immediately after the shareholders’ meeting that approved the delisting from the Novo Mercado.




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     The specialized institution responsible for determining the economic value of our shares will be chosen
from a list of three institutions submitted by our board of directors by an absolute majority of votes obtained
at a shareholders’ meeting attended by shareholders representing a minimum of 20% of our outstanding
shares on the first call and, if this quorum is not reached, any number of voting shares on the second call,
blank votes are not taken into account.

    If our delisting from the Novo Mercado results from our decision to register our shares outside the Novo
Mercado, or results from a corporate reorganization, shareholders that voted in favor of such deliberation
must conduct a public offering for the acquisition of the outstanding shares. Our bylaws also set forth that the
BOVESPA may suspend the trading of our shares if we do not comply with the obligations under the Novo
Mercado Rules. In such case, the chairman of our board of directors must call an extraordinary shareholders’
meeting within two days to replace all the members of board of directors and, if the chairman fails to do so,
any shareholder may call such meeting. The new board of directors will be responsible for remedying the
non-compliance which gave rise to the creation of the new board of directors.

     In the event of a transfer of our control within 12 months following our delisting from the Novo Mercado,
the selling controlling shareholder and the purchaser must offer to purchase the remaining shares for the same
price and terms offered to the selling controlling shareholder, 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 after the delisting date, unless there is a change in control in our
Company after this delisting.

Purchases of Our Shares by Us

     Under the rules and regulations of the CVM, we may approve the acquisition of our shares. The decision
to acquire our shares may not, among other actions:

    •    result in a reduction of our capital stock;

    •    require the use of resources greater than our retained earnings or reserves recorded, except legal
         reserves, unrealized profits reserve, revaluation reserve and special mandatory dividends reserve;

    •    create, by action or omission, directly or indirectly, any artificial demand, supply or share price
         condition, or use any non-equitable practice;

    •    be used to purchase shares held by our controlling shareholder; or

    •    occur during the public offering for purchase of our shares.

     Our board of directors is responsible for deciding on the purchase of our shares, and must set forth (1) the
purpose of the transaction; (2) the specific number of shares offered for purchase; (3) the purchase period, that
cannot exceed 365 days; (4) the number of outstanding shares in the market; and (5) the financial institutions
acting as intermediaries in these transactions.

    We cannot hold in treasury more than 10% of our total outstanding shares, excluding the shares held by
our controlling shareholders, and including the shares held by our subsidiaries and affiliates.

     Any acquisition of our shares by us must be made on the stock exchange or over-the-counter market,
rather than in a private transaction, unless prior approval for the acquisition is obtained from the CVM.

   We also may purchase our own shares for the purpose of becoming a privately-held company. See
“Going Private Process.” Moreover, we may acquire or issue put or call options related to our shares.




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Disclosure Requirements

     Once we become a publicly held corporation, we will be subject to the reporting requirements established
by the Brazilian Corporation Law and the CVM. Also, as a result of our listing on the Novo Mercado, we
will be required to meet the information requirements set forth in the Rules of the Novo Mercado.

Publishing of information from time to time and also at regular intervals

    The Brazilian Law No. 6,385/76 and CVM Instruction No. 358 require publicly held corporations to
furnish the CVM and the BOVESPA with periodic information that includes our annual financial statements,
quarterly financial statements, quarterly management reports and reports of our independent auditors.
Brazilian securities regulations also require our Company to file any shareholders’ agreements and notices
and minutes of shareholders’ meetings with the CVM.

    In addition to the disclosure requirements imposed by the CVM and Brazilian Corporation Law, we must
observe the following additional disclosure requirements:

    •    no later than six months following our listing on the Novo Mercado, we must disclose consolidated
         financial statements after the end of each quarter (except the last quarter of each year) and at the end
         of our fiscal year, including individual and consolidated cash flow statements which must indicate, at
         least, the changes in our cash and cash equivalents, divided into operational, finance and investment
         cash flows;

    •    in the second year following our listing on the Novo Mercado we must, no later than four months
         after the end of the fiscal year: (1) release our annual financial statements in accordance with U.S.
         GAAP or IFRS in reais or U.S. dollars, which must be published in their entirety, in the English
         language, together with (a) the management’s reports, (b) the explanatory notes which include our
         net revenue and shareholders’ equity calculated at the end of such fiscal year, prepared in accordance
         with Brazilian GAAP as well as any dividend proposal and (c) our independent auditors’ report; or;
         (2) publish, in the English language, the full financial statements, management reports and
         explanatory notes, prepared in accordance with Brazilian Corporation Law, accompanied by (a) an
         additional explanatory note regarding the reconciliation of year-end results and shareholders’ equity
         calculated in accordance with Brazilian GAAP and the U.S. GAAP or IFRS, as the case may be,
         which must include the main differences between the accounting principles used; and (b) the
         independent auditors’ report; and

    •    no more than 15 days following the term established by law for the publication of quarterly financial
         information, we must: (1) disclose, in its entirety, our quarterly financial information translated into
         the English language or (2) disclose our financial statements and consolidated financial statements in
         accordance with U.S. GAAP or IFRS, accompanied by the independent auditors’ report.

     According to the Novo Mercado Rules, we must submit to the BOVESPA, and disclose information
regarding, all agreements entered into between us and our controlling shareholders, directors and executive
officers, and subsidiaries and affiliates of the directors and executive officers, and of our controlling shareholder,
as well as agreements with other companies in which any of the above persons participate, whether sole
agreements or successive agreements, with or without the same purpose, at any time of the fiscal year, equal to
or higher than R$0.2 million, or equal to or higher than 1% of our net worth, whichever is greater.

Quarterly Information

     In its quarterly financial information, in addition to the information pursuant to applicable legislation, our
Company as a listed company on the Novo Mercado, must also disclose: (1) our consolidated balance sheet,
consolidated income statement, and commentary on our consolidated performance, if we are obliged to
disclose consolidated financial statements at year-end; (2) any direct or indirect ownership interest exceeding
five percent of our capital stock, looking through to any ultimate beneficial owners; (3) the number and
characteristics of our shares held directly or indirectly by our controlling shareholders, members of our board
of directors, our board of executive officers and our fiscal council, if one is constituted; (4) changes in the




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numbers of shares held by the controlling shareholders, members of our board of directors, our board of
executive officers and our fiscal council, if one is constituted, as to the number of shares held by them, in the
immediately preceding 12 months; (5) our cash flow statement, which must include explanatory notes; (6) the
number of free float shares, and their percentage in relation to the total number of issued shares; and (7) the
existence of an arbitration clause.

    The information referred to in items (3), (4), (6) and (7) shall be included in the Section “Other
Information that the Company deems Relevant” in our quarterly reports, and the information referred to in
items (3), (4) and (7) shall be included in the Section “Other Information Considered Important for a Better
Understanding of the Company” in our annual reports.

Disclosure of Trading by Our Controlling Shareholder, Members of Our Board of Directors,
Executive Officers or Members of Our Fiscal Council

     Our management and members of our fiscal council, if one is constituted, and any other technical or
consultative body shall disclose to us, to the CVM and to the BOVESPA, the number and type of shares
issued by us, our subsidiaries and our controlling companies that are held by each of them or by persons
related to them, as well as any changes in their respective monthly ownership. Information regarding the
acquisition of any shares (such as amount, type, price and date) must be provided to us within a period of
10 days of the end of the month in which these securities were traded. Moreover, Novo Mercado Rules require
our controlling shareholder to disclose such information to the BOVESPA, including information in
connection with our derivatives, within 10 days after the end of the month in which the securities were traded.

     According to CVM Instruction No. 358, if any of our controlling shareholders or any other shareholders
that elect the members of our fiscal council, directly or indirectly increases participation in our capital stock
by more than 5%, such shareholder must disclose to the CVM and to the BOVESPA, the following
information: (1) name and qualification of the person purchasing our shares; (2) participation objective and
intended amount of shares; (3) amount of shares, subscription bonus, as well as share subscription rights and
purchase option by type and class, convertible debentures previously held, directly or indirectly, by the
purchaser or anyone connected to it; and (4) information regarding any agreement relating to the exercise of
voting rights or the purchase and sale of our securities.

Disclosure of Material Developments

      CVM Instruction No. 358 regulates the disclosure and use of information related to material facts and
acts of publicly held companies. Such Instruction (1) defines material events as any decisions by controlling
shareholders, general shareholders’ meetings, or by officers of publicly-held companies, as well as any other
acts or facts of a political-administrative, technical, business or financial nature related to the relevant
business that may significantly influence (a) the market price of the securities; (b) investors’ decisions to buy,
sell, or preserve those securities, and (c) investors’ decision to exercise any rights inherent to titleholders of
securities issued by us; (2) gives examples of material events which may include, but are not limited to, the
execution of agreements or contracts regarding the transfer of the company’s control, a new shareholder, or a
shareholder leaving the company, who executed agreements or operating, financial, technological or
administrative cooperation agreements with us, merger, acquisitions, spin-offs involving our Company or
related parties; (3) imposes upon the investor’s relation directors, controlling shareholder, officers, and
members of the fiscal council and of any technical and consulting bodies, the obligation to disclose any
material development to the CVM; (4) requires simultaneous disclosure of material facts to all markets in
which a company’s securities are admitted for trading; (5) requires an acquirer of a controlling stake in the
company to publish material facts, including its intention, if any, to de-list the company’s shares, within one
year; (6) establishes rules regarding disclosure requirements in the acquisition and disposal of a material
stockholding stake; and (7) prohibits the use of insider information.

     Under CVM Instruction No. 358, and special circumstances, we may request confidential treatment of
certain material developments from the CVM, when our controlling shareholders or our management believes
that public disclosure could result in adverse consequences for our Company.




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Registration of Our Shares

     Our common shares will be held in book-entry form with Banco Itaú S.A. Transfer of our common shares
is carried out by means of book entry by Banco Itaú S.A., through a written order of the transferor or a
judicial authorization or order to effect such transfers, by debiting the share account of the seller and crediting
the share account of the buyer.

Regulation of the Brazilian Securities Market

     The Brazilian securities markets are regulated by the CVM, which was granted regulatory authority over
the stock exchanges and securities markets, by the CMN and the Central Bank, which, among other powers,
have the authority to license brokerage firms and regulate foeign investments and exchange transactions. The
Brazilian securities markets are regulated by Brazilian Corporation Law and Law No. 6,385/76, as amended.
Law No. 6,385/76 is the principal law regulating the Brazilian securities market, which is also regulated by
rules of the CVM, CMN and the Central Bank. These laws and regulations provide for, among other things,
disclosure requirements, restrictions on insider trading and price manipulation and protection of minority
shareholders. Moreover, they also regulate the licensing and supervision of brokerage firms and the
governance of Brazilian stock exchange.

     Under the Brazilian Corporation Law, a company is either publicly held and listed, a companhia aberta, or
privately held and unlisted, a companhia fechada. 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 may not simultaneously trade on the Brazilian over-the-counter markets. Shares of a listed company
also may be traded outside the stock exchange, under certain limitations imposed by this type of trade. In order
to be listed on the BOVESPA, a company must file for registration with the BOVESPA and the CVM.

     The trading of securities on the BOVESPA may be suspended at the request of a company in anticipation
of a material announcement. Trading may also be suspended on the initiative of the BOVESPA or the CVM
based on or due to, among other reasons, 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.

Trading on the BOVESPA For more information see “Market Information.”

Corporate Governance and Novo Mercado

   On June 29, 2007, we entered into the Novo Mercado Participation Agreement. For more information see
“Market Information.”

Public Meetings with Analysts

     Pursuant to the Novo Mercado Regulation, we must conduct a public meeting with analysts and any other
interested parties at least once annually, in order to disclose information about our financial and economic
situation, projects and perspectives.

Annual Calendar

     Pursuant to the regulations of the Novo Mercado companies and their management must send to the
BOVESPA and disclose to the market by the end of January of each year, an annual calendar, containing
information of scheduled corporate events, information about the company, and the date, place and time of the
events. Any documents that are addressed at such events must be published to the market and sent to the
BOVESPA. Any changes with respect to the scheduled corporate events must be sent to the BOVESPA and
promptly published to the market.




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Corporate Governance

    This section presents information on corporate governance practices adopted by us, and must be read in
conjunction with “Description of Capital Stock” and “Management.”

Overview

     Corporate governance is the set of rules applicable to the way companies are managed and monitored,
including the relationship among shareholders, members of the board of directors, members of the board of
executive officers, independent auditors and members of the fiscal council.

     Novo Mercado, as set forth below, is a listing segment of the BOVESPA aimed at the trading of shares
issued by companies that voluntarily adopt differentiated corporate governance practices and disclosure
requirements in addition to those already imposed by Brazilian law.

Corporate Governance Practices

    In 2000, the BOVESPA introduced three special listing segments, known as Levels 1 and 2 of
Differentiated Corporate Governance Practices and Novo Mercado, aimed at fostering a secondary market for
securities issued by Brazilian companies listed on the BOVESPA, by prompting these companies to follow
good corporate governance practices. 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 Brazilian law. These rules generally increase shareholders’ rights and
enhance the quality of information provided to shareholders.

Adherence to the Novo Mercado

     In order to keep the highest levels of corporate governance, we have entered into an agreement with the
BOVESPA to comply with the listing requirements of the Novo Mercado. Companies trading in the Novo
Mercado segment are voluntarily subject to certain stricter rules compared to what is required by the Brazilian
legislation. These companies have to (1) exclusively issue common shares; (2) keep at least 25% of the share
capital in outstanding shares; (3) detail and include additional quarterly information; and (4) provide annual
financial statements in English and based on internationally accepted accounting principles. Adherence to the
Novo Mercado rules occurs through the execution of agreements between the company, the management, the
controlling shareholders and the BOVESPA, and an amendment to a company’s bylaws to conform with the
rules of the Listing Regulation of the Novo Mercado.

   By entering into these agreements, companies must adopt the rules and practices imposed by the Novo
Mercado, in order to provide transparency in their activities and financial condition to the market, and more
power to minority shareholders. The principal rules of the Novo Mercado are briefly described below.

    A company that intends to list its securities in the Novo Mercado must obtain and keep its registry with
the CVM updated. The company must also enter into a Novo Mercado Participation Agreement and amend its
bylaws to the minimum requirements of the BOVESPA. The share capital must be comprised exclusively of
common shares and 25% of the share capital must be kept outstanding. There is also a prohibition for the
companies listed in the Novo Mercado of issuing and trading founder’s shares.

     The board of directors of the companies authorized to trade in the Novo Mercado must be comprised of at
least five members, elected by the shareholders at a shareholders’ meeting, for a two-year term and reelection
is permitted. At least 20% of the members of the board of directors must be independent members. All new
members of the board of directors and the board of executive officers must enter into an instrument of consent
prior to taking office. By signing the instrument of consent, the new directors agree to comply with and cause
our compliance with our Novo Mercado Participation Agreement, the Regulation of the Market Arbitration
Chamber and the Listing Regulation of the Novo Mercado.




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     The principal requirements imposed on the companies listed in the Novo Mercado are: (1) the mandatory
tendering of a public offering for the purchase of shares under certain circumstances, such as the delisting from
the Novo Mercado; (2) the mandatory distribution of shares to prevent shareholder concentration; (3) in the
event of sale of control, all shareholders are granted the same conditions offered to the controlling shareholder;
(4) quarterly disclosure of non-financial information, such as the number of shares held by the company’s
managers and the number of outstanding shares; (5) disclosure of additional information with respect to related
party transactions; and (6) compliance with the Regulation of the Market Arbitration Chamber of the BOVESPA
by the Company, its shareholders, managers and members of the fiscal council, to solve any possible conflicts
that may arise, in relation to or from the application, validity, effectiveness, construction, breach and its effects,
of the Brazilian Corporation Law, the Company’s bylaws, the regulations of the CMN, the Central Bank and the
CVM, as well as rules regulating the Brazilian capital markets, rules of the Novo Mercado, Regulations of the
Market Arbitration Chamber and the Novo Mercado Participation Agreement.

    As a result of CMN Resolution No. 2,829, of March 30, 2001, or the CMN Resolution No. 2,829, as
amended to set forth rules for the use of proceeds of private pension funds, shares issued by companies that
adopt differentiated corporate practices, such as those whose securities are admitted for trading in the special
segment of the Novo Mercado or whose listing classification is Level 1 or Level 2 in accordance with the
regulation of the BOVESPA, may have a larger participation in the investment portfolio of such private
pension funds. Therefore, since CMN Resolution No. 2,829, as amended, companies that adopt differentiated
corporate practices are an important and attractive investment for private pension funds, large investors in the
Brazilian capital markets. This may leverage the development of Brazilian capital market and benefit the
companies whose securities are traded here, including our company.

Code of Best Corporate Governance Published by the Instituto Brasileiro de Governança Corporativa,
or IBGC

     The Code of Best Corporate Governance Practices published by the IBGC, aims at (1) increasing the
value of the company, (2) improving its performance, (3) facilitating its access to capital at lower costs and
(4) contributing to its continuity; and the principles of this practice are transparency, equity, accountability
and corporate responsibility. We have adopted the following corporate governance best practices
recommended by the IBGC:

    •    exclusive issuance of common shares;

    •    “one share, one vote” policy;

    •    independent auditors to review our balance sheets and financial statements;

    •    clearly worded bylaws as to (1) the procedure for giving notice of shareholders’ meetings; (2) the duties
         and responsibilities of the board of directors and the board of executive officers; and (3) the voting
         system, election, removal and terms of office of the members of our board of directors and board
         of executive officers;

    •    transparent disclosure of the annual management reports;

    •    notices of shareholders’ meetings and relevant documentation available since the first call, including
         a detailed agenda and without the item “other matters,” definition of the place where our
         shareholders’ meetings will be held to facilitate attendance by most of our shareholders or their
         representatives;

    •    record of all the dissenting votes in the minutes of the shareholders’ meetings, when required;

    •    prohibition of use of privileged information and existence of a policy for disclosure of relevant information;




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    •   bylaws’ determination of arbitration as a way to solve any conflict among the shareholders and
        the company;

    •   free float aiming at the securities’ liquidity;

    •   the board of directors must consist of at least 20% of independent members (without any links with
        the company and the controlling shareholder);

    •   directors with experience in operational and financial issues and experience as member of other
        board of directors; and

    •   bylaws’ provision prohibiting the access to information and voting rights of directors whenever there
        is a conflict of interest.

    For more information on corporate governance practices adopted by the Company, see “Management”
and “Description of Capital Stock.”




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                                     DIVIDENDS AND DIVIDEND POLICY

Dividends

     Our bylaws provide that a minimum of 25% of our annual net income, as adjusted pursuant to the
Brazilian Corporation Law, should be available for distribution to our shareholders of (1) the mandatory
dividend or (2) payment of interest attributable to shareholders’ equity, pursuant to the rates and limits set
forth in the applicable tax laws. See “Description of capital stock – Dividends and dividend policy.” Any
amounts distributed to shareholders as payments of interest attributable to shareholders’ equity will be
deducted from the amount of any mandatory dividend in any year.

     We are required by the Brazilian Corporation 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 or payment of interest attributable to shareholders’ equity are
reviewed and approved, if applicable. According to our bylaws and the Brazilian Corporation Law, dividends
and interest attributable to shareholders’ equity are required to be paid within 60 days following the date of
their approval, unless our shareholders set another payment date, which must occur before the end of the year
in which the relevant dividend or interest attributable to shareholders’ equity is approved.

     We may only distribute dividends or interest attributable to shareholders’ equity if a mandatory dividend
is previously approved and distributed. If we distribute interim dividends or interim payments of interest
attributable to shareholders’ equity based on the accumulated profits or profit reserves reported in our
semi-annual financial statements in an amount equal to at least 25% of our net income during such interim
period, as adjusted pursuant to our bylaws, our board of directors may authorize the payment of interim profit
sharing to our executive officers.

Dividend Policy

    We intend to declare and pay dividends and/or interest attributable to shareholders’ equity to our
shareholders annually in a amount equivalent to at least 25% of yearly net income, as required by our bylaws
and by the Brazilian Corporation Law.

     The declaration and payment of annual dividends in addition to the mandatory dividend must be
approved by a majority of our shareholders at an annual shareholders’ meeting, and will depend on several
factors, including: our results of operations, our financial condition, our cash requirements and other factors
deemed relevant by our shareholders or members of our board of directors. As part of our tax planning, we
may consider paying interest attributable to shareholders’ equity instead of dividends.

   We did not distribute dividends in 2002 and 2003. We distributed dividends to our shareholders in the
amount of R$1.5 million, R$6.2 million and R$1.6 million in 2004, 2005 and 2006, respectively.

    We have not distributed interest attributable to shareholders’ equity in the past five fiscal years.

     We issued 9.50% notes due 2017 in an aggregate principal amount of US$150.0 million on January 19,
2007 and US$50.0 million on February 6, 2007, through our wholly subsidiary Minerva Overseas Ltd.. These
notes are guaranteed by us. Interest on these notes accrues at a rate of 9.50% per annum and is payable every
six months on February 1 and August 1 of each year, beginning on August 1, 2007. The indenture governing
these notes require us to comply with certain covenants, including limiting our ability to pay dividends of up
to 50% of the net income for the fiscal year.




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                                                  TAXATION

Brazil

    The following discussion summarizes the main Brazilian tax consequences of the acquisition, ownership
and disposition of our common shares by a holder that is not domiciled in Brazil for purposes of Brazilian
taxation (“Non-Brazilian Holder”). This discussion is based on Brazilian law as currently in effect. Any
change in applicable 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. 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 our common shares. Prospective purchasers of
common shares are advised to consult their own tax advisors with respect to an investment in shares in light
of their particular investment circumstances.

