ULTRAPAR HOLDINGS INC

Foreign Filer Report • Feb 19, 2003

6-K 1 feb1603-6k.htm 6k

Form 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report Of Foreign Private Issuer

Pursuant To Rule 13a-16 Or 15d-16 Of

The Securities Exchange Act Of 1934

For the month of February, 2003

Commission File Number: 001-14950

ULTRAPAR HOLDINGS INC. (Translation of Registrant’s Name into English)

Avenida Brigadeiro Luiz Antonio, 1343, 9º Andar São Paulo, SP, Brazil 01317-910 (Address of Principal Executive Offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F X Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes No X

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes No X

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

Yes No X

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

ULTRAPAR HOLDINGS INC.

TABLE OF CONTENTS

ITEM
1.	Press Release
dated February 13, 2003
2.	Report of Independent
Accountants on Audited Financial Information For the Year Ended December
31, 2002
3.	Notice of Dividend
Payment

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ULTRAPAR HOLDINGS INC.

By /s/ Fabio Schvartsman Name: Fabio Schvartsman Title Chief Financial Officer

Date February 14, 2003

4 th Quarter 2002

ULTRAPAR PARTICIPAÇÖES S.A. (BOVESPA:UGPA4/NYSE: UGP)

INFORMATION AND RESULTS FOR THE FOURTH QUARTER 2002 (São Paulo Brazil, February 13, 2003)

53% NET REVENUE GROWTH IN 4Q02 COMPARED TO 4Q01 55% INCREASE IN EBITDA IN 4Q02 COMPARED TO 4Q01 68% HIGHER ACCUMULATED 2002 NET INCOME COMPARED TO THE SAME PERIOD IN 2001

“Our work philosophy is based on the consistency and persistence of our actions and on the unceasing quest to constantly upgrade our quality. We are announcing significantly improved results in spite of the volatile macroeconomic environment and unfavorable conditions that prevailed in Brazil last year. This achievement convinces us that our business vision based upon the focus on the customer, our low cost creed and increasing employee skills reservoir is the most appropriate and efficient “

Paulo G. A. Cunha – CEO

Ultrapar Participaçöes S.A. UGPA4 = R$ 24.90 / 1,000 shares UGP = US$ 6.70 / ADR (December 30, 2002)

4 th Quarter 2002 - Overview

On December 4, 2002, Ultrapar concluded its Corporate Restructuring. The results for the July to December 2002 period now contemplates the performance of the incorporated companies, Oxiteno S.A. Ind. e Com. and Ultragaz Participaçöes, which have become wholly owned subsidiaries of Ultrapar.

We are continuing to announce the operating results for each business, reflecting our commitment to the best practices of corporate governance and transparency.

Ultrapar, a company with its business focus on the sectors of LPG distribution (Ultragaz), chemicals and petrochemicals (Oxiteno) and also transportation and storage of LPG and chemical products (Ultracargo), reported the following results in the fourth quarter and full year 2002:

| Financial
and Economic Data Ultrapar consolidated | 4Q02 | 4Q01 | (%) 4Q02x4Q01 | 2002 | 2001 | (%) 2002x2001 |
| --- | --- | --- | --- | --- | --- | --- |
| Net
Sales Revenue | 908 | 592 | 53% | 2,995 | 2,285 | 31% |
| Gross
Sales | 229 | 157 | 46% | 747 | 586 | 27% |
| Operating
Profit | 108 | 63 | 73% | 366 | 279 | 31% |
| EBITDA | 140 | 90 | 55% | 487 | 373 | 31% |
| Net
Income | 108 | 25 | 333% | 222 | 132 | 68% |
| Earnings
per 1,000 shares | 1.55 | 0.47 | 230% | 3.62* | 2.49 | 45% |
| In millions
of Reais (except EPS) | | | | | | |

• Based on the weighted average of the number of shares through the year

| Operating
Performance Ultragaz | 4Q02 | 4Q01 | (%) 4Q02x4Q01 | 2002 | 2001 | (%) 2002x2001 |
| --- | --- | --- | --- | --- | --- | --- |
| Sales
Volume (thousand tons) | 327.2 | 336.1 | (3%) | 1,302.7 | 1,344.9 | (3%) |
| Residential | 208.9 | 211.9 | (1%) | 798.3 | 825.8 | (3%) |
| Non-Residential | 118.3 | 124.2 | (5%) | 504.3 | 519.1 | (3%) |
| Market
Share* | 19.7% | 19.4% | | 19.6% | 19.3% | |