Income Tax

Dividends

     Dividends paid by a Brazilian company, such as ourselves, including stock dividends and other dividends
paid to a Non-Resident Holder are currently not subject to withholding income tax in Brazil, to the extent
that such amounts are related to profits generated as of January 1, 1996.

Interest Attributable to 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 net equity and treat those payments as a
deductible expense for purposes of calculating Brazilian corporate income tax, and, since 1997, social
contribution on profits as well, as far as the limits described below are observed. 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 the amount of the deduction may not exceed the greater of:

    •    50% of net income (after social contribution on profits and before the provision for corporate income
         tax and the amounts attributable to shareholders as net interest on equity) related to the period in
         respect of which the payment is made; and

    •    50% 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.

     Payment of interest to a Non-Resident Holder is 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% (“Tax-Haven Residents”).
These payments may be included, at their net value, as part of any mandatory dividend. To the extent payment
of interest on net 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, is at least equal to the mandatory dividend.

Capital gains

     According to Law No. 10,833/03, the gains related to disposition or sale of assets located in Brazil, such
as the common shares, are subject to income tax in Brazil, regardless of whether the sale or the disposition
 is made by the Non-Resident Holder to a resident or person domiciled in Brazil or not.




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     As a general rule, gains realized as a result of a disposition transaction of common shares are the positive
difference between the amount realized on the sale or exchange of the security and its acquisition cost. There
is a controversy regarding the currency that should be considered for the purposes of determining the
acquisition cost of the investment in Brazil. In sum, the controversy refers to whether the acquisition cost
shall be determined based on the amount in foreign currency or the amount in local currency registered with
the Brazilian Central Bank.

    For purposes of taxation of gains earned in a sale or disposition of shares, two situations should be considered:

    •    gains earned by Non-Resident Holders registered under Resolution No. 2,689, other than Tax-Haven
         Residents, are not subject to income tax (unless the sale takes place outside a Brazilian stock
         exchange, in which case the gains are subject to a 15.0% income tax); and

    •    gains earned by Non-Resident Holders who invest in Brazil through any means other than under
         Resolution No. 2,689 (“Non-Registered Investors”) and Tax-Haven Residents – whether or not they
         are registered under Resolution No. 2,689.

     In this last situation, gains derived from the sale of the common shares on the Brazilian stock exchange
by Non-Registered Investors and Tax-Haven Investors are subject to income tax at a rate of 15.0%. In this last
situation, gains derived from the sale of common shares on the Brazilian stock exchange by Non-Resident
Holders and Tax-Haven Residents are subject to income tax at a rate of 15.0%. The sale or disposal of
common shares will also be subject to withholding income tax at a rate of 0.005%. Furthermore, a sale of
common shares outside a Brazilian stock exchange will be subject to income tax at a rate of 15.0% or, in the
case of Tax-Haven Residents, 25.0%.

     In the case of redemption of securities or capital reduction by a Brazilian corporation, such as ourselves,
the positive difference between the amount effectively received by the Non-Resident Holder and the
corresponding acquisition cost is treated, for tax purposes, as capital gain derived from sale or exchange of
common shares not carried out on a Brazilian stock exchange market, and is therefore subject to income tax at
the rate of 15% or 25% (in case of Tax-Haven Residents), as the case may be.

Tax on Foreign Exchange and Financial Transactions – IOF TAX

Foreign Exchange Transactions

     Brazilian law imposes a Tax on Foreign Exchange Transactions, or IOF/Exchange Tax, due 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%. However, any increase in rates may only 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, on
transactions involving bonds and securities, including those carried out on a Brazilian stock exchange. The
rate of IOF applicable to transactions involving stocks is currently zero, although the Minister of Finance is
permitted to increase such rate at any time up to 1.5% per day, but only in respect to future transactions.

Temporary Contribution on Financial Transactions – CPMF Tax

Any transaction carried out by a holder of securities in Brazil that results in a transfer of reais from a checking
account maintained by such holder (or its custodian) with a financial institution may be subject to the CPMF Tax,
at a rate of 0.38%. Currently, the CPMF rate applicable to the transfer of funds for the acquisition of shares on a
Brazilian stock exchange or an organized over-the-counter market is reduced to zero. In addition, according to
Law No. 11,312 dated as of June 27, 2006, the CPMF tax rate is reduced to zero on withdrawals from bank
accounts used to acquire shares in a public offering made outside a Brazilian stock exchange.




                                                        127
    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.

    Although the CPMF tax will remain in effect until December 31, 2007, no assurance can be given that
such term will not be extended.

Other Brazilian Taxes

    There are no Brazilian inheritance, gift or succession taxes applicable to the ownership, transfer or
disposition of common shares by a non-resident holder except for gift and inheritance taxes imposed by some
Brazilian states on gifts or bequests by Non-Resident Holder 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.

United States Federal Income Taxation

     The following is a description of the principal United States federal income tax consequences that may be
relevant with respect to the acquisition, ownership and disposition of our common shares. This description
addresses only the United States federal income tax considerations of holders that are initial purchasers of our
common shares pursuant to this offering and that will hold our common shares as capital assets. This description
does not address tax considerations applicable to holders that may be subject to special tax rules, including:

    •    banks, financial institutions or insurance companies;

    •    real estate investment trusts, regulated investment companies or grantor trusts;

    •    dealers or traders in securities or currencies;

    •    tax-exempt entities;

    •    persons that received our common shares as compensation for the performance of services;

    •    persons that will hold our common shares as part of a “hedging,” “conversion” or other risk
         reduction transaction or as a position in a “straddle” for United States federal income tax purposes;

    •    certain former citizens or long-term residents of the United States;

    •    persons that have a “functional currency” other than the U.S. dollar; or

    •    holders that own or are deemed to own 10.0% or more, by voting power or value, of our common shares.

    Moreover, this description does not address the United States federal estate and gift or alternative
minimum tax consequences, nor any state, local or foreign tax consequences of the acquisition, ownership and
disposition of our common shares.

     This description is based on the Internal Revenue Code of 1986, as amended, (the “Code”), existing,
proposed and temporary United States Treasury Regulations and judicial and administrative interpretations
thereof, in each case as in effect and available on the date hereof. All of the foregoing are subject to change
(which change could apply retroactively or with differing interpretations) which could affect the tax
consequences described below.




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    For purposes of this description, a “U.S. Holder” is a beneficial owner of our common shares that, for
United States federal income tax purposes, is:

    •    an individual citizen or resident of the United States;

    •    a corporation created or organized in or under the laws of the United States or any state thereof,
         including the District of Columbia;

    •    an estate the income of which is subject to United States federal income taxation regardless of its
         source; or

    •    a trust if such trust validly elects to be treated as a United States person for United States federal
         income tax purposes or if (1) a court within the United States is able to exercise primary supervision
         over its administration and (2) one or more United States persons have the authority to control all of
         the substantial decisions of such trust.

    If a partnership (or any other entity treated as a partnership for United States federal income tax purposes)
holds our common shares, the tax treatment of such partnership, or a partner in such partnership, will
generally depend on the status of the partner and the activities of the partnership. Such partner or partnership
should consult its tax advisor as to its tax consequences.

     Persons considering the purchase of the common shares should consult their own tax advisor with respect
to the United States federal, state, local and foreign tax consequences of acquiring, owning or disposing of
 our common shares.

Internal Revenue Service Circular 230 Disclosure

    Pursuant to Internal Revenue Service Circular 230, we hereby inform you that the description set
forth herein with respect to U.S. federal tax issues was not intended or written to be used, and such
description cannot be used, by any taxpayer for the purpose of avoiding any penalties that may be
imposed on the taxpayer under the Code. Such description was written to support the marketing of the
common shares. Taxpayers should seek advice based on the taxpayer’s particular circumstances from
an independent tax advisor.

Distributions

     Subject to the discussion below under “—Passive Foreign Investment Company Considerations,” the
gross amount of any distribution of cash or property (other than certain distributions, if any, of our common
shares distributed pro rata to all our shareholders), before reduction for any Brazilian taxes withheld
therefrom, including withholding taxes attributable to interest on equity, will be includible in income on the
day on which the dividends are actually or constructively received by a U.S. Holder. Such distributions will
be treated as dividend income to the extent such distributions are paid out of the current or accumulated
earnings and profits of our Company as determined under United States federal income tax principles. Under
current law, dividends received in taxable years beginning on or before December 31, 2010 by non-corporate
U.S. Holders on shares of certain foreign corporations may be subject to United States federal income tax at
lower rates than other types of ordinary income if certain conditions are met. Currently, we do not believe that
dividends that we will pay on the common shares meet these conditions. Dividends paid to the U.S. Holders
will not be eligible for the dividends received deduction generally allowed to corporate U.S. Holders. Subject
to the discussion below under “—Passive Foreign Investment Company Considerations,” to the extent, if any,
that the amount of any distribution by us exceeds our current and accumulated earnings and profits as
determined under United States federal income tax principles, it will be treated first as a tax-free return of the
U.S. Holder’s adjusted tax basis in the common shares and thereafter as capital gain. We do not maintain
calculations of our earnings and profits under United States federal income tax principles. Therefore, U.S.
Holders should expect that the entire amount of distributions by our Company generally will be treated as
dividends for United States federal income tax purposes.




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     Dividends paid to U.S. Holders in reais will be includable in income in an amount equal to the U.S.
dollar value of the reais based on the prevailing spot market exchange rate in effect on the date of receipt,
whether or not converted into U.S. dollars at that time. Assuming the payment is not converted at that time,
the U.S. Holder will have a tax basis in reais equal to the U.S. dollar value of the reais, which will be used to
measure gain or loss due to subsequent changes in exchange rates. Any gain or loss that a U.S. Holder
recognizes on a subsequent conversion of reais into U.S. dollars (or other disposition) generally will be U.S.
source ordinary income or loss. If dividends received in reais are converted into U.S. dollars on the day they
are received, the U.S. Holder generally will not be required to recognize foreign currency gain or loss in
respect of the dividend income. The amount of any distribution of property other than cash will be the fair
market value of such property on the date of distribution.

     Dividends on the common shares received by a U.S. Holder generally will be treated as foreign source
income for U.S. foreign tax credit purposes. Subject to limitations under U.S. federal income tax law
concerning credits or deductions for foreign taxes and certain exceptions for short-term and hedged positions, a
Brazilian withholding tax, if any, imposed on dividends would be treated as a foreign income tax eligible for
credit against a U.S. Holder’s U.S. federal income tax liability (or at a U.S. Holder’s election, may be deducted
in computing taxable income if the U.S. Holder has elected to deduct all foreign income taxes for the taxable
year). The limitation on foreign taxes eligible for the U.S. foreign tax credit is calculated separately with respect
to specific “baskets” of income. For this purpose, dividends on the common shares should generally constitute
“passive income”, or in the case of certain U.S. Holders, “general category income.”

     The rules with respect to foreign tax credits are complex, and U.S. Holders are urged to consult their own
tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

     Subject to the discussion below under “—Backup Withholding Tax and Information Reporting
Requirements,” a Non-U.S. Holder of common shares generally will not be subject to U.S. federal income or
withholding tax on dividends received the common shares, unless such income is effectively connected with
the conduct by such Non-U.S. Holder of a trade or business in the United States.

Sale or Exchange of Common Shares

      Subject to the discussion below under “—Passive Foreign Investment Company Considerations,” a U.S.
Holder generally will recognize gain or loss on the sale or exchange of the common shares equal to the
difference between the amount realized (before the deduction of any Brazilian tax) on such sale or exchange
and the U.S. Holder’s adjusted tax basis in the common shares. Subject to the discussion below under
 “–Passive Foreign Investment Company Considerations,” such gain or loss will be capital gain or loss. In the
case of a non-corporate U.S. Holder, the maximum marginal U.S. federal income tax rate applicable to such
gain will be lower than the maximum marginal U.S. federal income tax rate applicable to ordinary income
(other than certain dividends) if such U.S. Holder’s holding period for such common shares exceeds one year
(i.e., such gain is long-term capital gain). Gain or loss, if any, recognized by a U.S. Holder generally will be
treated as U.S. source gain or loss, as the case may be. The deductibility of capital losses is subject to
limitations under the Code. If any gain from the sale or exchange of common shares is subject to Brazilian
tax, U.S. Holders may not be able to credit such taxes against their U.S. federal income tax liability under the
U.S. foreign tax credit limitations of the Code since such gain generally would be United States source
income, unless such tax can be credited (subject to applicable limitations) against tax due on other income
treated as derived from foreign sources. Alternatively, a U.S. Holder may take a deduction for the Brazilian
income tax if such U.S. Holder does not take a credit for any foreign income tax during the taxable year.

     The initial tax basis of a U.S. Holder's common shares will be the United States dollar value of the reais-
denominated purchase price determined on the date of purchase. If the common shares are treated as traded on
an “established securities market,” a cash basis U.S. Holder, or, if it elects, an accrual basis U.S. Holder, will
determine the dollar value of the cost of such common shares by translating the amount paid at the spot rate of
exchange on the settlement date of the purchase. The conversion of U.S dollars to reais and the immediate use of
that currency to purchase common shares, generally will not result in a taxable gain or loss for a U.S. Holder.




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    With respect to the sale or exchange of our common shares, the amount realized generally will be the
U.S. dollar value of the payment received determined on (1) the date of receipt of payment in the case of a
cash basis U.S. Holder and (2) the date of disposition in the case of an accrual basis U.S. Holder. If the common
shares are treated as traded on an “established securities market,” a cash basis taxpayer, or, if it elects, an
accrual basis taxpayer, will determine the U.S. dollar value of the amount realized by translating the amount
received at the spot rate of exchange on the settlement date of the sale.

    Subject to the discussion below under “—Backup Withholding Tax and Information Reporting
Requirements,”a Non-U.S. Holder of the common shares, generally will not be subject to United States federal
income or withholding tax on any gain realized on the sale or exchange of such common shares unless:

    •    such gain is effectively connected with the conduct by such Non-U.S. Holder of a trade or business
         in the United States; or

    •    in the case of any gain realized by an individual Non-U.S. Holder, such holder is an individual
         present in the United States for 183 days or more in the taxable year of such sale or exchange and
         certain other conditions are met.

Passive Foreign Investment Company Considerations

    A non-U.S. corporation will be classified as a “passive foreign investment company”, or a PFIC, for U.S.
federal income tax purposes in any taxable year in which, after applying certain lookthrough rules, either:

    •    at least 75 percent of its gross income is “passive income”; or

    •    at least 50 percent of the average value of its gross assets is attributable to assets that produce
         “passive income” or are held for the production of “passive income.”

   Passive income for this purpose generally includes dividends, interest, royalties, rents and gains from
commodities and securities transactions.

Based on certain estimates of our gross income and gross assets, the nature of our business and the anticipated
amount of goodwill (which is determined in large part by the price of our stock), we believe that we were not
a PFIC for our taxable year ended December 31, 2006. Our actual status in the current year and in future years
will depend on our assets and activities in those years and the value of the Company’s outstanding stock as
determined at the end of each calendar quarter. We have no reason to believe that our assets, activities or the
value of our stock will change in a manner that would cause our Company to be classified as a PFIC in our
2007 taxable year or in the future, but there can be no assurance that we will not be considered a PFIC for any
taxable year. If we were a PFIC, a U.S. Holder of common shares generally would be subject to imputed
interest charges and other disadvantageous tax treatment with respect to any gain from the sale or exchange
of, and certain distributions with respect to, the common shares. Each U.S. Holder should consult its own tax
advisor regarding the tax consequences that would arise if we were treated as a PFIC.

Qualified electing fund election and mark-to-market election

     Where a company that is a PFIC meets certain reporting requirements, a U.S. shareholder can avoid the
adverse consequences described above by making a “qualified electing fund” (“QEF”) election to be taxed
currently on its proportionate share of the PFIC’s ordinary income and net capital gains. However, we do not
intend to comply with the necessary accounting and record keeping requirements that would allow a U.S.
Holder to make a QEF election with respect to the Company. If the common shares of a PFIC are “regularly
traded” on a “qualified exchange,” a U.S. Holder may make a mark-to-market election with respect to the
common shares. If a U.S. Holder makes the mark-to-market election, for each year in which the Company is
PFIC, the holder will generally include as ordinary income the excess, if any, of the fair market value of the
common shares, at the end of the taxable year over their adjusted tax basis, and will be permitted an ordinary
loss in respect of the excess, if any, of the adjusted tax basis of the common shares over their fair market
value at the end of the taxable year (but only to the extent of the net amount of previously included income as
a result of the mark-to-market election). If a U.S. Holder makes the election, the holder’s tax basis in the




                                                        131
common shares will be adjusted to reflect the amount of any such income or loss. Any gain recognized on the
sale or other disposition of common shares will be treated as ordinary income. The common shares will be
considered “marketable stock” if they are traded on a qualified exchange, other than in de minimis quantities,
on at least 15 days during each calendar quarter. The BOVESPA may constitute a qualified exchange for this
purpose provided it meets certain trading volume, listing, financial disclosure, surveillance, and other
requirements set forth in applicable U.S. Treasury regulations. However, we cannot be certain that our
common shares will continue to trade on the BOVESPA or that our common shares will be traded on at least
15 days in each calendar quarter in other than de minimis quantities. Each U.S. Holder should consult its own
tax advisor to determine whether a mark-to-market election is available and the consequences of making an
election if we were characterized as a PFIC.

Backup Withholding and Information Reporting Requirements

     United States backup withholding and information reporting requirements generally apply to certain
payments to certain non-corporate holders of our common shares. Information reporting generally will apply
to payments of dividends on, and to proceeds from the sale or redemption of, common shares made within the
United States, or by a U.S. payor or U.S. middleman, to a holder of our common shares, other than an exempt
recipient, including a corporation, a payee that is not a United States person that provides an appropriate
certification and certain other persons. A payor will be required to withhold from any payments of dividends
on, or the proceeds from the sale or redemption of, our common shares within the United States, or by a U.S.
payor or U.S. middleman, to a holder, other than an exempt recipient, if such holder fails to furnish its correct
taxpayer identification number or otherwise fails to comply with, or establish an exemption from, such
backup withholding requirements. The backup withholding rate is 28.0% for taxable years through 2010.

     Backup withholding is not an additional tax. A U.S. Holder generally may obtain a refund of any
amounts withheld under the backup withholding rules that exceed such holder’s U.S. federal income tax
liability by filing a refund claim with the Internal Revenue Service. A U.S. Holder will be entitled to credit
any amounts withheld under the backup withholding rules against its U.S. federal income tax liability
provided the required information is furnished to the Internal Revenue Service in a timely manner.

    The above description is not intended to constitute a complete analysis of all tax consequences
relating to acquisition, ownership and disposition of our common shares. U.S. Holders should consult
their own tax advisor concerning the tax consequences of their particular situation.




                                                      132
                                                             PLAN OF DISTRIBUTION

     Under the terms and subject to the conditions set forth in the Brazilian underwriting agreement,
dated July 18, 2007, the Brazilian underwriters have severally agreed to place the following respective
number of common shares:

Initial Purchasers                                                                                                                         Number of Shares
Banco de Investimentos Credit Suisse (Brasil) S.A ............................................................                                15,600,000
Banco Itaú BBA S.A. ..........................................................................................................                 8,400,000
Total ..................................................................................................................................      24,000,000

      In addition, pursuant to the terms and subject to the conditions set forth in the placement facilitation
agreement, dated July 18, 2007, Credit Suisse Securities (USA) LLC, Itaú Securities Inc. and Citigroup Global
Markets Inc. are acting as placement agents with respect to the offering of common shares sold to investors
located outside of Brazil that are authorized to invest in Brazilian securities under the requirements established
by the CMN and the CVM. See “—Brazilian Requirements for the Purchase of Common Shares” below.

      The Brazilian underwriters have agreed to purchase any common shares placed outside of Brazil in the
initial offering that are not taken up by purchasers who have agreed to do so, other than those common shares
covered by the over-allotment option described below. The Brazilian underwriters propose to offer the
common shares initially at the offering price on the cover page of this offering circular. After the initial
offering, the Brazilian underwriters may offer common shares at prices which are different from the original
offering price.

     We have granted the Brazilian underwriters a 30-day option to place up to 3,600,000 additional common
shares to cover over-allotments, if any.

      The common shares have not been, and will not be, registered under the Securities Act, and they may
not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except to
qualified institutional buyers (as defined in Rule 144A) in reliance on Section 4 of the Securities Act and to
non-U.S. persons in offshore transactions in reliance on Regulation S under the Securities Act. Each of the
placement agents and the Brazilian underwriters will not offer, sell, place or deliver common shares as part of
its distribution at any time within the United States or to, or for the account or benefit of, U.S. persons, except
to qualified institutional buyers (as defined in Rule 144A) purchasing for their own account or for the
accounts of qualified institutional buyers. Terms used in this paragraph have the meanings given to them by
Regulation S and Rule 144A under the Securities Act. Resales of the common shares are restricted as
described under “—Transfer Restrictions.”

     In addition, until 40 days after the commencement of the offering, an offer or sale of common shares within
the United States by a dealer (whether or not it is participating in the offering) may violate the registration
requirements of the Securities Act if such offer or sale is made otherwise than pursuant to Rule 144A.

     Purchasers of common shares outside of the United States may be required to pay stamp taxes and other
charges in compliance with the laws and practices of the country of purchase in addition to the price to
investors on the cover page of this offering circular.

      We and the selling shareholders have agreed to indemnify the placement agents and the Brazilian
underwriters against liabilities, including liabilities under the Securities Act and under the Brazilian securities
laws, or to contribute to payments that they may be required to make in that respect, subject to limitations in
the placement facilitation agreement and the Brazilian underwriting agreement.




                                                                                 133
Brazilian Requirements for the Purchase of Common Shares

     Investors residing outside Brazil are authorized to purchase equity instruments, including the common
shares, on the Brazilian stock exchanges provided that they comply with the registration requirements set
forth in Resolution No. 2,689 and CVM Instruction No. 325 or register their investment as a foreign direct
investment under Law No. 4,131.

     With certain limited exceptions, Resolution 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, futures or
organized over-the-counter market licensed by the CVM. Investments and remittances outside Brazil of gains,
dividends, profits or other payments in respect of our common shares are made through the “exchange
market” as further described under “Exchange Rates.”

    In order to become a Resolution 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 the CVM; and

    •    through its representative, register itself as a foreign investor with the CVM and the investment with
         the Central Bank.

     Securities and other financial assets held by foreign investors pursuant to Resolution 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 who qualify under CMN Resolution No.
2,689 is generally restricted to transactions on the Brazilian stock exchanges and organized over-the-counter
markets licensed by the CVM.

     Foreign direct investors under Law No. 4,131 may sell their shares in both private or open market
transactions, but these investors will generally be subject to less favorable tax treatment on gains.

    A foreign direct investor under Law No. 4,131 must:

    •    register as a foreign investor with the Central Bank;

    •    obtain a tax payer identification number from Brazilian tax authorities;

    •    appoint a tax representative in Brazil; and

    •    appoint a representative in Brazil for service of process in respect of suits based on the Brazilian
         Corporate Law.

    Payment for the common shares will be required to be made through the facility of the CBLC.

Lock-Up Agreements and Other Restrictions

     We have agreed that, subject to certain exceptions, not to offer, sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, or file with the SEC or the CVM a registration statement relating to, any
shares of our common stock, or securities convertible into or exchangeable or exercisable for any shares of
our common stock, or publicly disclose an intention to make any offer, sale, pledge, disposition or filing,
without the prior written consent of Credit Suisse Securities (USA) LLC and Itaú Securities, Inc., on behalf of
the placement agents and the Brazilian underwriters, for a period of 180 days after the date of this offering circular.




                                                         134
     The selling shareholders, our executive officers and our directors also have agreed, subject to certain
exceptions, that they will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly,
any of our common shares, or securities convertible into or exchangeable or exercisable for any of our
common shares, enter into a transaction which would have the same effect, or enter into any swap, hedge or
other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of our
common shares, whether any of these transactions are to be settled by delivery of our common shares or such
other securities, in cash or otherwise, or publicly disclose the intention to make any offer, sale, pledge or
disposition, or to enter into any transaction, swap, hedge or other arrangement, without, in each case, the prior
written consent of Credit Suisse Securities (USA) LLC and Itaú Securities, Inc., on behalf of the placement
agents and the Brazilian underwriters, until 180 days after the date of this offering circular.

    Additionally, according to the rules of the Novo Mercado, the selling shareholders, our directors and our
executive officers may not sell and/or offer to sell any of the common shares, as well as any securities or other
derivatives linked to securities issued by us, for 180 days after the commencement of the distribution of the
common shares and the execution of the Terms of Consent of the Novo Mercado. After the expiration of this
180-day period, the selling shareholders, our directors and our executive officers may not, for an additional
six month period, sell and/or offer to sell more than 40% of the securities held by such parties.

    Stabilization and Other Transactions

     In connection with the offering, Banco de Investmentos Credit Suisse (Brasil) S.A. acting through its
brokerage house Credit Suisse (Brasil) S.A. Corretora de Títulos e Valores Mobiliários on behalf of the
Brazilian underwriters, may engage in transactions in the BOVESPA that stabilize, maintain or otherwise
affect the price of the common shares. Specifically, it may over-allot in connection with the offering, creating
a syndicate short position. In addition, it may bid for, and purchase, common shares in the open market to
cover syndicate short positions or stabilize the price of the common shares.

     These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of
raising or maintaining the market price of the common shares or preventing or delaying a decline in the
market price of the common shares. As a result, the price of the common shares may be higher than the price
that might otherwise exist in the absence of these transactions. These transactions, if commenced, may be
discontinued at any time. Reports on stabilization activity are required to be furnished to the CVM.
Stabilization activities may be carried out for up to 30 days from July 19, 2007, the date of the announcement
in Brazil of this offering. A stabilization activities agreement, in a form approved by the CVM, has been
executed simultaneously with the execution of the Brazilian underwriting agreement.

Relationship between the Company and Placement Agents and Brazilian Underwriters

     From time to time, certain of the placement agents, the Brazilian underwriters and their affiliates have
provided, and may in the future provide, investment banking and commercial banking services to us and our
affiliates for which they have received or may receive customary fees and commissions.

     Due to the long-term relationship between our company and Banco de Investimentos Credit Suisse
(Brasil) S.A., during which Banco de Investimentos Credit Suisse (Brasil) S.A. has provided investment
banking services to us (including the structuring of several financings), we granted to Banco de Investimentos
Credit Suisse (Brasil) S.A. a bonus, or the Bonus. The payment of the Bonus is conditioned on the successful
completion of this offering, and will be settled on a date previously agreed upon by us and Banco de
Investimentos Credit Suisse (Brasil) S.A. The amount of the Bonus will be equal to the real equivalent of
US$15.0 million multiplied by (((the value of the company less the gross proceeds received by us from this
offering) divided by R$600.0 million) minus one). Based upon a price per share of R$18.50 and assuming that
Banco de Investimentos Credit Suisse (Brasil) S.A. exercises its over-allotment option in full, we would pay
to Banco de Investimentos Credit Suisse (Brasil) S.A. an amount equivalent to R$19.4 million.

     In addition, we have entered into two export pre-payment facilities with Banco de Investimentos Credit
Suisse (Brasil) S.A., each in the aggregate principal amount of US$15.0 million, with one maturing in the
second half of 2010 and the other maturing in the second half of 2011. We entered into these facilities to
strengthen our working capital and to improve our debt profile.




                                                        135
Selling Restrictions

     Other than with respect to the public offering of the common shares listed on the BOVESPA, no action
has been or will be taken in the United States, the United Kingdom or any country or jurisdiction by us or the
Brazilian underwriters or the placement agents that would permit a public offering of the common shares, or
possession or distribution of any offering material in relation thereto, in any country or jurisdiction where
action for that purpose is required. Accordingly, the common shares may not be offered or sold, directly or
indirectly, and neither this offering circular nor any other offering material or advertisements in connection
with the common shares may be distributed, published, in or from any country or jurisdiction, except in
compliance with any applicable rules and regulations of any such country or jurisdiction. This offering
circular does not constitute an offer to sell or a solicitation of an offer to purchase in any jurisdiction where
such offer or solicitation would be unlawful. Persons into whose possession this offering circular comes are
advised to inform themselves about and to observe any restrictions relating to the offering of the common
shares, the distribution of this offering circular and resale of the common shares. See “Transfer Restrictions.”

    European Economic Area

    In relation to each Member State of the European Economic Area which 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”), the common
shares have not been offered and will not be offered to the public in that Relevant Member State prior to the
publication of a prospectus in relation to the common shares which 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 it may, with effect from and including the Relevant Implementation Date, the common
shares may be offered to the public in that Relevant Member State at any time:

    •    to legal entities which are 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 which 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 443,000,000 and (3) an annual net turnover of
         more than 450,000,000, as shown in its last annual or consolidated accounts; or

    •    in any other circumstances which do not require the publication by the Issuer of a prospectus
         pursuant to Article 3 of the Prospectus Directive.

    United Kingdom

    Each placement agent:

    •    has only communicated or caused to be communicated and will only communicate or cause to be
         communicated an invitation or inducement to engage in investment activity (within the meaning of section
         21 of the Financial Services and Markets Act 2000, or the FSMA) to persons who have professional
         experience in matters relating to investments falling with Article 19(5) of the Financial Services and
         Markets Act 2000 (Financial Promotion) Order 2005 or in circumstances in which section 21 of FSMA
         does not apply; and

    •    with all applicable provisions of the FSMA with respect to anything done by it in relation to the common
         shares in, from or otherwise involving the United Kingdom.




                                                       136
    France

     The common shares may not be offered or sold, directly or indirectly, to the public in France. Neither this
offering circular nor any other offering material has been nor will be submitted to the clearance procedure of
the “Commission des Operations de Bourse,” and it may not be released or distributed to the public in France.
The common shares may only be offered to and purchased by investors in France acting for their own account
and in accordance with article L. 411-2 of the French Monetary and Financial Code, and decree No. 98-880
dated October 1, 1998, provided they are “qualified investors” within the meaning of said article L. 411-2 and
said decree. Any resale, directly or indirectly, to the public of the common shares offered may be effected
only in compliance with article L. 411-1 of the French Monetary and Financial Code.

    Germany

     The common shares will not be offered, sold or publicly promoted or advertised in the Federal
Republic of Germany other than in compliance with the German Securities Prospectus Act (Gesetz über
die Erstellung, Billigung und Veröffentlichung des Prospekts, der beim öffentlicken Angebot von
Wertpapieren oder bei der Zulassung von Wertpapieren zum Handel an einem organisierten Markt zu
veröffenlichen ist—Wertpapierprospektgesetz) as of 22 June 2005, effective as of 1 July 2005 as amended,
or any other laws and regulations applicable in the Federal Republic of Germany governing the issue,
offering and sale of securities. No selling prospectus (Verkaufsprospekt) within the meaning of the German
Securities Selling Prospectus Act has been or will be registered within the Financial Supervisory Authority
of the Federal Republic of Germany or otherwise published in Germany.

    Italy

     The common shares may not be offered, sold or delivered in the Republic of Italy, and copies of this
offering circular or any other document relating to the common shares may not be distributed in the Republic
of Italy, other than to professional investors (operatori qualificati), as defined in article 31, second paragraph,
of Consob Regulation No. 11522 of July 1, 1998, as amended (the “Broker-Dealers Regulation”). Any offer,
sale or delivery of the common shares in the Republic of Italy must be (a) made by an investment firm, bank
or financial intermediary permitted to conduct such activities in the Republic of Italy in accordance with
the Legislative Decree No. 58 of February 24, 1998 (the “Financial Services Act”) as implemented by the
Broker-Dealers Regulation; and (b) in compliance with any other applicable laws and regulations.

    The Netherlands

     The common shares may not be offered, sold, transferred or delivered, in or from the Netherlands, as part
of the initial distribution or as part of any reoffering, and neither this offering circular nor any other document
in respect of the offering may be distributed in or from the Netherlands, other than to individuals or legal
entities who or which trade or invest in securities in the conduct of their profession or trade (which includes
banks, investment banks, securities firms, insurance companies, pension funds, other institutional investors
and treasury departments and finance companies of large enterprises), in which case, it must be made clear
upon making the offer and from any documents or advertisements in which a forthcoming offering of
common shares is publicly announced that the offer is exclusively made to said individuals or legal entities.

    Spain

     The common shares have not been registered with the Spanish National Commission for the Securities
Market and, therefore, no common share may be publicly offered, sold or delivered, nor any public offer in
respect of the common shares made, nor may any offering circular or any other offering or publicity material
relating to the common shares be distributed in Spain by the placement agents or any person acting on their
behalf, except in compliance with Spanish laws and regulations.




                                                       137
                                      NOTICE TO CANADIAN RESIDENTS

Resale Restrictions

     The distribution of the common shares in Canada is being made only on a private placement basis exempt
from the requirement that we prepare and file a prospectus with the securities regulatory authorities in each
province where trades of the common shares are made. Any resale of the common shares in Canada must be
made under applicable securities laws which will vary depending on the relevant jurisdiction, and which may
require resales to be made under available statutory exemptions or under a discretionary exemption granted by
the applicable Canadian securities regulatory authority. Purchasers are advised to seek legal advice prior to
any resale of the common shares.

Representations of Purchasers

     By purchasing the common shares in Canada and accepting a purchase confirmation, a purchaser is
representing to us, the selling shareholders and the dealer from whom the purchase confirmation is received that:

    •    the purchaser is entitled under applicable provincial securities laws to purchase the common shares
         without the benefit of a prospectus qualified under those securities laws;

    •    where required by law, the purchaser is purchasing as principal and not as agent;

    •    the purchaser has reviewed the text above under “—Resale Restrictions”; and

    •    the purchaser acknowledges and consents to the provision of specified information concerning
         its purchase of the common shares to the regulatory authority that by law is entitled to collect
         the information.

     Further details concerning the legal authority for this information is available on request.

Rights of Action – Ontario Purchasers Only

     Under Ontario securities legislation, certain purchasers who purchases a security offered by this offering
circular during the period of distribution will have a statutory right of action for damages, or while still the
owner of the common shares, for rescission against us and the selling shareholders in the event that this
offering circular contains a misrepresentation without regard to whether the purchaser relied on the
misrepresentation. The right of action for damages is exercisable not later than the earlier of 180 days from
the date the purchaser first had knowledge of the facts giving rise to the cause of action and three years from
the date on which payment is made for the common shares. The right of action for rescission is exercisable
not later than 180 days from the date on which payment is made for the common shares. If a purchaser elects
to exercise the right of action for rescission, the purchaser will have no right of action for damages against us
or the selling shareholders. In no case will the amount recoverable in any action exceed the price at which the
common shares were offered to the purchaser and if the purchaser is shown to have purchased the securities
with knowledge of the misrepresentation, we and the selling shareholders will have no liability. In the case of
an action for damages, we and the selling shareholders will not be liable for all or any portion of the damages
that are proven to not represent the depreciation in value of the common shares as a result of the
misrepresentation relied upon. These rights are in addition to, and without derogation from, any other rights or
remedies available at law to an Ontario purchaser. The foregoing is a summary of the rights available to an
Ontario purchaser. Ontario purchasers should refer to the complete text of the relevant statutory provisions.




                                                        138
Enforcement of Legal Rights

     We, together with most of our directors and officers as well as the experts named in this offering
circular and the selling shareholders, are located outside of Canada and, as a result, it may not be possible
for Canadian purchasers to effect service of process within Canada upon us or those persons. All or a
substantial portion of our assets and the assets of those persons are located outside of Canada and, as a result,
it may not be possible to satisfy a judgment against us or those persons in Canada or to enforce a judgment
obtained in Canadian courts against us or those persons outside of Canada.

Taxation and Eligibility for Investment

     Canadian purchasers of the common shares should consult their own legal and tax advisors with respect
to the tax consequences of an investment in the common shares in their particular circumstances and about the
eligibility of the common shares for investment by the purchaser under relevant Canadian legislation.




                                                       139
                                           TRANSFER RESTRICTIONS

     The common shares have not been registered under the Securities Act nor may they 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
to (a) qualified institutional buyers (as defined under Rule 144A) in reliance on the exemption from the
registration requirements of the Securities Act provided by Section 4 and (b) non-U.S. persons in offshore
transactions in reliance on Regulation S.

    Each purchaser of the common shares who is a U.S. person within the meaning of Regulation S, including
purchasers who are U.S. persons acquiring common shares in offshore transactions, will be deemed, by
accepting delivery of the common shares, to represent, agree and acknowledge as applicable, as follows:

    •    the offering and sale of the common shares have not been registered under the Securities Act and are
         intended to be exempt from registration under the Securities Act pursuant to Section 4 thereof;

    •    the purchaser is acquiring the common shares for its own account (or, if it is acquiring the common
         shares as a fiduciary or agent for one or more investor accounts, the purchaser has the full power and
         authority to make the representations, warranties and agreements herein on behalf of each such account);

    •    the purchaser is not acquiring the common shares with a view to any distribution of the common shares
         within the meaning of the Securities Act;

    •    the purchaser is (or, if it is acquiring the common shares as a fiduciary or agent for one or more investor
         accounts, each such account is) a “qualified institutional buyer,” as such term is defined in Rule 144A;

    •    the purchaser has sufficient knowledge and experience in financial and business matters so as to be
         capable of independently evaluating the merits and risks of an investment in the common shares, and
         the purchaser is able to bear the economic risk of the investment. The purchaser has made its own
         investment decision regarding the common shares based on its own knowledge;

    •    the purchaser understands and agrees that the common shares may not be re-offered, resold, pledged or
         otherwise transferred except (1) (A) to a person who it reasonably believes is a qualified institutional
         buyer in a transaction exempt from registration under U.S. securities laws or (B) in an offshore
         transaction complying with Rule 903 or Rule 904 of Regulation S and, in either case, (2) in accordance
         with all applicable securities laws of the states of the United States;

    •    except with respect to transactions over the BOVESPA, the purchaser (1) will not transfer the common
         shares to any person or entity, unless such person or entity could itself truthfully make each of the
         foregoing representations, warranties and covenants and (2) will provide notice of the transfer
         restrictions applicable to the common shares to any subsequent transferees;

    •    the purchaser has had the opportunity to ask questions of, and receive answers from the Company,
         concerning the Company, its business and financial condition and the common shares to be acquired by
         the purchaser and other related matters. The purchaser further represents and warrants that the
         Company has made available to the purchaser or its agents all documents and information requested by
         the purchaser or on its behalf relating to an investment in the common shares, including the final
         offering circular. In evaluating the suitability of an investment in the common shares, the purchaser has
         not relied and will not rely on any other representations or other information (whether oral or written)
         made by or on behalf of the Company or the selling shareholders (or any of their agents, including,
         without limitation, the Brazilian underwriters and the placement agents) other than as contemplated by
         the two preceding sentences;

    •    the purchaser agrees not to deposit the common shares into an unrestricted American or global
         depositary facility, for so long as the common shares constitute restricted securities, as such term is
         defined in Rule 144;




                                                        140
    •   the purchaser agrees that any transfer of the common shares, including to residents of jurisdictions
        outside Brazil, may be effected only in Brazil pursuant to Resolution 2,689; and

    •   the purchaser acknowledges that the Company, the selling shareholders, the placement agents, the
        Brazilian underwriters and others will rely upon the truth and accuracy of the foregoing
        acknowledgments, representations and agreements.

     Pursuant to the terms of Resolution No. 2,689, any U.S. person that acquires common shares in this
offering will be permitted to transfer such purchased common shares solely in a transaction effected on the
BOVESPA or another securities exchange in Brazil other than in a pre-arranged trade with a counter party.
To the extent that the provisions of Resolution No. 2,689 are modified in the future to permit transfers by
non-Brazilian holders other than on the BOVESPA or another securities exchange in Brazil, we will require,
and each purchaser acknowledges and agrees, as a condition to any such transfer by a U.S. person that
acquires the common shares in this offering, that the transferee execute a document confirming each of the
representations and agreements set forth above.




                                                      141
                  ENFORCEMENT OF JUDGMENTS AND SERVICE OF PROCESS

     We were incorporated under the laws of Brazil. Our directors and officers and certain advisors named
herein reside in Brazil. Substantially all of our assets and those of these other persons are located outside the
United States. As a result, it may not be possible for investors to effect service of process within the United
States upon such persons or to enforce against them or us in United States courts judgments predicated upon
the civil liability provisions of the federal securities laws of the United States.

     We have been advised by Pinheiro Neto Advogados that judgments of United States courts for civil
liabilities based upon the federal securities laws of the United States may be, subject to the requirements
described below, enforced in Brazil. A judgment against us obtained outside Brazil would be enforceable in
Brazil against us without reconsideration of the merits, upon confirmation of that judgment by the Brazilian
Superior Court of Justice (Superior Tribunal de Justiça). That confirmation, generally, will occur if the
foreign judgment:

    •    fulfills all formalities required for its enforceability under the laws of the country where the foreign
         judgment is granted;

    •    is issued by a competent court after proper service of process on the parties, which service must be in
         accordance with Brazilian law if made in Brazil, or after sufficient evidence of the parties’ absence
         has been given, as established pursuant to applicable law;

    •    is not subject to appeal;

    •    is authenticated by a Brazilian consular office in the country where the foreign judgment is issued and
         is accompanied by a sworn translation into Portuguese; and

    •    is not against Brazilian public policy, good morals or national sovereignty.

    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 U.S. securities laws with respect to our common shares.

    We have also been advised by Pinheiro Neto Advogados that:

    •    original actions based on the federal securities laws of the United States may be brought in Brazilian
         courts and that, subject to applicable law, Brazilian courts may enforce liabilities in such actions
         against us (provided that provisions of the federal securities laws of the United States do not
         contravene Brazilian public policy, good morals or national sovereignty and provided further that
         Brazilian courts can assert jurisdiction over the particular action);and

    •    a plaintiff, whether Brazilian or non-Brazilian, who resides outside Brazil during the course of
         litigation in Brazil must make a deposit to guarantee the payment of the defendant’s legal fees and
         court expenses if the plaintiff owns no real property in Brazil that could secure that payment, except
         in the case of collection claims based on an instrument that may be enforced in Brazilian courts
         without the review of its merit (título executivo extrajudicial) or counterclaims as established under
         Article 836 of the Brazilian Code of Civil Procedure. The deposit must have a value sufficient to
         satisfy the payment of court fees and the defendant’s attorney fees, as determined by a Brazilian
         judge. This requirement does not apply to the enforcement of foreign judgments which have been
         confirmed by the Brazilian Superior Court of Justice.

    Any disputes or controversies relating to the listing rules of the Novo Mercado, our bylaws, Brazilian
Corporation Law, the rules established by CMN, the Central Bank, the CVM and the BOVESPA, as well as
other rules applicable to Brazilian capital markets in general, must be submitted to arbitration conducted in
accordance with the Rules of the Market Arbitration Chamber established by the BOVESPA, provided the
dispute or controversies do not involve non waiveable rights.




                                                       142
                                            LEGAL MATTERS

     Pinheiro Neto Advogados, our Brazilian counsel, will pass on the validity of our common shares. White
& Case LLP, our U.S. counsel, will pass on certain legal matters for us. Machado, Meyer, Sendacz e Opice
Advogados, Brazilian counsel to the agents and the underwriters, and Davis Polk & Wardwell, U.S. counsel
to the agents, will pass on certain legal matters for the agents.