** Source: Sindigás*

| Operating
Performance Oxiteno | 4Q02 | 4Q01 | (%) 4Q02x4Q01 | 2002 | 2001 | (%) 2002x2001 |
| --- | --- | --- | --- | --- | --- | --- |
| Sales
Volume (thousand tons) | 118.8 | 102.6 | 16% | 433.5 | 445.6 | (3%) |
| Domestic | 66.1 | 55.2 | 20% | 263.7 | 256.7 | 3% |
| Exports | 52.7 | 47.4 | 11% | 169.7 | 188.9 | (10%) |

2

Highlights in the Period:

Distribution of income – On February 12, 2003, Ultrapar’s Board of Directors authorized the payment of an interim dividend of R$ 45 million for the fiscal year 2002. Common shareholders are to receive a dividend of R$ 0.629268 per thousand shares and preferred shareholders a dividend of R$ 0.692195 per thousand shares. Payment will be effected on March 06, 2003.

Corporate Restructuring – In October, we announced an important corporate restructuring which was successfully concluded in December and will allow a complete align of interests of all the shareholders, a liquidity increase and an optimization of the financial management. This operation was given substantial coverage in the specialized financial press being cited as the most outstanding corporate event in 2002.

Ultrapar and the Brazilian Macroeconomic Environment

In Brazil, the 4Q02 brought good economic news in spite of the high inflation rate. After more than a year of external shocks, political uncertainty and concern surrounding the external and internal debt, the perception of political risk began to dissipate. The markets began to indicate a greater confidence in the transition from one government to another, in this way stimulating an appreciation in the Real and a reduction in sovereign risk. However, fears of military conflict in the Middle East and political instability in Venezuela have pushed up oil and oil product prices. The international LPG Mont Belvieu benchmarkprice increased 49% when compared with 4Q01 and the average naphtha NWE benchmark price rose by 48% in comparison with 4Q01.

Operating Performance

Ultragaz: Brazilian LPG consumption reported a year-on-year decline of 6% in 4Q02. This decline is partly the consequence of the high sales volume in 4Q01, the result of the anticipation of purchases in December 2001 prior to the announcement of LPG price increases in early 2002. Petrobras also increased prices during the year, in the case of the residential segment by 59% and 94% for the non-residential segment and this also impacted LPG demand.

Ultragaz achieved a better performance than the market, posting a decline of 3% in sales volume for the quarter and expanding its market share from 19.4% to 19.7% in the period. Fourth quarter sales 2002 registered 327.2 thousand tons compared with 336.1 thousand tons in 4Q01. In 2002, Ultragaz reported a 3% fall in sales volume as against 5% for the market as a whole. With a 19.6% market share in 2002, Ultragaz was the second largest LPG distributor in Brazil.

3

The residential segment, which is supplied in the form of 13 kg gas cylinders, posted a year-on-year reduction of 1% in its sales volume for the fourth quarter. In the non-residential segment, where sales are largely to the commercial and industrial sectors, 4Q02 volumes were down by 5% compared to 4Q01. This drop in sales was mainly a consequence of clients located near the Brazil-Bolivia Pipeline who converted their energy sources to the Natural Gas, as previously anticipated by Ultrapar. Accumulated annual volumes sold to both the residential and non-residential segments for 2002 as a whole were down year-on-year by 3%.

Oxiteno: Oxiteno produces ethylene oxide and its principal derivatives and is also a leading manufacturer of specialty chemicals. Oxiteno’s products are used in various industrial sectors such as those of PET packaging, paints, cosmetics and detergents.

During the 4Q02, the currency which had depreciated an average of 44% year-on-year, benefited the competitiveness of Oxiteno’s products both in the overseas and domestic markets. As a result, the volume of chemical products sold in 4Q02 grew 16% compared with 4Q01 reflecting increased sales to both domestic and overseas markets of 20% and 11%, respectively. Due to positive performances in the polyester, hydraulic fluids, tannery, paper and resins segments, domestic sales volume in 4Q02 was 66.1 thousand tons. Sales to the external market reached 52.7 thousand tons during the period, driven by exports of glycols to the Far East, the United States, Canada and Mexico and the recovery in sales to the Argentine market.