                                       INDEPENDENT AUDITORS

     Our financial statements as of and for the three-month periods ended March 31, 2007 and 2006, have
been prepared in accordance with Brazilian GAAP and have been audited by Terco Grant Thornton,
independent auditors, under Brazilian generally accepted auditing standards as stated in their reports included
elsewhere in this offering circular. Our financial statements as of and for the the three years ended December
31, 2006, 2005 and 2004, have been prepared in accordance with Brazilian GAAP and have been audited by
Terco Grant Thornton, independent auditors, under Brazilian generally accepted auditing standards as stated
in their reports included elsewhere in this offering circular.




                                                      143
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                                                   INDEX TO FINANCIAL STATEMENTS

Audited Interim Financial Statements

Report of Independent Auditors .................................................................................................................... F-2
Balance Sheets at March 31, 2007 and 2006 ................................................................................................. F-3
Statements of Income for the three-month periods ended March 31, 2007 and 2006 ................................... F-5
Statements of Changes in Quotaholders’ Equity for the three-month periods ended March 31,
2007 and 2006 ............................................................................................................................................... F-6
Statements of Changes in Financial Position for the three-month periods ended March 31,
2007 and 2006 ............................................................................................................................................... F-7
Notes to the Financial Statements ................................................................................................................ F-8

Audited Annual Financial Statements

Reports of Independent Auditors................................................................................................................... F-32
Balance Sheets at December 31, 2006, 2005 and 2004 ................................................................................. F-34
Statements of Income for the years ended December 31, 2006, 2005 and 2004 ........................................... F-36
Statements of Changes in Quotaholders’ Equity for the years ended December 31, 2006,
2005 and 2004 ............................................................................................................................................... F-37
Statements of Changes in Financial Position for the years ended December 31, 2006, 2005 and 2004........ F-38
Notes to the Financial Statements ................................................................................................................ F-39




                                                                              F-1
Report of independent public
accountants
         (Translation of the report originally issued in the Portuguese language. See note 20
         to the Financial Statements)
         To the management and stockholders of Indústria e Comércio de Carnes Minerva
         Ltda.:
    1.   We have audited the balance sheets of Indústria e Comércio de Carnes Minerva
         Ltda. (the “Company”) and its subsidiaries, as of March 31, 2007 and 2006 and
         related statements of income, stockholders’ equity, and financial position for the
         three-month period then ended. These financial statements are the responsibility of
         the Company’s management. Our responsibility is to express an opinion on these
         financial statements based on our audits.
    2.   We conducted our audits in accordance with auditing standards generally accepted
         in Brazil. Those standards require that we plan and perform the audit, taking into
         consideration the significance of the balances, the volume of transactions and the
         accounting and internal control systems of the Company and its subsidiaries;
         examining, on a test basis, evidence supporting the amounts and disclosures in the
         financial statements, and assessing the accounting practices and significant
         estimates made by management, as well as evaluating the overall presentation of
         the financial statements.
    3.   In our opinion, based on our audits, the financial statements referred to above
         present fairly, in all material respects, the financial position of Indústria e Comércio
         de Carnes Minerva Ltda. and its subsidiaries, as of March 31, 2007 and 2006, and
         the results of its operations, the changes in its stockholders’ equity and the
         changes in its financial position for the three-month period then ended, in
         conformity with the accounting practices adopted in Brazil.
    4.   The statements of cash flow for the three-month period ended March 31, 2007 and
         2006, presented to provide supplementary information about the Company and its
         subsidiaries, are not a required part of the basic financial statements. This
         information has been subjected to the auditing procedures described in paragraph
         2 and in our opinion is fairly presented in all material aspects in relation to the
         financial statements taken as a whole.
                          Barretos-SP, May 18, 2007 (except for the Notes 19.3 and 19.4)




         Terco Grant Thornton                                       Luiz Cláudio Fontes
         Auditores Independentes                                    Partner-accountant




                                     F-2
                                                      Indústria e Comércio de Carnes Minerva Ltda.
                                                                       Balance Sheets as of March 31

                                                                        (Translation from the original issued in Portuguese)
                                                                                       (In thousands of Reais)

      ASSETS
                                                                                                     Controlling Company                        Consolidated
                                                                            Notes                  2007               2006               2007                  2006
      Current assets:
      Cash and cash equivalents .........................                     3                       314,590                   29,675     314,948                29,975
      Trade accounts receivable from customers...                             4                       166,923                   93,576     167,310                93,576
      Inventories.................................................            5                       134,892                   94,517     135,233                94,651
      Other receivables.......................................                -                         1,674                    2,275       2,402                 2,275
      Taxes recoverable......................................                 6                       175,417                  135,622     175,748               138,122
      Total current assets ..................................                                         793,496                  355,665     795,641               358,599




F-3
      Non-current assets:
      Long-term assets
      Judicial deposits.........................................              -                         3,443                    1,857       3,443                    1,857
      Related parties............................................             7                        20,524                    6,806       4,540                    4,301
      Prepaid expenses........................................                -                             -                        -       8,586                        -
                                                                                                       23,967                    8,663      16,569                    6,158

      Permanent assets
      Investments...............................................              8                        53,875                   53,791           -                     -
      Fixed assets..............................................              9                       258,260                  166,323     312,006               220,059
      Deferred assets.........................................                -                           425                      459         514                   465
                                                                                                      312,560                  220,573     312,520               220,524

      Total non-current assets...........................                                             336,527                  229,236     329,089               226,682

      Total assets...............................................                                   1,130,023                  584,901    1,124,730              585,281


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

                                                                                                             -                       -             -                      -
                                                   Indústria e Comércio de Carnes Minerva Ltda.
                                                                    Balance Sheets as of March 31

                                                                     (Translation from the original issued in Portuguese)
                                                                                    (In thousands of Reais)

      LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                                                  Controlling Company                         Consolidated
                                                                         Notes                  2007               2006                2007                  2006

      Current liabilities
       Trade accounts payable to suppliers...........                      11                      101,361                   89,290       99,619                89,302
       Loans and financing..................................               10                       97,465                  229,838       97,643               230,190
       Payroll and tax payable..............................               12                       14,996                   14,291       15,482                14,307
       Other liabilities.........................................           -                            6                      419           18                   419
       Provision for income taxes.........................                 13                       10,129                    2,638       10,129                 2,638
      Total current liabilities..............................                                      223,957                  336,476      222,891               336,856

      Non-current liabilities
       Long-term liabilities
       Loans and financing..................................               10                      592,377                   84,116      592,377                84,116




F-4
       Payroll and tax payable..............................               12                       26,228                   25,099       26,228                25,099
       Deferred taxes..........................................            13                       52,854                   17,936       52,854                17,936
       Provision for contingences.........................                 14                       30,429                   48,588       30,429                48,588
       Provision for losses - negative equity                               8                        4,807                        -            -                     -
       Related parties.........................................             7                            -                    5,267          573                 5,267
      Total non-current liabilities.......................                                         706,695                  181,006      702,461               181,006

      Minority equity                                                                                     -                       -              7                   -

      Stockholders' equity
       Capital stock...........................................            15                       29,400                   29,400       29,400                29,400
       Capital reserves.......................................              -                          253                      253          253                   253
       Revaluation reserves................................                15                      148,450                   77,106      148,450                77,106
       Retained earnings (acumulated deficit).......                        -                       21,268                  (39,340)      21,268               (39,340)
                                                                                                   199,371                   67,419      199,371                67,419


      Total liabilities and stockholders' equity...                                              1,130,023                  584,901     1,124,730              585,281


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

                                                                                                          -                       -              -                   -
                                                            Indústria e Comércio de Carnes Minerva Ltda.
                                                                                  Statements of income
                                                                      for the three months period ended March 31

                                                                               (Translation from the original issued in Portuguese)
                                                                                              (In thousands of Reais)

                                                                                                                Controlling Company                      Consolidated
                                                                                       Notes                  2007               2006             2007                2006
                                                                                                                               Adjusted                             Adjusted
      Gross sales revenue
      Export sales.........................................................               -                      271,811              186,920       271,811             186,920
      Domestic sales.....................................................                 -                       75,021               64,196        75,613              64,630
                                                                                          -                      346,832              251,116       347,424             251,550

      Sales taxes..........................................................               -                      (41,508)              (22,444)     (41,740)             (22,536)

      Net sales revenue.................................................                                         305,324              228,672       305,684             229,014

      Cost of goods sold.................................................                 -                     (234,941)             (178,365)    (235,326)            (178,514)




F-5
      Gross profit..........................................................                                      70,383               50,307        70,358              50,500

      Operating income (expenses)
      Selling expenses....................................................                -                      (39,346)              (30,003)     (39,368)             (30,003)
      General and administrative expenses.......................                          -                       (7,436)               (8,549)      (7,596)              (8,603)
      Financial income (expense), net..............................                       -                        1,946                (2,948)       2,678               (2,948)
      Equity accounting...................................................                -                       (5,034)                  139          -                    -
                                                                                                                 (49,870)              (41,361)     (44,286)             (41,554)

      Operating income.................................................                                           20,513                 8,946       26,072                8,946

      Non operating income..............................................                  -                          (582)                 -         (6,134)                   -

      Income before income tax and social contribution                                                            19,931                 8,946       19,938                8,946

      Tax and social contribution - current.........................                     13                        (7,881)              (2,638)      (7,888)              (2,638)
      Tax and social contribution - deferred.......................                      13                        (1,109)                (669)      (1,109)                (669)

      Net income ..........................................................                                       10,941                 5,639       10,941                5,639


                                                                  The accompanying notes are an integral part of these financial statements.
                                                                                              Indústria e Comércio de Carnes Minerva Ltda.
                                                                                                    Statements of changes in stockholders' equity
                                                                                                     for the three months period ended March 31
                                                                                                                    (Translation from the original issued in Portuguese)
                                                                                                                                   (In thousands of Reais)

                                                                                                                      Capital             Capital                       Revaluation reserve                   Retained
                                                                                                                                                                                                              earnings
                                                                                                                      stock               reserve          controlled      own assets            Total        (losses)          Total
      First quarter ended March 31, 2006


      Balances as of December 31, 2005 (adjusted).................................                                    29,400                253             42,830                  34,741       77,571          (45,444)      61,780


      Realization of revaluation reserve......................................................                  -                     -                -                   (465)                 (465)             465                  -

      Net income ....................................................................................           -                     -                -                                -                 -      5,639          5,639




F-6
      Balances as of March 31, 2006 .......................................................                           29,400                253                42,830               34,276       77,106          (39,340)   67,419

      First quarter ended March 31, 2007


      Balances as of December 31, 2006 ................................................                               29,400                253                42,830              106,368      149,198            9,133    187,984


      Negative goodwill in acquisition of subsidiary.....................................                                       -     -                -                                -                 -        446           446

      Realization of revaluation reserve......................................................                                  -     -                -                   (748)                 (748)             748                  -

      Net income ....................................................................................                           -     -                -                                -                 -     10,941         10,941


      Balances as of March 31, 2007.......................................................                      29,400                253              42,830                      105,620    148,450           21,268      199,371



                                                                                                    The accompanying notes are an integral part of these financial statements.
                                                   Indústria e Comércio de Carnes Minerva Ltda.
                                                            Statements of changes in financial position
                                                            for the three months period ended March 31
                                                                                 (Translation from the original issued in Portuguese)
                                                                                                  (In thousands of Reais)

                                                                                                                  Controlling Company                     Consolidated
                                                                                                                2007               2006            2007                  2006

Sources of funds
From operations
Net income for the period...................................................................                        10,941                5,639       10,941                    5,639
Items not affecting working capital:
  Equity accounting...........................................................................                       5,034                 (139)           -                     -
  Update/complement of provision for contingences.............................                                         584                8,249          584                 8,249
  Increase in deferred taxes - temporary differences............................                                     1,485                  900        1,485                   900
  Decrease in deferred tax liabilities - revaluation of assets...................                                     (376)                (231)        (376)                 (231)
  Depreciation and amortization..........................................................                            3,826                2,950        3,826                 2,950
  Other.............................................................................................                   542                    -          446                     -
Total funds from operations...............................................................                          22,036               17,368       16,906                17,507

From partners
Increase in capital stock...................................................................                                -                 -               -                     -
                                                                                                                            -                 -               -                     -

From third parties
Increase in non-current liabilities - loans and financing.........................                                 399,369                   -       399,466                       -
Increase in non-current liabilities - payroll and tax payable....................                                        -                 111             -                     111
Increase in non-current liabilities - related parties ................................                                   -                   -            94                       -
                                                                                                                   399,369                 111       399,560                     111

Total sources of funds.....................................................................                        421,405               17,479      416,466                17,618

Application of funds
Acquisition of investments - controlled company units.........................                                          10                  100               -                  -
Acquisition of fixed assets.................................................................                         2,664                4,764           2,679              4,771
Increase in deferred assets................................................................                             20                    -              48                  -
Increase in non-current assets - judicial deposits.................................                                     70                    -              70                  -
Increase in non-current assets - related parties....................................                                15,441                4,647           1,162              2,142
Increase in non-current assets - prepaid expenses...............................                                         -                    -           8,586                  -
Decrease in non-current liabilities - loans and financing........................                                        -               26,484               -             26,484
Decrease in non-current liabilities - payroll and tax payable...................                                       208                    -             208                  -
Decrease in non-current liabilities - related parties................................                                    -                  213               -                565

Total applications of funds..............................................................                           18,413               36,208       12,753                33,962

Increase (decrease) in net working capital.......................................                                  402,992              (18,729)     403,713               (16,344)

Changes in working capital
Current assets
 At the beginning of the period...........................................................                         578,861              344,299      580,409               344,594
 At the end of the period....................................................................                      793,496              355,665      795,641               358,599
                                                                                                                   214,635               11,366      215,232                14,005
Current liabilities
 At the beginning of the period...........................................................                         412,314              306,381      411,372               306,507
 At the end of the period....................................................................                      223,957              336,476      222,891               336,856
                                                                                                                  (188,357)              30,095     (188,481)               30,349

Increase (decrease) in net working capital.......................................                                  402,992              (18,729)     403,713               (16,344)


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




                                                                                                           F-7
Notes to the consolidated interim
financial information
Three-month period ended March 31, 2007 and
2006
(Amounts expressed in thousands of Reais)

           (Translation from the original issued in the Portuguese language)



      1.   Company’s operation

           Indústria e Comércio de Carnes Minerva Ltda. is a joint stock company
           organized under the laws of Brazil (the "Company"), whose principal business
           activities include slaughtering and processing beef and selling and exporting
           fresh, frozen and processed beef products.
           The Company’s headquarters are located in the city of Barretos (São Paulo)
           and its manufacturing facilities are located in the cities of José Bonifácio (São
           Paulo), Palmeiras de Goiás (Goiás), Batayporã (Mato Grosso do Sul), Barretos
           and Cajamar (São Paulo). Its manufacturing facilities are located in São
           Bernardo do Campo (São Paulo) and Olímpia (São Paulo), which operate as
           distribution centers for the domestic market (which includes the State of São
           Paulo and parts of the States of Minas Gerais and Paraná).
           At March 31, 2007, the Company’s manufacturing facilities had the capacity to
           slaughter 4,300 cattle daily (5,000 in April 2007) and to de-bone 1,185 tons of
           beef daily, and comply with the European Union food requirements. All of its
           manufacturing facilities, are approved for exports (except the Araguaína
           (Tocantins) manufacturing facility which was acquired in April 2007) and the
           manufacturing facility located in Barretos facility has the capacity to produce
           processed beef (cubed beef and roast beef), mainly for export.
           On May 18, 2007, Russia prohibited imports of bovine meat from 11 Brazilian
           butcher shops, including four of the manufacturing facilities of the Company.
           The Company’s management believes that such prohibition will not reduce
           its volume of export sales, since its production and distribution schedule for
           May was redirected to other markets, principally Egypt, Iran and Israel.




                                     F-8
2.   Presentation of the consolidated interim financial
     information and description of significant accounting
     policies

     The consolidated interim financial information was prepared in accordance with
     generally accepted accounting principles in Brazil, including NPC rule No. 27
     issued by the Brazilian Institute of Independent Auditors (Instituto dos Auditores
     Independentes do Brasil - IBRACON) and rule No. 488 issued by the Brazilian
     Securities and Exchange Commission (Comissão de Valores Mobiliários – CVM)
     No. 488, both dated October 3, 2005.
     In order to fairly present the consolidated interim financial information for the
     three-month period ended March 31, 2007 and to fairly compare the
     Company’s equity and financial situation, the Company’s management
     registered the following accounting adjustments in its official books in 2007:
     Description                     Debit                  Credit                    Amount
     Provision for contingencies     Stockholders’ equity   Non current liabilities    23,509
     for debts paid with              -
                                     -- retained earnings    -
                                                            -- provision for
     presumed tax credit (IPI)                              contingences
     Written-off of presumed tax Stockholders’ equity       Non current assets-        66,300
     credit (IPI)                 -
                                 -- retained earnings       taxes recoverable -
                                                            presumed tax credit-
                                                            (IPI)
     Update of contingencies         Stockholders’ equity   Non current liabilities     9,933
     related to payable as            -
                                     -- retained earnings    -
                                                            -- provision for
     penalties related to                                   contingences
     contingencies for debts paid
     with presumed tax credit for
     2005 and 2004
     Negative goodwill in            Stockholders’ equity   Investments -                (446)
     acquisition of                   -
                                     -- retained earnings   Negative goodwill
     Transportadora Minerva

     The consolidated interim financial information of the Company for the three
     month period ended March 31, 2006 reflects the adjustments to written-off of
     presumed tax credit (IPI)- (R$66,300), the provision for contingencies for
     debts paid with presumed tax credits (IPI) (R$ 23,509) and the previous years
     interest payable as penalties related to these contingencies (R$ 9,933) in
     retained earnings (stockholders’ equity) as of December 31, 2003.
     The significant accounting policies adopted to prepare the consolidated
     interim financial information are set forth below:




                                   F-9
2.1. Accounting Estimates

     The preparation of the financial statements in accordance with generally accepted
     accounting principles in Brazil requires the Company’s management to (i) make
     estimates and assumptions that affect the reported amounts of assets and
     liabilities and (ii) disclose (A) contingent assets and liabilities as of the date of the
     financial statements and (B) the reported amounts of revenue and expenses during
     the reporting period. Actual results could differ from those estimates.


2.2. Time deposits
     Time deposits are recorded at cost plus income accrued up to the balance
     sheet date.

2.3. Allowance for doubtful accounts
     The calculation of the allowance for doubtful accounts considers an analysis
     of the realization risks of the accounts receivable and has been set in an
     amount considered adequate by management of the Company to cover any
     losses arising on collection of accounts receivable.


2.4. Inventories
     Inventories are stated based on their average cost of acquisition or production,
     which is lower than their market or net realizable value.

2.5. Investments
     The Company’s investments in subsidiaries are accounted according to the equity
     method.

2.6. Fixed assets
     Fixed assets are stated at their acquisition or construction cost and revalued
     to their market value based on an appraisal report issued by a specialized
     consulting firm.
     Depreciation is calculated using the straight-line method at annual rates that
     are based on the useful-economic and remaining service lives of the assets.

2.7. Current and non-current assets and liabilities
     Assets are stated at the lower of their cost or fair market value and liabilities
     are stated at their known or estimated amounts, plus, when applicable, the
     corresponding earnings, charges and/or exchange variances incurred up to
     the balance sheet date.




                                 F-10
2.8. Income tax and social contribution on net income
     Income tax and social contribution on net income are calculated in
     accordance with current legislation. The respective deferred income taxes
     liabilities, net were computed for temporary differences, revaluations of fixed
     assets and tax loss carryforwards.


2.9. Consolidated interim financial information
     The consolidated interim financial statements include the financial statements
     of the Company and its subsidiaries. The consolidated interim financial
     statements have been prepared under the following criteria:
        •    elimination of intercompany asset and liability account balances;
        •    elimination of intercompany income and expense balances;
        •    elimination of investments in the capital, reserves and retained
             earnings of the Company’s subsidiaries; and
        •    identification of the minority interests in the consolidated financial
             statements.
     Participations in jointly-controlled companies are proportionally consolidated
     using the Company’s percentage interest in the capital of such jointly-
     controlled company.
     The Company did not use the equity method or consolidate the financial
     statements of Transportadora Minerva in the consolidated interim financial
     statements for the three-month period ended March 31, 2006.
     Transportadora Minerva had limited operations and its financial information
     did not effect, in any material respect, the Company’s financial statements.
     However, considering that the Company became a joint stock company in
     May 2007, Transportadora Minerva’s financial statements were consolidated
     with the consolidated interim financial statements for the three-month period
     ended March 31, 2007, using the equity accounting method.
     The consolidated interim financial statements include the financial statements
     of the Company and the subsidiaries listed in Note 8.


2.10 Supplemental information
     In order to provide a better understanding of its financial statements, the Company
     has included the consolidated statements of cash flow as supplementary
     information.




                               F-11
3.   Cash and cash equivalents

Description                   C ontrolling Com pany              C onsolidated
                                     2007          2006            2007           2006
Cash on hand                          129           126             129            126
Cash with banks
denominated in
Brazilian currency - R$
                                  15,000          17,670         15,103          17,970
Availability of cash
held with banks                   23,498           8,359         23,498           8,359
Time deposits                    275,963           3,520        276,218           3,520
                                 314,590          29,675        314,948          29,975


     Time deposits refer substantially to the quotas of the Company in the Long
     Term Investment Fund Multimarket - ICM, managed by Credit Suisse (Brazil),
     remunerated at rates, which vary from 100% and 101% of the Interbank
     Deposit Certificates (CDI). These quotas are allocated in LFT- Financial
     Treasury Bill.
     The availability of cash held with banks denominated in foreign currency
     refers to the receipt from customers located abroad of money denominated in
     a foreign currency, whose closing exchange rates had not been determined
     with financial institutions prior to the end of the financial statement period.



4.   Trade accounts receivable from customers

     Description                  Controlling Company                Consolidated
                                        2007         2006             2007         2006
     Domestic customers               23,293       18,546            23,680       18,546
     (-) Allowance for
     doubtful accounts –
     domestic customers                   (764)            -          (764)               -
     Foreign customers                  179,558       88,559        179,558          88,559
     (-) Allowance for
     doubtful accounts -
     foreign customers                  (1,931)             -        (1,931)               -
     (-) ACE - Advances for
     export agreements               (33,233)        (13,529)       (33,233)        (13,529)
                                     166,923          93,576        167,310          93,576




                                 F-12
  5.   Inventories

Description                      Controlling Com pany              Consolidated
                                       2007          2006           2007         2006
Finished products                   115,714        74,949         115,714       74,949
Goods for resale                      1,101         2,485           1,442        2,619
Raw and packaging
materials                               358           7,383          358             7,383
Warehouse materials
(spare parts) and
auxiliary materials                  17,719           9,700        17,719        9,700
                                    134,892          94,517       135,233       94,651


       Inventories pledged as collateral
       The Company has pledged inventories with an aggregate value of R$9,449 as
       collateral to secure certain of its indebtedness.



  6.   Taxes recoverable

       Description                    Controlling Company             Consolidated
                                            2007         2006          2007            2006
       Employees’ Social
       Integration Program
       (PIS) credit                         16,073       11,319       16,073         11,319
       Tax for Social Security
       Financing (COFINS)
       credit                               69,310       58,063       69,310         58,063
       Value-Added Tax on
       Sales of Goods (ICMS)
                                            83,763       59,851       84,094         62,351
       IRPJ and CSLL –
       Income Tax and Social
       Contribution on Net
       Profit                              6,271         6,389        6,271        6,389
                                         175,417       135,622      175,748      138,122




                                     F-13
COFINS and PIS Federal Tax Credits
The COFINS and PIS tax credits are derived from Laws n. 10,637/02 and n.
10,833/03, which established the non-cumulative method and provides tax
credits for all export companies.
As a result of favorable judicial decisions for companies in the beef sector,
the Company recorded R$ 228 in its results for the three-month period ended
March 31, 2007, related to interest income (at the SELIC rate) earned on the
amount of COFINS and PIS tax credits granted by the Brazilian Internal
Revenue Service which the Company sought and received or offset against
other federal taxes payable.
Currently, the COFINS and PIS tax credits relating to the 4th quarter of 2005
and the 2006 calendar year are under review by the Brazilian Internal Revenue
Service. The Company expects these tax credits to be confirmed by the
Brazilian Internal Revenue Service and expects to receive compensation
estimated at R$ 85,383 in cash.
ICMS
Due to the fact that the products the Company exports are exempt from ICMS
taxes in Brazil and the majority of the Company’s gross sales revenue is
derived from exports, the Company has accumulated ICMS tax credits that it
uses principally to offset ICMS tax payments in respect of its purchases of
raw materials. Such tax credits may also be sold to third parties.
The Company’s ICMS tax credit balance is under investigation and is subject
to confirmation by the Secretariat of Finance of the State of São Paulo. The
Company’s management expects to benefit from a significant portion of its
ICMS tax credit balance during 2007, including the ICMS tax credit granted
(the percentage of the difference between the nominal rate from the tax
bookkeeping and the effective tax of the collection of the ICMS in force in the
state of origin), which has been contested by the State of São Paulo.
According to the opinion of the Company’s external and internal legal
advisors, the Company’s management believes that its position with respect
to the ICMS tax credits is supported by applicable tax law.




                         F-14
7.      Related parties transactions

        Transactions with related parties, entered into on an arm’s length basis and
        under normal market conditions for similar types of operations, are listed in
        the table below and consist of: (i) sales of cow intestine by the Company to
        Brascasing (an affiliate of the Company); (ii) purchase of cattle by the
        Company from affiliated agricultural companies; (iii) construction services
        rendered by Redi Neto (a subsidiary of the Company since August 2006 which
        was previously an affiliate of the Company; and (iv) loans made to
        quotaholders, evidenced by loan agreements, with indefinite terms and which
        bear interest at 130% of the Interbank Deposit Certificate (CDI) rate.
                              Controlling Company        Consolidated
                                    2007        2006      2007          2006
     Loans and accounts
     receivable / Suppliers
     paid in advance

     Brascasing Coml. e            2,345       1,981      2,345         1,981
     Indl. Ltda.
     Agriculture Cos. –            2,196       1,673      2,195         1,673
     stockholders
     Redi Neto Construções           91          647          -          647
     Ltda.
     Transportadora                1,694       2,505          -             -
     Minerva Ltda.
     Minerva Ind. e Com. de          61            -          -             -
     Alimentos
     Minerva Overseas Ltd.        14,137           -          -             -

                                 20,524        6,806     4,540          4,301


     Accounts payable /
     loans
     Loan – stockholders                -          -       573              -
     Redi Neto Construções              -      5,267         -          5,267
     Ltda.
                                        -      5,267       573          5,267

     Sales
     Brascasing Coml. e             241          374       241           374
     Indl. Ltda.
                                    241         374        241           374

     Purchase of cattle
     Agriculture Cos. –            1,286         498      1,286          498
     Stockholders
                                  1,286         498      1,286           498

     Freight expenses
     Transportadora                4,724           -      4,727             -
     Minerva Ltda.
                                  4,724            -     4,727              -




                                 F-15
                 8.         Investments

                 Investments in subsidiaries and affiliates are set forth below:
Description
                          Transportadora Minerva                     Eurominerva Minerva
                          Minerva (1)    Alimentos (2) Redi Neto (3) Comércio (4) Overseas (5) Total
Interest held                     99.99%       98.00%        99.00%        50.00%       100.00%

Balances as of 12/31/05          53,552           -             -            -             -        53,552

Payment of capital                  100           -            -             -             -             100

Equity account                      139           -            -             -             -             139

Balances as of 03/31/06          53,791           -            -             -             -        53,791


Balances as of 12/31/06          53,612               29       201          250            -        54,092

Payment of capital                   -            -            -             -                 10         10

Equity account                     (115)          -           (106)              4      (4,817)        (5,034)

Balances as of 03/31/07          53,497               29           95       254         (4,807)     49,068



                                (1) In December 2005, the Company received a capital
                                    contribution in the amount of R$ 10,722 (net of the negative
                                    goodwill of R$ 446), in connection with its investment in its
                                    subsidiary, Transportadora Minerva Ltda. This investment is
                                    composed of:

                  Description                                                         R$
                  Previous adjusted stockholders' equity of Transportadora Minerva by
                  farms and lands of the controlled company Agropecuária Villela de
                  Queiroz Ltda. (*)                                                     10,622
                  Initial investment of the Company in Transportadora Minerva              100
                  Total capital contribution to the Company, net of negative goodwill
                  of R$ 446                                                             10,722

                  Revaluation reserve on the farms and lands based upon a report of a
                  specialized consulting firm (*)                                                      42,830
                  Total of investment as of December 31, 2005                                          53,552

                 (*) Stockholders’ equity substantially composed of the Guaporé Farm, located
                 in Vila Bela da Santíssima Trindade-MT, with an area of 10,164 hectares. This
                 farm was appraised on December, 2005 by a specialized consulting firm that
                 has generated a write-up of R$ 42,830.

                                (2) In April 2006, the Company acquired 29,400 units at R$1.00
                                    each of Minerva Indústria e Comércio de Alimentos Ltda. This
                                    company was established in order to manage the Company’s
                                    operations in the State of Rondônia.

                                (3) In 2006, the Company acquired 202,059 units of Redi Neto
                                    Construções Ltda. at a nominal value of R$1.00 each, which




                                               F-16
                               represents 99% of the Redi Neto Construções Ltda.’s capital
                               stock.

                           (4) At the end of 2006, the Company acquired 250,000 units at
                               R$1.00 each of Eurominerva Comércio e Exportação Ltda. This
                               company was established in order to strengthen the
                               Company’s export operations of live cattle.

                           (5) In 2007, the Company contributed R$ 10,000 to the capital
                               stock of Minerva Overseas, a company organized under the
                               laws of the Cayman Islands. Minerva Overseas was
                               established to issue Senior Unsecured Notes and transfer the
                               proceeds of such issuance to the Company by entering into an
                               export pre-payment transaction with the Company mirroring
                               the same terms of the Senior Unsecured Notes. The
                               commission paid to the underwriters of the Senior Unsecured
                               Notes was paid by Minerva Overseas and is registered at
                               Minerva Overseas’ books as in non-operating expenses.
                               The company recorded a provision for losses in connection
                               with its negative stockholders’ equity in Minerva Overseas.

              Summary of the financial statements of the subsidiaries as of March 31,
              2007
Description               Transportadora Minerva            Redi Neto       Eurominerva Minerva
                          Minerva         Alimentos                                      Overseas
Current assets                      2,100               9               665          511            29
Non-current assets –
long term assets                        -               -                 -            -       424,873
Non-current assets –
fixed assets                      10,635               82                 -            2              -
Non-current assets–
Revaluation of fixed               42,830               -               -              -              -
Current liabilities                   370               -             475              1          5,492
Non-current liabilities             1,694              61              91              -       424,217
Stockholders’ equity               53,501              30              99            512        (4,807)
Interest held                 99.99%          98.00%              99.00%         50.00%      100.00%


              The financial statements of the subsidiaries were audited by the same
              auditors as the Company.




                                            F-17
9.   Fixed assets




     During 2003 and 2006, certain of the Company’s fixed assets were revalued
     and the Company recorded an increase in the Company’s fixed assets
     resulting from such revaluation. These appraisals were revaluated by a
     specialized consulting firm named Câmara dos Consultores Associados and
     appraised the part of the Company’s manufacturing facilities located in
     Barretos, José Bonifácio and Palmeiras de Goiás in the total amount of
     R$148,989, being R$ 53,104 in 2003 and R$ 95,885 in 2006.
     The amount of R$148,989 (related to the revaluation of fixed assets made in
     2003 and 2006) was added to the Company’s fixed assets and the same
     amount was recorded in the correspondent counterpart accounts as a
     Revaluation Reserve in the amount of R$114,020 and the Deferred Income tax
     and Social Contribution on Net Income taxes in the total amount of R$34,969
     were recorded.
     During 2005, the Company recorded a revaluation on the Guaporé farm owned
     by an indirect subsidiary of Agropecuária Villela de Queiroz Ltda, which in turn is
     directly controlled by Transportadora Minerva Ltda. This revaluation was
     prepared by a consulting firm named Câmara dos Consultores Associados
     resulting in an increase in the farm’s value in the amount of R$42,830.




                               F-18
              The amount of R$42,830 was added to the Company’s investment (non-
              consolidated using the equity method of accounting) and in the fixed assets
              (consolidated) and the same amount was recorded in the correspondent
              counterpart account as a Revaluation Reserve.
              Other revaluations of fixed assets are scheduled to occur between 2007 and
              2010, in conformity with the rules issued by IBRACON and Rule No. 183/95
              issued by CVM.


        10. Loans and financing

Types                     Interest rate                Controlling        Consolidated
                                                       2007      2006      2007     2006

Local Currency
BNDES (2)                 TJLP (Long-term Interest
                          rate) + basket of
                          currencies + Spread          10,774    12,028    10,774    12,028
FINEP (3)                 TJLP (Long-term Interest
                          rate)                        27,225    27,342    27,225    27,342
Bank credit notes(1)      CDI - Interbank Deposit
                          Certificate                       -    25,103         -    25,103
Resolution n. 2770 (1)    CDI - Interbank Deposit
                          Certificate                       -    56,185         -    56,185
Other types (1)           Interest rate of 8,0% per
                          year                            989     1,057     1,075     1,227
                                                       38,988   121,715    39,074   121,885

Foreign currency (US Dollars)
Advances on export      Interest rate of 6.5% to
contracts (ACC) (1)     8.5% per year +
                        Exchange variance              37,603    97,088    37,603    97,088
EXIM /BBM               Interest rate of 2.3% to
                        2.6% per year + Libor +
                        Spread + Exchange
                        variance                            -     7,571         -     7,571
Prepayment (4)          Interest rate of 2.3% to
                        2.6% per year + Libor +
                        Spread + Exchange
                        variance                      600,492    78,953   190,412    78,953
Export credit note (1)  Interest rate of 9.0% per
                        year + Exchange
                        variance                       11,697     7,492    11,697     7,492
Senior Unsecured Notes Interest rate of 9.5% per
(5)                     year + Exchange
                        variance                            -         -   410,080         -
Other types (1)         Interest rate of 4.7% per
                        year + Exchange
                        variance                        1,062     1,135     1,154     1,317
                                                      650,854   192,239   650,946   192,421

Grand Total                                           689,842   313,954   690,020   314,306

Current liabilities                                    97,465   229,838    97,643   230,190
Non-current liabilities                               592,377    84,116   592,377    84,116




                                          F-19
                  The Company’s loans and financings are guaranteed and secured by the
                  following guarantees and security:

                  (1) Personal guarantees provided by certain quotaholders;
                  (2) Mortgage of the Palmeiras de Goias manufacturing facility and mortgage of
                      farms owned by certain stockholders or stockholders’ companies;
                  (3) Mortgage of the Barretos manufacturing facility;
                  (4) Personal guarantees provided by certain quotaholders and pledge of
                      inventories (R$ 7,970); and
                  (5) Guarantee of the Company.

                  In January 2007, Minerva Overseas Ltd. issued 9.50% Senior Unsecured Notes due
                  2017 in an aggregate principal amount of US$ 200,000 under Rule 144A and
                  Regulation S of the U.S. Securities Act of 1933, as amended, that are guaranteed
                  by the Company. Interest under the notes is payable semi-annually. We accounted
                  for certain costs and expenses incurred in connection with this offering as follows:
                  (i) The discount to par of Senior Unsecured Notes was recorded as a financial cost
                  paid in advance in January and February 2007 in the total amount of R$ 9,541. This
                  amount was registered as prepaid expenses and is being amortized over a ten year
                  period in equal installments. On March 31, 2007, the remaining amortizable
                  balances reflected in current assets and non-current assets were R$ 716 and R$
                  8,586, respectively.
                  (ii) The expenses incurred in connection with professional services provided by
                  underwriters, lawyers and independent auditors in the total amount of R$ 6,134
                  were classified as non-operating expenses since they represent non-recurring
                  expenditures.
                  (iii) In accordance with the covenants applicable to the Senior Unsecured Notes,
                  the Company obtained the consent from the noteholders’ in connection with the
                  spin-off of Transportadora Minerva Ltda. See note 19.
                  (iv) The indenture governing these notes limits the Company’s ability to, among
                  other provisions:
                    Incurr additional indebtedness;
                    Pay dividends;
                    Create liens;
                    Enter in a merger, sale or consolidation transactions; and
                    Enter into certain transactions with their stockholders or affliates.

                  The following table reflects the maturity profile of the Company’s outstanding
                  long-term loans and financings as of March 31, 2007:
Types                         2008      2009        2010      2011      2012      2013       2017 Total
BNDES                       1,359     1,918       2,439     2,351       810        -          -        8,877
FINEP                       4,963     4,524       4,756     4,201       722        -          -      19,166
Prepayment                 43,778    14,255      14,471     8,563          -       -          -      81,067
Senior Unsecured Notes     10,896    11,007      11,572    10,222    10,546    11,778    410,080    476,101
Export credit note          2,081     4,584          -         -         -         -          -        6,665
Other types                   342       159          -         -         -         -          -          501
                           63,419    36,447      33,238    25,337    12,078    11,778    410,080    592,377




                                               F-20
    11. Trade accounts payable to suppliers

Description               Controlling Company        Consolidated
                                      2007    2006    2007      2006

Domestic suppliers
Commodities                        61,832   51,855   61,832   51,855
Materials and services             18,341   15,051   16,599   15,063
Finished products                  15,909   14,589   15,909   14,589
                                   96,082   81,495   94,340   81,507

Foreign suppliers
Render services                     4,256    7,659    4,256    7,659
Finished products                   1,023      136    1,023      136
                                    5,279    7,795    5,279    7,795

Total                             101,361   89,290   99,619   89,302

    12. Payroll and tax payable

Description               Controlling Company        Consolidated
                                      2007    2006    2007      2006

Payroll
Payroll and management
fees                                1,300      979    1,300      995
Charges – FGTS and INSS
(employees and third
parties)                            2,034    1,831    2,034    1,831
Provision for vacation              6,507    4,627    6,507    4,627
Others                                998      418      998      418
                                   10,839    7,855   10,839    7,871

Tax payable
INSS tax payable
(installments)                     26,980   27,330   26,980   27,330
Incentive Goiás – TARE              2,921    2,852    2,921    2,852
Others                                484    1,353      970    1,353
                                   30,385   31,535   30,871   31,535

Total                              41,224   39,390   41,710   39,406

Current liabilities                14,996   14,291   15,482   14,307
Non-current liabilities            26,228   25,099   26,228   25,099




                          F-21
              Special Tax Payment in Installments Program (PAES)
              The INSS tax payable in installments refers to the Special Tax Payment In
              Installments Program (PAES) instituted by Brazilian law, which provides for
              the payment of unpaid taxes in 168 installments, adjusted based on the TJLP
              (Long-term interest rate) variance. On March 31, 2007 there were 135
              installments payable.
              The Company is obliged in keeping the regular payments of these
              financed taxes and the related current ones in order to keep the finance
              terms. In addition, it was not necessary for the Company to provide
              guarantees or other collateral to participate in the program.
              The long-term installments have the following payment schedule as of March
              31, 2007:

                       Year                     R$
                       2008                             974
                       2009                           1,222
                       2010                           1,499
                       2011                           1,807
                       2012                           2,150
                       2013                           2,531
                       2014                           2,954
                       2015                           3,421
                       2016                           3,938
                       2017                           4,509
                       2018                           1,223
                                                     26,228

         13. Income tax and social contribution tax


         a)   Current income taxes payable
                The income tax and social contribution tax are calculated and recorded based
                on the Company’s taxable income, taking into account the tax incentives that
                are recognized whenever the taxes are paid, and the tax rates established by
                the tax legislation in effect.
Description                                  Controlling Company         Consolidated
                                                  2007        2006         2007        2006
IRPJ - Corporate income tax                      7,398        1,925       7,398        1,925
CSLL - Social contribution                       2,731          713       2,731          713
Total of taxes payable - levied on the
income of the current year                      10,129       2,638       10,129       2,638




                                       F-22
b)     Deferred taxes provision
       A provision for deferred taxes is recorded in order to reflect future tax effects
       related to the temporary differences between the tax base of assets and
       liabilities and their respective carrying amount, as well as to reflect the tax
       credits derived from tax losses and negative social contribution tax basis.

Description                                  Controlling Company        Consolidated
                                                  2007        2006       2007         2006
Deferred taxes - fixed asset                    31,375       11,121     31,375       11,121
Deferred taxes - temporary differences
and credits of tax losses and negative
social contribution tax basis
                                                21,479        6,815     21,479       6,815
Total provisioned of deferred taxes             52,854       17,936     52,854      17,936


c)     Reconciliation of income tax and social contribution - balances and the
       result of the years
       The reconciliation between the tax expense and the income tax and social
       contribution expense charged to net income is presented below:

       Current taxes
                                             Controlling Company        Consolidated
                                                  2007        2006       2007        2006
Income before income taxes                      19,931        8,946     19,938       8,946
Inclusions
 Temporary differences                           2,088        5,046      2,088       5,046
 Permanent differences                           6,787          818      6,800         818
 Realization of temporary differences           15,586        9,439     15,586       9,439

 Realization of revaluation reserve              1,124          696      1,124         696
Exclusions
 Temporary differences                         (10,779)    (10,680)    (10,779)    (10,680)
 Permanent differences                                -       (139)           -       (139)
 Realization of temporary differences           (1,001)     (3,108)     (1,001)     (3,108)

Subtotal                                         33,736      11,018      33,756     11,018
Realization of tax losses                      (10,121)      (3,097)   (10,121)     (3,097)
Taxable income                                   23,615        7,921     23,635       7,921

Income Taxes
Income tax (15%)                                (3,542)     (1,188)    (3,545)      (1,188)
Additional rate (10%)                           (2,355)       (786)    (2,357)        (786)
Amortized deductions                                141          49        141           49
CSLL                                            (2,125)       (713)    (2,127)        (713)
 Total current IRPJ and CSLL                    (7,881)     (2,638)    (7,888)      (2,638)
payable




                                      F-23
               Deferred taxes


                                            Controlling Company          Consolidated
                                                 2007         2006        2007         2006
Tax losses carryfoward                        (15,314)     (41,634)    (15,314)     (41,634)

Temporary differences (1)
Income of PIS and COFINS credit                   86,386    66,126      86,386        66,126
Allowance for commissions                         (1,084)   (5,046)     (1,084)       (5,046)
Allowance for doubtful accounts                   (3,007)         -     (3,007)             -
Provision for contingences                        (4,832)         -     (4,832)             -

Deferred taxes basis                              62,149     19,446     62,149        19,446

Income taxes
Income tax                                      (9,322)     (2,917)      (9,322)      (2,917)
Additional rate                                 (6,563)     (2,148)      (6,563)      (2,148)
CSLL                                            (5,594)     (1,750)      (5,594)      (1,750)
Other adjustments                                     -           -            -            -
Deferred tax liabilities                      (21,479)      (6,815)    (21,479)       (6,815)
(-) Deferred tax liabilities from the
previous year                                     19,994      5,915     19,994         5,915
(-) IRPJ and CSLL on revaluation reserve
                                                      376       231         376          231
Deferred tax expense                              (1,109)     (669)     (1,109)        (669)

                              (1) The temporary differences are due to the income generated
                                  by PIS and COFINS credits, which are taxed only in their
                                  effective compensation or reimbursement.