Oxiteno reported a 3% decline in sales volume for 2002 as a whole, largely due to the ethylene supply restrictions from Braskem, in the first semester 2002. Sales to the domestic market rose by 3% while exports fell by 10% in view of the priority given to the domestic market.

Ultracargo: Through its subsidiaries Transultra and Tequimar, Ultracargo is one of the leaders in inter-modal transportation services for the chemical, petrochemicals and LPG sectors in Brazil. Among the solutions, Transultra offers integrated multi-modal transportation, loading and unloading operations at its customers’ installations and management of third party trucking fleets. Tequimar maintains and operates storage installations at port terminals and rail junctions for the movement of chemical and petrochemical products. Tequimar operates terminals in Aratu, Camaçari, Maceió, Paulínia, Santosand Suape. The company’s considerable storage capacity and the strategic location of its assets, facilitates product movement along its multi-modal logistics system. Besides storage services, Tequimar offers ship loading and unloading services, the operation of pipelines, logistics programming and installation engineering.

4

In 4Q02, kilometers driven by Transultra increased 65% to 12,712 kilometers compared with 7,683 kilometers in 4Q01. Transultra has become an outstanding player in the transportation market, increasing its portfolio of important clients thanks to its competitive advantages of solidity, respect for legislation and compliance with safety and environment regulations. In 4Q02, Tequimar’s utilized storage capacity was 91.1% in relation to 91.9% reported in 4Q01. Transultra’s accumulated 2002 total of kilometers driven grew 38% as compared with the same period in 2001 and Tequimar posted a utilized capacity of 91.6% in relation to 93.2% posted for 2001.

Economic – Financial Performance

Net Sales Revenue – Ultrapar’s consolidated net sales revenue of R$ 907.5 million in 4Q02 was 53% higher than for the same period in the preceding year. In 2002, Ultrapar’s sales revenue was 31% higher than the figure reported for the same period in 2001, posting R$ 2,994.5 million.

Ultragaz – Net sales revenue in 4Q02 at Ultragaz totaled R$ 554.3 million in 4Q02 compared with R$ 365.2 million in 4Q01. For the full year 2002, net sales revenue was R$ 1,942.7 million, a year-on-year increase of 41%. Increased net sales revenue is a reflection of increased LPG costs in 2002.

Oxiteno – Oxiteno’s net sales revenue in 4Q02 was R$ 323.9 million, a year-on-year growth of 57%. The Real’s depreciation made the company’s products more competitive both in the overseas as well as domestic markets where Oxiteno competes with imported products. For the full year 2002, Oxiteno’s net sales revenues were R$ 956.1 million thus posting a year-on-year growth of 15%.

Ultracargo – Net sales revenue in 4Q02 was R$ 38.9 million, a growth of 35% compared with 4Q01. This increase reflects greater business volumes at Transultra due to further expansion in its client base.

Cost of Goods Sold. Ultrapar’s costs of goods sold in 4Q02 at R$ 678.3 million was 56% higher than the R$ 435.0 million posted for the same period in 2001. Ultrapar’s cost of goods sold for the full year posted a year-on-year increase of 32%.

Ultragaz: Ultragaz’s cost of goods sold in 4Q02 was R$ 470.2 million, a year-on-year increase of 63%. This increase is a reflection of higher ex-refinery prices for LPG sold by Petrobras with an increase of 59% and 94% in the residential and non-residential segments respectively during the course of 2002. Since January 2002, Petrobras, as the only Brazilian producer, was allowed to set its own LPG prices for sales to the domestic market and benchmarked these to the international price plus the costs of importing the product. In the 3Q02, ANP intervened in Petrobrás price policies, fearing the effects the increase in LPG prices might have on domestic inflation. From October onwards, Petrobras’ freedom to set its own LPG prices was gradually restored. For 2002 as a whole, Ultragaz’s cost of goods sold increased year-on-year by 43%.

5

Oxiteno: The cost of goods sold at Oxiteno was R$ 192,5 million in 4Q02, 40% higher than the figure of R$ 137.6 million reported in 4Q01. Much of the increase was due to higher ethylene prices, which are very sensitive to the depreciation in the Real, as well as the effect of increased naphtha prices on the international market. At R$ 614.8 million in the accumulated 2002, Oxiteno’s cost of goods sold rose year-on-year by 9%.

Ultracargo – The cost of services rendered increased year-on-year by 44% in 4Q02, reflecting the higher prices of Tequimar’s raw materials and in the case of Transultra, the increase in diesel fuel.

Selling, General and Administrative Expenses – Ultrapar reported R$ 118.8 million in operational expenses in 4Q02 as against R$ 91.6 million for the same period in 2001. Ultrapar’s SG&A expenses for the full year were R$ 382.3 million and year-on-year higher by 20%.

Ultragaz – General, administrative and selling and depreciation expenses increased from R$ 51.2 million in 4Q01 to R$ 65.7 million in 4Q02. Depreciation expenses were R$ 19.6 million, R$ 2.1 million higher than 4Q01. Selling expenses in 4Q02 increased R$ 6.7 million over 4Q01. This increase reflected an allowance for doubtful account provision of R$ 8.3 million. Due to the present difficult environment, the amount of the provisions were increased. General and administrative expenses recorded an increase from R$ 12.9 million in 4Q01 to R$ 18.6 million in 4Q02, due to the annual collective wage increase negotiated in September 2002 and consultancy fees related to the implementation of the ERP – Enterprise Resource Planning system. For the full year 2002, SG&A expenses were R$ 217.8 million.

Oxiteno – General, administrative and selling and depreciation expenses increased from R$ 37.9 million in 4Q01 to R$ 47.1 million in 4Q02. Selling expenses were 3% lower than for the same period in 2001 as a consequence of the reversal of R$ 2.6 million from allowance for doubtful account, once this amount has been received. This provision was constituted in 4Q01 in the light of the Argentine crisis. Administrative expenses increased from R$ 18.4 million to R$ 27.9 million due to an increased provision for the Profit Sharing Program, in line with the company’s operating performance, as well as consultancy and legal fees involved with the Corporate Restructuring in 4Q02. For the full year 2002, Oxiteno’s selling, general and administrative expenses were R$ 142.4 million.

Operating Profit – Ultrapar reported an operating profit of R$ 108.4 million, a year-on-year increase of 73% while Oxiteno's operating profit was R$ 84.4 million, an increase of R$ 53.4 million in relation to 4Q01. Ultragaz recorded an operating profit of R$ 19.3 million, R$ 6.4 million lower than the same item in 4Q01. It is important to notice that if the provision made in 4Q02 is ignored, Ultragaz’s operating profit would have been R$ 27.6 million, corresponding to an increase of R$ 1.9 million compared with the same period in 2001. Ultracargo recorded an operating profit of R$ 3.6 million, R$ 1.2 million lower than in 4Q01. Ultrapar’s operating profit for the full year was R$ 365.6 million, a year-on-year increase of 31%.

6

EBITDA – Consolidated operating cash flow (EBITDA) was R$ 139.9 million in 4Q02, 55% more than registered in the same period in 2001. The overall EBITDA figure for the year was R$ 487.3 million, a year-on-year increase of 31%.

EBITDA R$million

Ultragaz – Ultragaz reported an EBITDA of R$ 38.9 million, and a decline of R$ 4.3 million in relation to 4Q01. EBITDA for the full year 2002 was R$ 219.8 million, an increase of R$ 56.7 million compared with the same period in 2001.

Oxiteno – Oxiteno reported an EBITDA of R$ 92.7 million, an increase of R$ 54.1 million in relation to 4Q01. For the full year, EBITDA was R$ 232.6 million, an increase of R$ 55.8 million compared with the same period in 2001.

Ultracargo – Ultracargo posted EBITDA of R$ 7.0 million, corresponding to a decline of R$ 0.2 million compared to 4Q01. EBITDA for the full year 2002 was R$ 29.3 million, a growth of 3% compared to the same period in 2001.

Financial Results – Ultrapar posted a loss of R$ 7.2 million in its 4Q02 albeit a gain of R$ 28.5 million for 2002 as a whole.

Ultrapar ended 2002 with a total cash position of R$ 637.9 million, of which R$ 508.4 million was in dollar denominated assets and hedge instruments. Total debt in December was R$ 583.5 million, of which foreign currency denominated liabilities, including advances on foreign exchanges contracts, were R$ 348.9 million. Even after the disbursement of R$ 208.0 million to Oxiteno’s dissenting minority shareholders following the completion of the Corporate Restructuring, Ultrapar ended the year with a net cash position of R$ 54.4 million, and 100% of its dollar denominated liabilities hedged.