               Based on studies and forecasts performed for upcoming years and
               considering the limits stated by the legislation in effect, the expectations of
               the Company’s management is that the existing tax credits will be realized
               within a maximum 5-year period.
               The net income is not directly related to the taxable income for income tax
               and social contribution tax, due to the differences existing between the
               accounting criteria and the related tax legislation. Therefore, we recommend
               that the evolution of the tax credits realization, stemming from tax loss
               carryforward, negative tax basis carryforward and temporary differences,
               should not be considered as a future net profit indicator.




                                           F-24
14. Contingencies

   a) Summary of contingences
   The Company is party to several legal and administrative proceedings arising in
   the ordinary course of its business, including labor claims, civil litigation and tax
   proceedings. The Company has established provisions in its financial statements
   for the contingencies arising from these proceedings. The table below sets forth
   the main information about our legal and administrative proceedings as of March
   31, 2007:
   Type of Proceedings          Number of lawsuits    Provision
   Labor                                          595                            2,927
   Civil                                           31                                -
   Taxes                                            2                           27,502
   Total                                          628                           30,429

   b) Description of contingencies and labor and tax credits

   b1) Labor Proceedings (probability of losses considered probable)
   The Company is party to approximately 595 labor claims that involved an
   aggregate of approximately R$ 23,800 in claims as of March 31, 2007. Most of
   these labor claims involve claims for overtime, unpaid vacation, salary, other
   employee-benefit issues and indemnity for work-related accidents. Based on
   the opinion of its outside legal counsel, the Company has established
   provisions for labor contingencies in its financial statements of R$ 2,927 and
   have not recorded any provisions in relation to the civil contingencies.


   b2) Civil Proceedings (probability of losses considered remote)
   The Company is party to approximately 31 civil lawsuits that involved an
   aggregate of approximately R$ 1,700 in claims. None of these claims, on an
   individual basis, is material to the Company's business or results of
   operations.
   b3) Tax Proceedings
   b3.1) Contingent liabilities provisioned in connection with IPI tax credits
   On December 17, 2003, the Company filed a claim seeking IPI tax credits to
   offset PIS and COFINS taxes paid in connection with its acquisition of raw
   materials for the production of goods that the Company exported. The
   Company filed a legal action in connection with its exports, and the Company
   prevailed in the first instance. This judicial decision remains subject to appeal
   by the Brazilian federal tax authorities. Although this decision is not final, the
   Company has used R$ 19,504 in IPI tax credits out of the total amount of R$
   89,809 to offset other federal taxes. Based on the opinion of the Company’s




                              F-25
external counsel, the Company’s management believes that a favorable
ruling is probable in the appeal. The Company has registered a provision for
contingency related to these IPI tax credits in the amount of R$ 19,504 and the
related penalties in the amount of R$ 7,998 in the event an unfavorable
ruling is entered against the Company.
b3.2) Contingent liabilities not provisioned and probability of losses
considered remote
                                     -
(i) Social Security Proceedings -- In 2004, the INSS, a Brazilian federal
agency, filed several claims against the Company. These claims amount to
approximately R$ 32,600 in respect of several social security debit notices
from the INSS related to certain differentiated payroll contributions required
to be made to rural employees. The enforceability of these social security
debit notices has been suspended based upon a motion for writ of
mandamus, together with an injunction, that the Company filed in December
2001, seeking the payment of a contribution called ‘‘Novo Funrural’’ to be
declared unconstitutional. In January 2002, the Regional Federal Court, 3rd
Circuit, granted an injunction suspending payment and allowing the
Company to refrain from paying such contribution. Based on the advice of its
outside legal counsel and certain judicial precedents, the management
believes that it is reasonably possible that the Company will prevail in these
proceedings. The Company has not recorded any provision for this amount.
(ii) Beef Industry Antitrust Proceedings - On June 21, 2005, the SDE --    -
Secretaria de Direito Econômico initiated administrative proceedings against
11 Brazilian beef companies, including the Company and certain other large
beef producers. The proceedings relate to allegations that the Company and
these other beef companies may have breached Brazilian antitrust regulations
by entering into agreements to establish the price of cattle purchased for
slaughter. On August 22, 2006, the SDE announced that it was unable to
prove any antitrust violation against three of the beef companies originally
cited (but not the Company), and the SDE advised CADE that there is
evidence that the other eight Brazilian beef companies (including the
Company) violated Brazilian antitrust regulations.
Although the SDE has found evidence that the Company violated these
regulations, a determination on this matter can only be made by CADE. If
CADE ultimately decides that we violated Brazilian antitrust regulations,
CADE may impose administrative penalties on the Company, including a fine
that may range from 1% to 30% of our annual gross revenues in 2004 (in
addition, to criminal proceedings that may be brought by a Brazilian public
prosecutor). If CADE were to render an unfavorable decision, the Company
would be entitled to appeal any such decision in Brazilian courts, and if the
public prosecutor were to bring any criminal charges, the Company would be
able to dispute these charges in court. An adverse decision by CADE could
result in a material adverse effect on it’s the Company’s results of operations,
financial condition and prospects.




                         F-26
      b3.2) Tax credits considered probable and other possible contingencies
      (i) PIS and Cofins tax credits - On January 24, 2006, the Company filed a
      claim to enable it to utilize credits from PIS and COFINS contributions in
      connection with its acquisition of raw materials for the production of goods
      that it exported. This suit is pending, and based on the advice of its outside
      legal counsel, the Company’s management believes that it is reasonably
      possible that it will prevail in the proceeding. The Company has yet to apply
      for any tax credits that may arise from this dispute.
      (ii) IPI tax credits from exports - On January 23, 2004, the Company filed a
      claim requesting IPI tax credits in connection with its exports from 1995 to
      2003, as well as subsequent exports. This suit is pending, and based on the
      advice of its outside legal counsel, the Company believes that it is reasonably
      possible that they will prevail in this proceeding. The amount in controversy
      is R$237,000, but the Company has yet to apply for tax credits that may arise
      from this dispute. If a final decision is rendered against them, the Company
      may be required to pay attorneys’ fees incurred by the Brazilian federal
      government up to a maximum amount of 20% of the amount in controversy.
      The Company has not recorded any provisions relating to any possible claim
      for these attorneys’ fees.



15. Stockholders’ equity

15.1. Capital stock
      At March 31, 2007, the Company’s subscribed and paid-up capital was R$
      29,400, comprised of 18,231,501 quotas with no face value (at March 31, 2006,
      the Company’s subscribed and paid-up capital was R$29,400).

15.2. Revaluation reserve
      In 2003, 2005 (revaluation of subsidiary's fixed assets) and 2006, the
      Company performed a revaluation of its fixed assets and the amounts
      recorded as of March 31, 2007 and 2006 were R$148,450 and R$77,106,
      respectively.



16. Management’s Compensation

      For the quarter ended March 31, 2007 and 2006, the aggregate compensation
      paid by the Company to the Company’s management was R$446 and R$376,
      respectively.




                               F-27
17. Insurance coverage (unaudited)

    The Company and its subsidiaries have a policy of maintaining insurance that
    takes in consideration the level of concentration of risks, the significance and the
    replacement cost of the assets.. At March 31, 2007, the goods and amounts
    secured follows
  Goods                          Tipo de cobertura             Importância segurada
  Installations, equipaments     Fire, flood and landslide                   151,758
  and products in inventory
  Trucks                         Fire, flood and landslide                        1,937
                                                                               153,695

    The Company keeps insurance for all transported products in the country and
    abroad.



18. Risk management and derivative instruments

    The Company’s operations are exposed to market risks primarily related to
    exchange rates, the credit worthiness of its customers, interest rates and
    cattle prices. These types of risks are monitored by its treasury area, which
    manages these risks through a system of statistical computation of the Value
    at Risk (VAR) and through its technical committee. The technical committee
    is composed of board members and by the Company’s financial executives,
    who monitor the risks, limits on financial positions and overall level of risk
    exposure.
    a) Exchange rate and interest rate risks
    The exchange rate and interest rate risks related to financings and loans,
    marketable securities and accounts receivable from customers denominated
    in foreign currencies are hedged on a transaction by transaction basis
    through derivative instruments, such as swap contracts (dollar to CDI or
    LIBOR to fixed interest rates or vice-versa). The notional value of these
    contracts is not recorded on the Company’s balance sheet.
    Also, on March 31, 2007, the Company had blocked exchange contracts
    (‘‘operações de travamento de câmbio’’), in the amount of R$16,198
    (US$7,500). The notional value of these contracts is not recorded on the
    Company’s balance sheet.
    b) Credits risks
    The Company is exposed to credit risks in respect of accounts receivable from
    customers, which are partially mitigated through the diversification of the credit
    profile of the Company’s customer portfolio. The Company does not have a client




                               F-28
     that represents more than 10% of its combined net sales revenue, and most of the
     Company’s clients have good financial and operating indicators.
     c) Purchase Price of Cattle
     The Company is exposed to volatility with respect to the price of cattle,
     caused by climate factors, supply, transportation cost and agricultural
     policies. According to its inventory policy, the Company maintains individual
     physical control of its livestock, which includes anticipated purchases.
     d) Estimated Market Value
     The assets and liabilities of the Company are accounted for in the balance
     sheets based on their respective acquisition cost, and the related
     classification of revenue and expenses in the income statement is accounted
     for based on its expected fair market value or liquidation.
     The market values of the financial instruments and derivatives contracts on
     March 31, 2007 were estimated based on the prices quoted in the market and
     approach the accounting values.



19. Subsequent events


19.1. Re-classification of retained earnings as of December 31, 2006
     Pursuant to a stockholders’ meeting held on May 18, 2007, the shareholders
     authorized the re-classification of the balance registered in the retained earnings
     account as of December 31, 2006 in the amount of R$ 9,133 to profits reserve
     (reserve for reinvestment). This amount should be reinvested during 2007.


19.2. Corporate reorganization
     Pursuant to a shareholders’ meetings held on April 30, 2007 and May 2, 2007,
     the following actions were authorized: (i) changing the status of the Company
     from a limited liability company to a corporation to better accomplish the
     Company’s objectives and (ii) spin-off of the Company’s assets and liabilities
     related to the Company’s ownership in Transportadora Minerva Ltda., the
     Company’s wholly- owned subsidiary, to Longridge Participações Ltda. The
     value of the quotas of Transportadora Minerva Ltda. transferred to Longridge
     Participações Ltda. was R$ 53,500.
     The unconsolidated condensed balance sheet of the Company and the
     consolidated condensed ‘‘pro-forma’’ balance sheet of the Company at March
     31, 2007 and 2006, as well as the unconsolidated and consolidated ‘‘pro
     forma’’ income statements for the three-month periods ended March 31, 2007
     and 2006 are set forth below. The ‘‘pro forma’’ financial information gives
     effect to the spin-off described above as if it had been consummated as of
     March 31, 2006.




                               F-29
           Condensed Balance Sheets pro forma as of March 31


                                               Controlling Company           Consolidated
                                                2007          2006        2007          2006

Asset:
Current assets                                  793,496      355,665      795,170       355,665
Non-current assets                              283,031      175,445      273,067       175,445

Total assets                                   1,076,527     531,110     1,068,237      531,110

Liabilities and stockholders' equity
Current libilities                              223,957      336,476      224,437       336,476
Non-current libilities                          706,695      181,006      697,925       181,006
Stockholders' equity                            145,875       13,628      145,875        13,628

Total liabilities and stockholders' equity     1,076,527     531,110     1,068,237      531,110

Income statements condensed "pro-forma" for the three-month period ended March 31, 2007 and
2006

                                               Controlling company           Consolidated
                                                2007          2006        2007          2006
Operating result                                 20,628         8,807      25,633         8,807
Non-operating result                               (582)          -        (5,583)          -
Income taxes                                     (8,990)       (3,307)     (8,994)       (3,307)

Net income                                       11,056         5,500      11,056         5,500




     19.3. Authorized Capital Stock
           Pursuant to the Company’s by-laws dated June 29, 2007, the Company is
           authorized to increase its capital stock without amending its by-laws by up to
           30,000,000 (thirty million) of common shares, without par value.
           Within this authorized limits the Company may, subject to the approval of the
           Board of Directors, be increase its capital stock without amending its by-laws.
           The Board of Directors will fix the number, price and terms of the capital
           increase and the other conditions with respect to the issuance of shares.
           Within this authorized limits the Board of Directors may approve an issuance
           of a subscription bonus.
           Within this authorized limits and in accordance with a plan approved at a
           shareholders meeting, the Company may grant options to purchase the
           Company’s shares to management, employees and other individuals that
           render services to the Company, subject to the preemptive rights of the
           shareholders of the Company in force on such date.




                                        F-30
19.4. Estimated net proceeds to be received as a result of its initial public
      offering commencing on July 2, 2007
     Based on a distribution price per share of R$18.50, the Company estimates
     receiving net proceeds in the amount of R$327,507 or R$390,676 in case the
     over-allotment option is exercised, deducting from the estimated commissions
     due to the Coordinators and the premium expense due to the Lead Offering in
     Coordinator and the others expenses these net proceeds or after deducting
     commissions, bouner and other expense of the Company in the total of
     R$42,493 or R$45,924 if the over-allotment option is exercised.




20. Explanation added to the translation into the English
    version

     The accompanying financial statements were translated into English from the
     financial statements prepared in Portuguese based upon generally accepted
     accounting principles in Brazil. Certain accounting practices applied by the
     Company that conform to generally accepted accounting practices in Brazil
     may not conform to the generally accepted accounting principles in other
     countries where these financial statements may be used.




                             F-31
Report of independent public
accountants
        (Translation of the report originally issued in the Portuguese language. See note 20
        to the Financial Statements)
        To the management and stockholders of Indústria e Comércio de Carnes Minerva
        Ltda.:


   1.   We have audited the balance sheets of Indústria e Comércio de Carnes Minerva
        Ltda. (the “Company”) and its subsidiaries, as of December 31, 2006, 2005 and
        2004 and related statements of income, changes in stockholders’ equity, and
        changes in financial position for the years then ended. These financial statements
        are the responsibility of the Company’s management. Our responsibility is to
        express an opinion on these financial statements based on our audits.


   2.   We conducted our audits in accordance with auditing standards generally accepted
        in Brazil. Those standards require that we plan and perform the audit, taking into
        consideration the significance of the balances, the volume of transactions and the
        accounting and internal control systems of the Company and its subsidiaries;
        examining, on a test basis, the evidence supporting the amounts and disclosures in
        the financial statements, and assessing the accounting practices and significant
        estimates made by management, as well as evaluating the overall presentation of
        the financial statements.


   3.   In our opinion, based on our audits, the financial statements referred to above
        present fairly, in all material aspects, the financial position of Indústria e Comércio
        de Carnes Minerva Ltda. and its subsidiaries, as of December 31, 2006, 2005 and
        2004, and the results of its operations, the changes in its stockholders’ equity and
        the changes in its financial position for the years then ended, in conformity with the
        accounting practices adopted in Brazil.




                                   F-32
4.   The statements of cash flow for the years ended December 31, 2006, 2005 and
     2004, presented to provide supplementary information about the Company and its
     subsidiaries, are not a required part of the basic financial statements. This
     information has been subjected to the auditing procedures described in paragraph
     2 and in our opinion is fairly presented in all material aspects in relation to the
     financial statements taken as a whole.
                                                             Barretos-SP, May 18, 2007




                                                            Luiz Cláudio Fontes
     Independent Public Accountants                         Partner-accountant




                               F-33
                                                                      Indústria e Comércio de Carnes Minerva Ltda.
                                                                                 Balance sheets as of December 31

                                                                                       (Translation from the original issued in Portuguese)
                                                                                                      (In thousands of Reais)

                                                                                                          ASSETS

                                                                                                                        Controlling company                         Consolidated
                                                                                 Notes                   2006                   2005           2004          2006               2005
                                                                                                                             Adjusted         Adjusted                         Adjusted
       Current assets:
       Cash and cash equivalents .........................                         3                         92,599                29,036          38,216       92,916              29,166
       Trade accounts receivable from customers...                                 4                        195,862               135,899         108,566      196,044             135,899
       Inventories.................................................                5                        118,734                54,132          54,966      119,092              54,297
       Other receivables.......................................                    -                          2,094                 2,107             897        2,206               2,107
       Taxes recoverable......................................                     6                        169,572               123,125          79,152      170,151             123,125
       Total current assets ..................................                                              578,861               344,299         281,797      580,409             344,594


       Non-current assets:




F-34
       Long-term assets
       Judicial deposits.........................................                  6                                -                    -               -              -                -
       Related parties............................................                 -                            3,373                1,857           1,854          3,373            1,857
       Other receivables .......................................                   7                            5,083                2,159           2,522          3,378            2,159
                                                                                   -                                -                    -             321              -                -
                                                                                                                8,456                4,016           4,697          6,751            4,016
       Permanent assets
       Investments...............................................
       Fixed assets..............................................                  8                         54,092                53,552               -            -                   -
       Deferred assets.........................................                    9                        259,409               164,497         144,676      313,155             218,232
                                                                                   -                            418                   471             526          466                 471
                                                                                                            313,919               218,520         145,202      313,621             218,703

       Total non-current assets...........................                                                  322,375               222,536         149,899      320,372             222,719

       Total assets...............................................                                          901,236               566,835         431,696      900,781             567,313


                                                                        The accompanying notes are an integral part of these financial statements.
                                                                     Indústria e Comércio de Carnes Minerva Ltda.
                                                                               Balance sheets as of December 31

                                                                                     (Translation from the original issued in Portuguese)
                                                                                                    (In thousands of Reais)

                                                                            L I A B I L I T I E S A N D S T O C K H O L D E R S' E Q U I T Y

                                                                                                                   Controlling company                            Consolidated
                                                                             Notes                   2006                  2005               2004         2006                2005
                                                                                                                        Adjusted            Adjusted                         Adjusted
       Current liabilities
        Trade accounts payable to suppliers...........                         11                       126,765                75,923            73,848      124,922              75,969
        Loans and financing..................................                  10                       253,101               213,403           192,193      253,287             213,403
        Payroll and tax payable..............................                  12                        13,144                12,884             6,797       13,628              12,864
        Other liabilities.........................................              -                         4,289                 1,423               138        4,520               1,523
        Provision for income taxes.........................                    13                        15,015                 2,748                 -       15,015               2,748
       Total current liabilities..............................                                          412,314               306,381           272,976      411,372             306,507

       Non-current liabilities
        Long-term liabilities




F-35
        Loans and financing..................................                  10                       192,911               110,600            64,959      192,911             110,600
        Payroll and tax payable..............................                  12                        26,436                24,988            41,940       26,436              24,988
        Deferred taxes..........................................               13                        51,746                17,267            16,696       51,746              17,267
        Provision for contingences.........................                    14                        29,845                40,339            35,185       29,845              40,339
        Related parties.........................................               7                              -                 5,480               249          479               5,832
       Total non-current liabilities.......................                                             300,938               198,674           159,029      301,417             199,026

       Minority equity                                                                                         -                      -                -             8                  -

       Stockholders' equity
        Capital stock...........................................               15                        29,400                 29,400           18,232       29,400              29,400
        Capital reserves.......................................                 -                           253                    253              253          253                 253
        Revaluation reserves................................                   15                       149,198                 77,571           36,604      149,198              77,571
        Retained earnings (acumulated deficit).......                           -                         9,133                (45,444)         (55,398)       9,133             (45,444)
                                                                                                        187,984                 61,780             (309)     187,984              61,780


       Total liabilities and stockholders' equity...                                                    901,236               566,835           431,696      900,781             567,313


                                                                      The accompanying notes are an integral part of these financial statements.
                                                                                 Indústria e Comércio de Carnes Minerva Ltda.
                                                                                Statements of income for the years ended December 31
                                                                                                 (Translation from the original issued in Portuguese)
                                                                                                                (In thousands of Reais)

                                                                                                                                  Controlling company                                Consolidated
                                                                                        Notes                 2006                    2005                    2004            2006                2005
       Gross sales revenue                                                                                                          Adjusted                Adjusted                            Adjusted
       Export sales.........................................................               -                   1,007,657                      815,276              724,690    1,007,657              815,276
       Domestic sales.....................................................                 -                     300,468                      235,327              214,588      304,675              235,327
                                                                                           -                   1,308,125                    1,050,603              939,278    1,312,332            1,050,603

       Sales taxes..........................................................               -                    (119,044)                    (110,255)            (118,830)    (119,936)            (110,255)

       Net sales revenue.................................................                                      1,189,081                      940,348              820,448    1,192,396             940,348

       Cost of goods sold.................................................                 -                    (916,683)                    (735,345)            (628,216)    (918,675)            (735,345)

       Gross profit..........................................................                                    272,398                      205,003              192,232      273,721             205,003

       Operating income (expenses)
       Selling expenses....................................................                -                    (133,355)                    (125,393)            (105,164)    (133,478)            (125,393)




F-36
       General and administrative expenses.......................                          -                     (31,025)                     (32,066)             (27,794)     (32,176)             (32,066)
       Financial income (expense), net..............................                       -                     (26,564)                     (29,923)             (23,206)     (26,654)             (29,923)
       Equity accounting...................................................                                          (41)                         -                    -            -                    -
                                                                                                                (190,985)                    (187,382)            (156,164)    (192,308)            (187,382)

       Operating income.................................................                                          81,413                       17,621               36,068       81,413              17,621

       Non operating income..............................................                  -                             -                       (446)             (26,777)             -               (446)

       Income before income tax and social contribution                                                           81,413                       17,175                9,291       81,413              17,175

       Tax and social contribution - current.........................                     13                      (15,015)                     (2,748)                 -        (15,015)              (2,748)
       Tax and social contribution - deferred.......................                      13                      (12,791)                       (178)              (3,890)     (12,791)                (178)

       Net income ..........................................................                                      53,607                       14,249                5,401       53,607              14,249


                                                                                    The accompanying notes are an integral part of these financial statements.
                                                                                                              Indústria e Comércio de Carnes Minerva Ltda.
                                                                                                                Statements of changes in stockholders' equity
                                                                                                                      for the years ended December 31
                                                                                                                             (Translation from the original issued in Portuguese)
                                                                                                                                            (In thousands of Reais)

                                                                                                                          Capital              Capital                                   Revaluation reserve                     Retained
                                                                                                                          stock                reserve              controlled              own assets         Total         earnings (losses)   Total
       Balances as of December 31, 2003 (adjusted)                                                                             18,232                    253                     -                 38,289          38,289             (61,232)       (4,458)

       Complement of gross revaluation income..............................................                                           -                    -                         -                248             248                 -             248
       Realization of revaluation reserve.........................................................                                    -                    -                         -             (1,933)         (1,933)              1,933           -
       Profit sharing......................................................................................                           -                    -                         -                  -             -                (1,500)       (1,500)
       Net income for the year.......................................................................                                 -                    -                         -                  -             -                 5,401         5,401

       Balances as of December 31, 2004 (adjusted)....................................                                         18,232                    253                     -                 36,604         36,604              (55,398)         (309)

       Realization of revaluation reserve........................................................                                   -                      -                    -                  (1,863)        (1,863)               1,863           -
       Constitution of gross revaluation income of controlled company units.....                                                    -                      -               42,830                       -         42,830                  -          42,830
       Profit sharing....................................................................................                           -                      -                    -                       -            -                 (6,158)       (6,158)
       Increase in capital stock...................................................................                            11,168                      -                    -                       -            -                    -          11,168
       Net income for the year.....................................................................                                 -                      -                    -                       -            -                 14,249        14,249

       Balances as of December 31, 2005 (adjusted)..................................                                           29,400                    253               42,830                  34,741         77,571              (45,444)       61,780




F-37
       Realization of revaluation reserve......................................................                                   -                        -                         -             (2,570)        (2,570)               2,570           -
       Constitution of gross revaluation income............................................                                       -                        -                         -             74,197         74,197                    -        74,197
       Profit sharing...................................................................................                          -                        -                         -                  -            -                 (1,600)       (1,600)
       Net income for the year....................................................................                                -                        -                         -                  -            -                 53,607        53,607

       Balances as of December 31, 2006.................................................                                       29,400                    253               42,830                 106,368        149,198                9,133      187,984


                                                                                                                The accompanying notes are an integral part of these financial statements.
                                                                Indústria e Comércio de Carnes Minerva Ltda.
                                                                          Statements of changes in financial position
                                                                                            for the years ended December 31
                                                                                          (Translation from the original issued in Portuguese)
                                                                                                         (In thousands of Reais)


                                                                                                                          Controlling company                          Consolidated
                                                                                                           2006                   2005             2004         2006                2005
                                                                                                                               Adjusted          Adjusted                         Adjusted
Sources of funds
From operations
Net income for the year......................................................................                   53,607                14,249           5,401       53,607              14,249
Items not affecting working capital:
  Decrease in investments.................................................................                           -                     -             165            -                   -
  Fixed asset write-off........................................................................                     15                   138           1,495           15                 138
  Equity accounting...........................................................................                      41                     -               -            -                   -
  Negative goodwill in investment acquisitions.....................................                                  -                   446               -            -                   -
  Update of provision for contingences................................................                         (10,494)                5,154           1,900      (10,494)              5,154
  Increase in deferred taxes - temporary differences............................                                14,079                 1,493           4,422       14,079               1,493
  Realization of deferred tax liabilities - revaluation of assets................                               (1,288)                 (922)           (832)      (1,288)               (922)
  Depreciation and amortization..........................................................                       13,912                10,025           6,091       13,912              10,025
Total funds from operations...............................................................                      69,872                30,583          18,642       69,831              30,137

From partners
Increase in capital stock...................................................................                          -               11,168                -             -            11,168
                                                                                                                      -               11,168                -             -            11,168

From third parties
Decrease in non-current assets - tax recoverable................................                                     -                     -          15,652            -                   -
Decrease in non-current assets - related parties..................................                                   -                   363               -            -                 363
Decrease in non-current assets - other...............................................                                -                   321               -            -                 321
Increase in non-current liabilities - loans and financing.........................                              82,311                45,641          44,930       81,959              45,641
Increase in non-current liabilities - payroll and tax payable....................                                1,448                     -             756        1,448                   -
Increase in non-current liabilities - related parties.................................                               -                 5,231             249            -               5,583
                                                                                                                83,759                51,556          61,587       83,407              51,908

Total sources of funds.....................................................................                    153,631                93,307          80,229      153,238              93,213

Application of funds
Acquisition of investments - controlled company units.........................                                     581                11,168               -            -                   -
Acquisition of fixed assets.................................................................                    12,901                29,929          36,401       12,901              40,834
Increase in deferred assets................................................................                          -                     -           4,101           48                   -
Increase in non-current assets - judicial deposits.................................                              1,516                     3           1,854        1,516                   3
Increase in non-current assets - related parties....................................                             2,924                     -           2,166        1,219                   -
Decrease in non-current liabilities - loans and financing........................                                    -                     -             662            -                   -
Decrease in non-current liabilities - payroll and tax payable...................                                     -                16,952               -            -              16,952
Decrease in non-current liabilities - related parties................................                            5,480                     -               -        5,004                   -
Decrease in non-current liabilities - other.............................................                             -                     -             371            -                   -
Profit sharing.....................................................................................              1,600                 6,158           1,500        1,600               6,158

Total applications of funds..............................................................                       25,002                64,210          47,055       22,288              63,947

Increase in net working capital........................................................                        128,629                29,097          33,174      130,950              29,266


Changes in working capital
Current assets
 At the beginning of the year.............................................................                     344,299               281,797         212,507      344,594             281,797
 At the end of the year......................................................................                  578,861               344,299         281,797      580,409             344,594
                                                                                                               234,562                62,502          69,290      235,815              62,797
Current liabilities
  At the beginning of the year............................................................                     306,381               272,976         236,860      306,507             272,976
  At the end of the year.....................................................................                  412,314               306,381         272,976      411,372             306,507
                                                                                                               105,933                33,405          36,116      104,865              33,531

Increase in net working capital.........................................................                       128,629                29,097          33,174      130,950              29,266


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




                                                                                                                  F-38
Notes to the financial statements for
the years ended December 31, 2006, 2005 and
2004 (Amounts expressed in thousands of Reais, except when
indicated otherwise)

           (Translation from the original issued in the Portuguese language)



      1.   Company's operation

           Indústria e Comércio de Carnes Minerva Ltda. is a joint stock company
           organized under the laws of Brazil (the "Company’’), whose principal business
           activities include slaughtering and processing beef and selling and exporting
           fresh, frozen and processed beef products.
           The Company’s headquarters are located in the city of Barretos (São Paulo)
           and its manufacturing facilities are located in the cities of José Bonifácio (São
           Paulo), Palmeiras de Goiás (Goiás), Batayporã (Mato Grosso do Sul), Barretos
           and Cajamar (São Paulo). Its manufacturing facilities are located in São
                                               -
           Bernardo do Campo (São Paulo -- since September 2006) and Olímpia (São
           Paulo), which operate as distribution centers for the domestic market (São
           Paulo and part of the States of Minas Gerais and Paraná).
           The Company’s manufacturing facilities allow it to slaughter 4,300 cattle daily
           and de-bone 1,185 tons of beef daily, and comply with the European Union
           food requiriments. All of its manufacturing facilities are approved for export
           and the Company’s Barretos plant has specialized processing lines that
           produce cooked, pre-cut meat, etc., mainly for export.



      2.   Presentation of the consolidated financial statements
           and description of significant accounting policies

           The individual and consolidated financial statements were prepared generally
           accepted accounting principles in Brazil, including NPC rule No. 27 issued by
           the Brazilian Institute of Independent Auditors (Instituto dos Auditores
           Independentes do Brasil - IBRACON) and rule No. 488 issued by the Brazilian
           Securities and Exchange Commission (Comissão de Valores Mobiliários – CVM)
           No. 488, both dated October 3, 2005.




                                    F-39
In order to fairly present the consolidated financial statements as of
December 31, 2006, the management fully recorded the following accounting
adjustments in its official books in 2006. Some of the amounts recorded are
derived from previous years:
Description             Debit                    Credit                      Amount
Provision for                                                                23,509
contingencies for
debts paid with                                  Non-current liabilities -
presumed tax credit     Stockholders’ equity -   provision for
(IPI)                   retained earnings        contingencies
                                                 Non-current assets -      66,300
Written-off of                                   taxes recoverable
presumed tax credit     Stockholders’ equity -   presumed tax credit
(IPI)                   retained earnings        (IPI)
Update of                                                                  9,933
contingencies related
to payable as
penalties related to
contingencies for
debts paid with                                  Non-current liabilities -
presumed tax credit     Stockholders’ equity -   provision for
for 2005 and 2004       retained earnings        contingencies
Update of                                                                    2,756
contingencies related
to payable as
penalties related to
contingencies for
debts paid with                                  Non-current liabilities -
presumed tax credit     Result - financial       provision for
for 2006                expenses                 contingencies
Negative goodwill in                                                         (446)
acquisition of                                   Investment - negative
Transportadora          Stockholders’ equity -   goodwill (assets debit
Minerva                 retained earnings        account)

Thus, in order to fairly present the individual and consolidated equity and
financial situation of the Company, and to fairly compare our equity and
financial situation for the years ended 2004 and 2005, certain adjustments
were made, including to the balance of retained earnings (stockholders’
equity) of December 31, 2003.
In the individual and consolidated adjusted financial statements, written-off of
presumable tax credit (IPI) - (R$ 66,300) and for tax contingencies (R$23,509),
and the previous years penalties related to these contigencies (R$ 3,693) were
adjusted in retained earnings (stockholders’ equity) as of December 31, 2003.
The remaining amount of contingencies penalties was distributed in the
results of 2006, 2005 and 2004 in the amounts of R$ 2,756, R$ 4,340 and R$
1,900, respectively, according to the time of incurrence.
The significant accounting policies adopted to prepare the consolidated
financial information are set forth below:




                           F-40
2.1. Accounting Estimates
     The preparation of the financial statements in accordance with generally accepted
     accounting principles in Brazil requires the Company’s management to (i) make
     estimates and assumptions that affect the reported amounts of assets and
     liabilities and (ii) disclose (A) contingent assets and liabilities as of the date of the
     financial statements and (B) the reported amounts of revenue and expenses during
     the reporting period. Actual results could differ from those estimates.


2.2. Time deposits
     Time deposits are recorded at cost plus income accrued up to the balance sheet
     date.

2.3. Allowance for doubtful accounts
     The calculation of the allowance for doubtful accounts considers an analysis
     of the realization risks of the accounts receivable and has been set in an
     amount considered adequate by management of the Company to cover any
     losses arising on collection of accounts receivable.


2.4. Inventories
     Inventories are stated based on their average cost of acquisition or
     production, which is lower than their market or net realizable value.


2.5. Investments
     The Company’s investments in subisidiaries are accounted according to the equity
     method.

2.6. Fixed assets
     Fixed assets are stated at their acquisition or construction cost and revalued to
     their market value based on an appraisal report issued by a specialized
     consulting firm.
     Depreciation is calculated using the straight-line method at annual rates that
     are based on the useful-economic and remaining service lives of the assets.

2.7. Current and non-current assets and liabilities
     Assets are stated at the lower of their cost or fair market value and liabilities
     are stated at their known or estimated amounts, plus, when applicable, the
     corresponding earnings, charges and/or exchange variances incurred up to
     the balance sheet date.




                                 F-41
2.8. Income tax and social contribution on net income
     Income tax and social contribution on net income are calculated in
     accordance with current legislation. The respective deferred income taxes
     liabilities, net were computed for temporary differences, revaluations of fixed
     assets and tax loss carryforwards.


2.9. Consolidated interim financial information
     The consolidated interim financial statements include the financial statements
     of the Company and its subsidiaries. The consolidated financial statements
     have been prepared under the following criteria:
        •    elimination of intercompany asset and liability account balances;
        •    elimination of intercompany income and expense balances;
        •    elimination of investments in the capital, reserves and retained
             earnings of the Company’s subsidiaries; and
        •    identification of the minority interests in the consolidated financial
             statements.
     Participations in jointly-controlled companies are proportionally consolidated
     using the Company’s percentage interest in the capital of such jointly-
     controlled company.
     As of December 31, 2004 the Company did not have investments in other
     companies, therefore there are not any consolidated financial statements for
     the year then ended.
     The consolidated financial statements include the financial statements of the
     Company and the subsidiaries listed in Note 8.


2.10 Supplemental information
     In order to provide a better understanding of its financial statements, the Company
     has included the consolidated statements of cash flow as supplementary
     information.




                               F-42
         3.     Cash and cash equivalents
                             Controlling company                      Consolidated
Description                  2006          2005        2004           2006         2005
Cash on hand                     330            158        170             330         158
Cash with banks
denominated in Brazilian
currency - R$                  18,761         5,722       6,792         19,078       5,852
Availability of cash held
with banks denominated
in foreign currency           46,315         19,817     28,637         46,315       19,817
Time deposits                 27,193          3,339      2,617         27,193        3,339
                              92,599         29,036     38,216         92,916       29,166



         4.     Trade accounts receivable from customers
                             Controlling company                      Consolidated
Description                  2006          2005        2004           2006         2005
Domestic customers             29,560         21,617      17,200        29,742        21,617
(-) Allowance for doubtful
           -
accounts -- domestic
customers                       (658)              -           -        (658)              -
Foreign customers             222,500        129,600      91,622      222,500        129,600
(-) Allowance for doubtful
           -
accounts -- foreign
customers                      (1,930)             -              -    (1,930)               -
(-) ACE - Advances for
export                        (53,610)      (15,318)       (256)      (53,610)      (15,318)
                              195,862       135,899     108,566       196,044       135,899



         5.     Inventories
                           Controlling company                        Consolidated
Description                2006        2005            2004           2006         2005
Finished products            95,861      42,813          43,231         95,861      42,813
Goods for resale              1,560       1,965           3,535          1,918       2,130
Raw and packing materials     7,066         280             212          7,066         280
Warehouse materials (spare
parts) and auxiliary
materials                    14,247       9,074          7,988         14,247        9,074
                            118,734      54,132         54,966        119,092       54,297

                Inventories given as a guarantee on financing
                The Company has pledged inventories in the amount of R$9,638 as collateral
                to secure certain of its indebtedness.




                                           F-43
       6.    Taxes recoverable
                            Controlling company                   Consolidated
Description                 2006          2005         2004       2006         2005
Employees’ Social
Integration Program (PIS)
credit                       15,616            9,414    32,572     15,617         9,414
Tax for Social Security
Financing (COFINS)
credit                       74,346           50,472     9,794     74,352        50,472
Value-Added Tax on
Sales of Goods (ICMS)        72,849           62,485    36,720     73,403        62,485
IRPJ and CSLL - Income
Tax and Social
Contribution on Net
Profit                        6,761           754           66      6,779          754
                            169,572       123,125       79,152    170,151      123,125



             COFINS and PIS
             The COFINS and PIS tax credits are derived from Laws n. 10,637/02 and n.
             10,833/03, which establish the non-cumulative method and provides tax
             credits for all export companies. During the 2005 calendar year, the Company
             has received R$16,181 in cash.
             In 2006, as a result of favorable judicial decisions for companies in the beef
             sector, the Company recorded R$ 11,390 in its result for the year ended
             December 31, 2006, related to interest income (at the SELIC rate) earned on
             the amount of COFINS and PIS tax credits granted by the Brazilian Internal
             Revenue Service which the Company sought and received or offset against
             other federal taxes payable.
             Currently, the COFINS and PIS tax credits relating to the 4th quarter of 2005
             and the 2006 calendar year are under review by the Brazilian Internal Revenue
             Service. The Company expects these tax credits to be confirmed by the
             Brazilian Internal Revenue Service and expects to receive compensation
             estimated at R$ 78,573 in cash.




                                       F-44
          ICMS
          Due to the fact that the products the Company exports are exempt from ICMS
          taxes in Brazil and the majority of the Company’s gross sales revenue is derived
          from exports, the Company has accumulated ICMS tax credits that it uses
          principally to offset ICMS tax payments in respect of its purchases of raw
          materials. Such tax credits may also be sold to third parties.
          The Company’s ICMS tax credit balance is under investigation and is subject to
          confirmation by the Secretariat of Finance of the State of São Paulo. The
          Company’s management expects to benefit from a significant portion of its ICMS
          tax credit balance during 2007, including the ICMS tax credit granted (the
          percentage of the difference between the nominal rate from the tax bookkeeping
          and the effective tax of the collection of the ICMS in force in the state of origin),
          which has been contested by the State of São Paulo. According to the opinion of
          the Company’s external and internal legal advisors, the Company’s management
          believes that its position with respect to the ICMS tax credits is supported by
          applicable tax law.



    7.    Related parties transactions

          Transactions with related parties, entered into on an arm’s length basis and
          under normal market conditions for similar types of operations, are listed in
          the table below and consist of: (i) sales of cow intestine by the Company to
          Brascasing (an affiliate of the Company); (ii) purchase of cattle by the
          Company from affiliated agricultural companies; (iii) construction services
          rendered by Redi Neto (a subsidiary of the Company since August 2006 which
          was previously an affiliate of the Company; and (iv) loans made to
          quotaholders, evidenced by loan agreements, with indefinite terms and which
          bear interest at 130% of the Interbank Deposit Certificate (CDI) rate:
                                     Controlling company                Consolidated
                                     2006       2005     2004           2006       2005
Loans and accounts receivable/
Suppliers paid in advance
Brascasing Coml. E Indl. Ltda.        2,593       1,972         629       2,593      1,972
Agriculture Cos. - stockholders         785           -       1,288         785          -
Redi Neto Construções Ltda.               -         187         605           -        187
Transportadora Minerva Ltda.          1,680           -           -           -          -
Minerva Ind. E Com. De Alimentos         25           -           -           -          -
                                      5,083       2,159       2,522       3,378      2,159

Accounts payable / loans
Agriculture Cos. - stockholders             -      214           -         479        214
      -
Loan -- stockholders                        -        -         249           -        352
Redi Neto Construções Ltda.                 -    5,266           -           -      5,266
                                            -    5,480         249         479      5,832




                                     F-45
      Construction - Goiás
      manufacturing
      Redi Neto Construções Ltda.            973        6,047              2,214             973          6,047
                                             973        6,047              2,214             973          6,047

      Sales
      Brascasing Coml. E Indl. Ltda.        2,602       4,414              6,396            2,602        4,414
                                            2,602       4,414              6,396            2,602        4,414


      Purchase of cattle
      Agriculture Cos. - stockholders       5,615         3,936            2,422            5,615         3,936
                                            5,615         3,936            2,422            5,615         3,936

      Freight expenses
      Transportadora Minerva Ltda.          8,099                  -                -               -             -
                                            8,099                  -                -               -             -

                 The Company did not provide any guarantees or sureties in order to
                 guarantee loan contracts or any other operation.



          8.     Investments

                 The movement of the investments in subsidiaries and affiliates is set forth
                 below:

                               Transportadora Minerva                              Eurominerva
Description                    Minerva        Alimentos         Redi Neto          Comércio    Total
Interest Held                  99.99%         98.00%            99.00%             50%

Balances as of December 31,
2004                                    -           -                  -                -                    -

Payment of capital (1)          11,268              -                  -                -               11,268
(-) Negative goodwill            (446)              -                  -                -                (446)
(-) To be paid in                (100)              -                  -                -                (100)

Fixed assets revaluation (1)    42,830              -                  -                -               42,830

Balances as of December 31,
2005                            53,552              -                  -                -               53,552

Payment of capital (2)            100              29            202                 250                  581

Equity accounting                 (40)              -             (1)                   -                 (41)

Balances as of December 31,
2006                            53,612             29           201                  250                54,092




                                            F-46
             (1) In December 2005, the Company received a capital
                 contribution in the amount of R$ 10,722 (net of the negative
                 goodwill of R$ 446), related to the investment in its subsidiary,
             .
                 Transportadora Minerva Ltda. This investment is composed of:
Description                                                          R$
Previous adjusted stockholders' equity of Transportadora Minerva by
farms and lands of the controlled company Agropecuária Villela de
Queiroz Ltda. (*)                                                      10,622
Initial investment of the Company in Transportadora Minerva               100
Total paid in capital in the Company, net of negative goodwill of R$
446                                                                    10,722

Revaluation reserve on the farms and lands made by specialized
consulting firm (*)                                                        42,830
Total of investment as of December 31, 2005                                53,552

 Stockholders’ equity substantially composed of the Guaporé Farm, located in
Vila Bela da Santíssima Trindade-MT, encompassing an area of 10,164
hectares. This farm was appraised on December, 2005 by a specialized
consulting firm that has generated a write-up of R$ 42,830.

             (2) In April 2006, the Company acquired 29,400 units at R$1.00
                 each of Minerva Indústria e Comércio de Alimentos Ltda. This
                 company was established in order to manage the Company’s
                 new operations set to commerce in the State of Rondônia.
                 In 2006, the Company acquired 202,059 units of Redi Neto
                 Construções Ltda. at a nominal value of R$1.00 each, which
                 represents 99% of the company’s capital stock.
                 At the end of 2006, the Company acquired 250,000 units at
                 R$1.00 each of Eurominerva Comércio e Exportação Ltda. This
                 company was established in order to strengthen the
                 Company’s export operations of live cattle.
Summary of the financial statements of the subsidiaries as of December
31, 2006:
                            Transportadora   Minerva                 Eurominerv
 Description                Minerva          Alimentos   Redi Neto   a
 Current assets                   2,426           13         670         507
 Non-current assets -
 fixed assets                      10,754        42            -            -
 Non-current assets -
 revaluation of fixed              42,830          -           -            -
 assets
 Current liabilities                 619                     466            -
  Non-current liabilities          1,680          25           -            -
 Stockholders’ equity             53,711          30         204          507
 Interest held                   99,99%      98,00%      99,00%       50,00%
 Number of units              11,267,999      29,400     104,100      250,000

The financial statements of the subsidiaries were audited by the same
auditors as the Company.




                            F-47
9.   Fixed assets




     During 2003 and 2006, certain of the Company’s fixed assets were revalued
     and the Company recorded an increase in the Company’s fixed assets
     resulting from such revaluation. These appraisals were revaluated by a
     specialized consulting firm named Câmara dos Consultores Associados and
     appraised the part of the Company’s manufacturing facilities located in
     Barretos, José Bonifácio and Palmeiras de Goiás in the total amount of
     R$148,989, being R$ 53,104 in 2003 and R$ 95,885 in 2006.
     The amount of R$148,989 (related to the revaluation of fixed assets made in
     2003 and 2006) was added to the Company’s fixed assets and the same
     amount was recorded in the correspondent counterpart accounts as a
     Revaluation Reserve in the amount of R$114,020 and the Deferred Income tax
     and Social Contribution on Net Income taxes in the total amount of R$34,969
     were recorded.




                            F-48
During 2005, the Company recorded a revaluation on the Guaporé farm
owned by an indirect subsidiary of Agropecuária Villela de Queiroz Ltda,
which in turn is directly controlled by Transportadora Minerva Ltda. This
revaluation was prepared by a consulting firm named Câmara dos
Consultores Associados resulting in an increase in the farm’s value in the
amount of R$42,830.
The amount of R$42,830 was added to the Company’s investment (non-
consolidated amending the equity method of accounting) and in the fixed
assets (consolidated) and the same amount was recorded in the
correspondent counterpart account as a Revaluation Reserve.
Other revaluations of fixed assets are scheduled to occur between 2007 and
2010, in conformity with the rules issued by IBRACON and Rule No. 183/95
issued by CVM.




                       F-49
10. Loans and financing




   The Company’s loans and financings are guaranteed and secured by the
   following guarantees and security:
   (1) Personal guarantees provided by certain quotaholders;
   (2) Mortgage of the Palmeiras de Goias manufacturing facility and mortgage of
       farms owned by certain stockholders or stockholders’ companies;
   (3) Mortgage of the Barretos manufacturing facility;
   (4) Personal guarantees provided by certain quotaholders and pledge of
       inventories (R$ 7,970).

   The following table summarizes the principal installments of the Company’s
   non-current loans and financings as of December 31, 2006, per year of
   maturity:




                           F-50
11. Trade accounts payable to suppliers
                                 Controlling company                        Consolidated
    Description                  2006       2005     2004                   2006      2005

    Domestic suppliers
    Commodities                   76,838         40,433         53,459       76,838   40,433
    Materials and services        39,197         17,844          8,751       37,354   17,890
    Finished products              7,464         11,340          9,651        7,464   11,340
                                 123,499         69,617         71,861      121,656   69,663

    Foreign suppliers
    Services provided              2,866          5,862          1,987        2,866    5,862
    Finished products                400            444              -          400      444
                                   3,266          6,306          1,987        3,266    6,306

    Total                        126,765         75,923         73,848      124,922   75,969




12. Payroll and taxes payable
                                        Controlling company                  Consolidated
    Description                           2006       2005            2004    2006     2005

    Payroll
    Payroll and management                                           968
    fees                                 1,016            901                 1,019      901
    Charges - FGTS and INSS
    (employees and third
    parties)                             2,486       1,468          1,933     2,495     1,477
    Provision for vacation and
    charges                              4,961       3,642         3,052      4,972    3,642
    Others                                 559         365           447        661      366
                                         9,022       6,376         6,400      9,147    6,386

    Taxes payable
    INSS tax payable                                               26,726    27,136    27,270
    (installments)                      27,136      27,270
    Incentive Goiás - TARE               2,904       2,836        15,214      2,904    2,836
    Others                                 518       1,390           397        877    1,360
                                        30,558      31,496        42,337     30,917   31,466

    Total                               39,580      37,872        48,737     40,064   37,852

    Current liabilities                 13,144      12,884         6,797     13,628   12,864
    Non-current liabilities             26,436      24,988        41,940     26,436   24,988




                                 F-51
   State Government of Goiás - TARE
   In December 2005, the State government of Goiás approved legislation that
   permits the receipt of the balance owed by the benefit Special Credit for
   Investment (TARE) at R$20,255 for 14% of the amount due, which therefore
   becomes R$2,836. The tax benefit in the amount of R$17,419 was deducted
   from taxes on sales on the income statement for the year ended 2005.
   Special Tax Payment in Installments Program (PAES)
   The INSS tax payable in installments refers to the Special Tax Payment In
   Installments Program (PAES) instituted by Brazilian law, which provides for
   the payment of unpaid taxes in 168 installments. The installment of 2004 is
   R$26,777 and it was directly recorded in the income of the year then ended
   and the remaining (R$25,970) were recorded in the stockholders’ equity as an
   adjustment from prior years in December 31, 2003.
   The Company is obliged in keeping the regular payments of the these
   financed taxes and the related current ones in order to keep the finance
   terms. The long-term installments have the following composition per
   maturity year as of December 31, 2006:
    Year                                     R$
    2008                                        916
    2009                                      1,157
    2010                                      1,426
    2011                                      1,727
    2012                                      2,061
    2013                                      2,432
    2014                                      2,844
    2015                                      3,300
    2016                                      3,804
    2017                                      4,361
    2018                                      2,408
                                             26,436


13. Income tax and social contribution tax

   a) Current taxes payable
   The income tax and the social contribution tax are calculated and recorded
   based on the Company’s taxable income, including the tax incentives that are
   recognized whenever the taxes are paid, as well as considering the rates
   established by the tax legislation in effect:
                                              Controlling company and
                                              Consolidated
    Description                               2006         2005       2004
    IRPJ                                       10,963        2,001    -
    CSLL                                        4,052          747    -
    Total of taxes payable - levied on the
    income of the current year                 15,015      2,748     -




                              F-52
b) Deferred taxes provision
The deferred tax debts are recorded in order to reflect future tax effects
related to the temporary differences between the tax base of assets and
liabilities and their respective carrying amount, as well as to reflect the tax
credits deriving from tax losses and negative social contribution tax basis:
                                               Controlling company and
                                               Consolidated
 Description                                   2006         2005       2004
                  -
 Deferred taxes -- fixed assets revaluation                              12,274
 reserve                                         31,752       11,352
 Deferred taxes - temporary differences
 and credits of tax losses and negative
 social contribution tax basis                   19,994       5,915       4,422
 Total provisioned of deferred taxes             51,746      17,267      16,696

                                                         -
c) Reconciliation of income tax and social contribution -- balances and the
result of the years
Provisioned balance and the result of the taxes levied on the net profit are
composed as follows:
Current taxes
                                              Controlling company and
                                              consolidated
                                              2006         2005       2004
   Income before income taxes              81,413            21,960       11,191
   Inclusions
    Temporary differences                   7,837             3,108            -
    Permanent differences                     632             2,173        3,855
    Realization of temporary differences   30,350            23,582            -
    Realization of revaluation reserve      3,858             2,785        2,580
   Exclusions
    Temporary differences                (56,658)           (41,753)     (46,713)
    Realization of temporary differences (3,108)                   -            -
   Subtotal                                64,324             11,855     (29,087)
   Realization of tax losses             (19,297)            (3,557)            -
   Taxable income                          45,027              8,299     (29,087)

   Income Taxes
   Income tax (15%)                               (6,754)      (1,245)              -
   Additional rate (10%)                          (4,479)        (806)              -
   Amortized deductions                               270           50              -
   CSLL                                           (4,052)        (747)              -
    Total current IRPJ and CSLL payable         (15,015)      (2,748)               -




                            F-53
Deferred taxes
                                           2006         2005         2004
Tax losses carryfoward                       (25,434)     (44,731)     (32,754)

Temporary differences (1)
Income of PIS and COFINS credit               91,194       64,885       46,713
Allowance for commissions                     (1,001)      (3,108)           -
Allowance for doubtful accounts               (2,589)            -           -
Provision for contingences                    (4,247)            -           -
Deferred taxes basis                          57,923       17,046       13,959

Income taxes
Income tax                                    (8,688)      (2,557)      (2,094)
Additional rate                               (6,092)      (1,824)      (1,372)
CSLL                                          (5,213)      (1,534)      (1,256)
Other adjustments                                   -            -          300
Deferred tax liabilities                    (19,994)      (5,915)      (4,422)
(-) Deferred tax liabilities from the
previous year                                  5,915        4,422            -
(-) IRPJ and CSLL on revaluation reserve       1,288          923          832
(+/-) Other adjustments                            -          392        (300)
Deferred tax expense                        (12,791)        (178)      (3,890)

         (1) The temporary differences are due to the income generated by
             PIS and COFINS credits, which are taxed only in their effective
             compensation or reimbursement.
Based on studies and forecasts performed for upcoming years and
considering the limits stated by the legislation in effect, the expectations of
the Company’s management is that the existing tax credits will be realized
within a maximum 5-year period.
In 2004, the credits of deferred taxes related to tax losses carryfoward had
been partially registered.
The net income is not directly related to the taxable income for income tax
and social contribution tax, due to the differences existing between the
accounting criteria and the related tax legislation. Therefore, we recommend
that the evolution of the tax credits realization, stemming from tax losses
carryforward, negative tax basis carryforward and temporary differences,
should not be considered as a future net profit indicator.




                           F-54
14. Contingencies

   a) Summary of contingences
      The Company is party to several legal and administrative proceedings arising in
      the ordinary course of its business, including labor claims, civil litigation and tax
      proceedings.    The Company has established provisions in its financial
      statements for the contingencies arising from these proceedings. The table
      below sets forth the main information about our legal and administrative
      proceedings as of December 31, 2006:
       Type of Proceedings           Number of lawsuits        Provision
       Labor                           531                        2,927
       Civil                            30                             -
       Taxes                             2                       26,918
       Total                           563                       29,845


   b) Description of contingencies and labor and tax credits

    b1) Labor Proceedings (probability of losses considered probable)
          The Company is party to approximately 531 labor claims that involved
          an aggregate of approximately R$ 18,241 in claims as of December 31,
          2006. Most of these labor claims involve claims for overtime, unpaid
          vacation, salary, other employee-benefit issues and indemnity for
          work-related accidents. Based on the opinion of its external legal
          counsel, the Company has established provisions for labor
          contingencies in its financial statements in the amount of R$ 2,927.
     b2) Civil proceedings (probability of losses considered remote)
          The Company is party to approximately 30 civil lawsuits that involved
          an aggregate of approximately R$ 600 in claims as of December 31
          2006. Based on the opinion of its outside legal counsel, the Company
          has not established provisions for civil contingencies, since the
          probability of the losses were considered as remote.
     b3) Tax Proceedings
      b3.1) Contingent liabilities provisioned in connection with IPI tax
   credits
           On December 17, 2003, the Company filed a claim seeking IPI tax
           credits to offset PIS and COFINS taxes paid in connection with its
           acquisition of raw materials for the production of goods that the
           Company exported. The Company filed a legal action in connection
           with its exports, and the Company prevailed in the first instance.
           This judicial decision remains subject to appeal by the Brazilian
           federal tax authorities. Although this decision is not final, the




                              F-55
       Company has used R$ 19,504 in IPI tax credits out of the total amount
       of R$ 89,809 to offset other federal taxes. Based on the opinion of the
       Company’s external counsel, the Company’s management believes
       that a favorable ruling is probable in the appeal. The Company has
       registered a provision for contingency related to these IPI tax credits
       in the amount of R$ 19,504 and a provision for contingency for any
       related penalties in the amount of R$ 7,998 in the event an
       unfavorable ruling is entered against the Company.
b3.2) Contingent liabilities not provisioned and probability of losses
considered remote
                                           -
      (i) Social Security Proceedings -- In 2004, the INSS, a Brazilian
      federal agency, filed several claims against the Company. These
      claims amount to approximately R$ 32,600 in respect of several social
      security debit notices from the INSS related to certain differentiated
      payroll contributions required to be made to rural employees. The
      enforceability of these social security debit notices has been
      suspended based upon a motion for writ of mandamus, together with
      an injunction, that the Company filed in December 2001, seeking the
      payment of a contribution called ‘‘Novo Funrural’’ to be declared
      unconstitutional. In January 2002, the Regional Federal Court, 3rd
      Circuit, granted an injunction suspending payment and allowing the
      Company to refrain from paying such contribution. Based on the
      advice of its outside legal counsel and certain judicial precedents, the
      management believes that it is reasonably possible that the Company
      will prevail in these proceedings. The Company has not recorded any
      provision for this amount.
      (ii) Beef Industry Antitrust Proceedings - On June 21, 2005, the SDE
      -- Secretaria de Direito Econômico initiated administrative
       -
      proceedings against 11 Brazilian beef companies, including the
      Company and certain other large beef producers. The proceedings
      relate to allegations that the Company and these other beef
      companies may have breached Brazilian antitrust regulations by
      entering into agreements to establish the price of cattle purchased for
      slaughter. On August 22, 2006, the SDE announced that it was unable
      to prove any antitrust violation against three of the beef companies
      originally cited (but not the Company), and the SDE advised CADE
      that there is evidence that the other eight Brazilian beef companies
      (including the Company) violated Brazilian antitrust regulations.
      Although the SDE has found evidence that the Company violated
      these regulations, a determination on this matter can only be made by
      CADE. If CADE ultimately decides that we violated Brazilian antitrust
      regulations, CADE may impose administrative penalties on the
      Company, including a fine that may range from 1% to 30% of our




                        F-56
             annual gross revenues in 2004 (in addition, to criminal proceedings
             that may be brought by a Brazilian public prosecutor). If CADE were to
             render an unfavorable decision, the Company would be entitled to
             appeal any such decision in Brazilian courts, and if the public
             prosecutor were to bring any criminal charges, the Company would
             be able to dispute these charges in court. An adverse decision by
             CADE could result in a material adverse effect on it’s the Company’s
             results of operations, financial condition and prospects
      b3.3) Tax credits considered probable and other possible contingencies
             (i) PIS and Cofins tax credits - On January 24, 2006, the Company
             filed a claim to enable it to utilize credits from PIS and COFINS
             contributions in connection with its acquisition of raw materials for
             the production of goods that it exported. This suit is pending, and
             based on the advice of its outside legal counsel, the Company’s
             management believes that it is reasonably possible that it will prevail
             in the proceeding. The Company has yet to apply for any tax credits
             that may arise from this dispute.
             (ii) IPI tax credits from exports - On January 23, 2004, the Company
             filed a claim requesting IPI tax credits in connection with its exports
             from 1995 to 2003, as well as subsequent exports. This suit is
             pending, and based on the advice of its outside legal counsel, the
             Company believes that it is reasonably possible that they will prevail
             in this proceeding. The amount in controversy is R$237,000, but the
             Company has yet to apply for tax credits that may arise from this
             dispute. If a final decision is rendered against them, the Company
             may be required to pay attorneys’ fees incurred by the Brazilian
             federal government up to a maximum amount of 20% of the amount
             in controversy. The Company has not recorded any provisions
             relating to any possible claim for these attorneys’ fees.


15. Stockholders’ equity

15.1. Capital stock
      At December 31, 2006, the Company subscribed and paid-up capital was R$
      29,400, consisting of 18,231,501 quotas with no face value (at December 31,
      2005 and December 31, 2004, the Company subscribed and paid-up capital
      was R$29,400 and R$18,232, respectively).

15.2. Revaluation reserve
      In 2003, 2005 (revaluation) and 2006, the Company performed a revaluation of
      its fixed assets and the amounts recorded as of December 31, 2006, 2005 and
      2004 were R$149,198, R$77,571 and R$36,604, respectively.




                              F-57
15.3. Profit distribution
      Profit was distributed in the years of 2006, 2005 and 2004 in the amounts of
      R$1,600, R$6,158 and R$1,500, respectively.


16. Management compensation

      For the years ended December 31, 2006, 2005 and 2004, the aggregate
      compensation paid by the Company to the Company’s management was
      R$1,430, R$1,286 and R$1,607, respectively.


17. Insurance coverage (unaudited)

      The Company and its subsidiaries have a policy of maintaining insurance that
      takes in consideration the level of concentration of risks, the significance and the
      replacement cost of the assets.. At December 31, 2006, the goods and amounts
      secured follows
   Goods                           Tipo de cobertura             Importância segurada
   Installations, equipaments      Fire, flood and landslide                   115,438
   and products in inventory
   Trucks                          Fire, flood and landslide                        2,020
                                                                                 117,458


      The Company keeps insurance for all transported products in the country and
      abroad.


18. Risk management and derivative instruments

      The Company’s operations are exposed to market risks primarily related to
      exchange rates, the credit worthiness of its customers, interest rates and cattle
      prices. These types of risks are monitored by its treasury area, which manages
      these risks through a system of statistical computation of the Value at Risk (VAR)
      and through its technical committee. The technical committee is composed of
      board members and by the Company’s financial executives, who monitor the
      risks, limits on financial positions and overall level of risk exposure.
      a) Exchange rate and interest rate risks
      The exchange rate and interest rate risks related to financings and loans,
      marketable securities and accounts receivable from customers denominated
      in foreign currencies are hedged on a transaction by transaction basis
      through derivative instruments, such as swap contracts (dollar to CDI or
      LIBOR to fixed interest rates or vice-versa). The notional value of these
      contracts is not recorded on the Company’s balance sheet.




                                F-58
   Also, on December 31, 2006, the Company had blocked exchange contracts
   (‘‘operações de travamento de câmbio’’), in the amount of R$19,404
   (US$9,000). The notional value of these contracts is not recorded on the
   Company’s balance sheet.
   b) Credits risks
   The Company is exposed to credit risks in respect of accounts receivable from
   customers, which are partially mitigated through the diversification of the credit
   profile of the Company’s customer portfolio. The Company does not have a client
   that represents more than 10% of its combined net sales revenue, and most of the
   Company’s clients have good financial and operating indicators.
   c) Purchase Price of Cattle
   The Company is exposed to volatility with respect to the price of cattle,
   caused by climate factors, supply, transportation cost and agricultural
   policies. According to its inventory policy, the Company maintains individual
   physical control of its livestock, which includes anticipated purchases.
   d) Estimated Market Value
   The assets and liabilities of the Company are accounted for in the balance
   sheets based on their respective acquisition cost, and the related
   classification of revenue and expenses in the income statement is accounted
   for based on its expected fair market value or liquidation.
   The market values of the financial instruments and derivatives contracts on
   December 31, 2006 were estimated based on the prices quoted in the market
   and approach the accounting values.



19. Subsequent events

   a) Obtainment of resources
   At the beginning of 2007, the Company’s wholly-owned subisidiary Minerva
   Overseas Ltd. issued an aggregate principal amount of US$ 200,000 of notes,
   with interest payable on a semi-annued basis at 9.5% due February 1, 2017. The
   indenture governing these notes limits the Company’s ability to, among other
   provisions:


    Incurr additional indebtedness;
    Pay dividends;
    Create liens;
    Enter in a merger, sale or consolidation transations; and
    Enter into certain transactions with their stockholders or affiliates.




                             F-59
      b) Reorganization partnership
     Pursuant to a shareholders’ meetings held on April 30, 2007 and May 2, 2007,
     the following actions were authorized: (i) changing the status of the Company
     from a limited company to a joint stock company to better accomplish the
     Company’s objectives and (ii) spin-off of Transportadora Minerva Ltda., the
     Company’s wholly owned subsidiary, to Longridge Participations Ltda. The
     value of the quotas of Transportadora Minerva Ltda. was R$ 53,500.
      The unconsolidated condensed balance sheet of the Company and the
      consolidated condensed ‘‘pro-forma’’ balance sheet of the Company at
      December 31, 2006 and 2005, as well as the unconsolidated and consolidated
      ‘‘pro forma’’ income statements for the years ended December 31, 2006 and
      2005 are set forth below. The ‘‘pro forma’’ financial information gives effect
      to the spin-off described above as if it had been consummated as of
      December 31, 2006.
Condensed balance sheets "pro-forma" as of December 31


                                             Controlling company        Consolidated
                                              2006         2005       2006        2005

Assets:
Current assets                               578.861      344.299     579.798     344.299
Non-current assets                           268.763      168.984     268.325     168.984

Total assets                                 847.624      513.283     848.123     513.283

Liabilities and stockholders' equity
Current liabilities                          412.314      306.381     412.788     306.381
Non-current liabilities                      300.938      198.674     300.963     198.674
Stockholders' equity                         134.372        8.228     134.372       8.228

Total liabilities and stockholders' equity   847.624      513.283     848.123     513.283

Income statements condensed "pro-forma" for the years ended December 31, 2006 and 2005


                                             Controlling company         Consolidated
                                              2006         2005       2006         2005
Operating result                               81.454       17.621     81.453       17.621
Non-operating result                               (1)         -          -            -
Income taxes                                  (27.806)      (2.926)   (27.806)      (2.926)

Net income                                    53.647       14.695      53.647      14.695




                                    F-60
20. Explanation added to the translation into the English
    version

   The accompanying financial statements were translated into the English
   version from those statements prepared for local purposes. Certain
   accounting practices applied by the Company that conform to those
   accounting practices adopted in Brazil may not conform to the generally
   accepted accounting principles in the countries where these financial
   statements may be used.




                         F-61

				
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