Net Income – Consolidated net income was R$ 107.8 million in 4Q02, R$ 82.9 million higher than in 4Q01. Net income for the full year was R$ 222.3 million, against R$ 132.2 million for the full year 2001, and representing a growth of 68%.

Investments – In 2002, investments totaled R$ 432.8 millions, including the purchase of the additional stakes in group companies. In 4Q02, investments were R$ 278.5 million, of which R$ 208.0 million was invested in the acquisition of the minority shareholders in Oxiteno and R$ 70.5 million in CAPEX, distributed among the businesses as follows:

7

| CAPEX
4Q02 | R$
MM | %
of Total |
| --- | --- | --- |
| Ultragaz | 46.9 | 67% |
| Oxiteno | 17.7 | 25% |
| Ultracargo | 5.8 | 8% |
| Ultrapar | 70.5 | 100% |

• At Ultragaz, capital expenditures were largely directed towards expanding the non-residential segment (UltraSystem), bottles and the new filling plant in Betim;
• At Oxiteno, capital expenditures were directed for expanding production capacity, quality and environmental control systems and the replacement of equipment;
• At Ultracargo, capital expenditures were directed to the expansion of Santos (São Paulo) and Aratu (Bahia) based terminals.

8

Ultrapar in the Capital Markets

In 2002, Ultrapar’s shares showed a consistently good performance in relation to the main local market indexes, Ibovespa and IBX, ending the year with an appreciation of 33% against the Ibovespa’s depreciation of 17% and an appreciation of 6% in the IBX.

__ UGPA4 __ IBOV __ IBX

9

The average daily trading volume in 2002 was R$ 1,233 thousand, including transactions on both the Bovespa and the New York Stock Exchange (NYSE), representing a year-on-year increase of 57%. If we consider the financial volume alone of Ultrapar shares traded on Bovespa, the increase was 101% against an increase of 10% in financial volume traded for the market as a whole.

Forthcoming Events

Results Release:

On February 14, 2003, Ultrapar will host a conference call with investors to discuss the company’s fourth quarter 2002 performance and the outlook for 2003.

Conference Call in Portuguese: 11:00 a.m. (Brasília time) Dial-in to pre-registering: 55 11 4613-0512

10

Website to pre-register: www.ccall.com.br/thomson Password for participants: 702 + registration number to be provided at pre-registration (PIN) Please call 5 minutes prior to the conference call time on 55 11 4613-0500 with your password.

Conference Call in English: 9:00 a.m. ( New York time) Dial-in to pre-register: Calling from Brazil: 11 4613-0512 Calling from abroad: 55 11 4613-0513 Website: www.ccall.com.br/thomson (Click on version in English) Participant Password: 628 Connecting Telephones: Calling from Brazil: 11 4613-0503 Calling from the USA: 1-703-788-1236 or 1-866-812-0442 (toll free) Participant Password: 628 + Personal Identification Number (PIN)

Following the conference calls, replays will be made available until February 24, 2003 at the following numbers:

Conference Call in Portuguese: Telephone: 55 11 4613-0501 (Password 702)

Conference Call in English For participants calling from Brazil: 11 4613-0502 (password 628) For participants calling from the USA: 1-703-788-1236 or 1-866-812-0442 (Password 628)

All financial information has been prepared in accordance with Brazilian corporate law accounting. All figures are given in Brazilian Reais, except on page 18 where they were converted into U.S. dollars, based on the average commercial exchange rate for the corresponding periods.

For further information please contact: Investor Relations Department Ultrapar Participaçöes S.A. (55 11) 3177-6513 fbrasil@ultra.com.br www.ultra.com.br

11

Relevant Market Information

| Focus
on Finance | 4Q02 | 4Q01 | Acum.
02 | Acum.
01 |
| --- | --- | --- | --- | --- |
| EBITDA
margin Ultrapar | 15% | 15% | 16% | 16% |
| Net
income margin Ultrapar | 12% | 4% | 7% | 6% |

| Focus
on Productivity | 4Q02 | 4Q01 | Acum.
02 | Acum.
01 |
| --- | --- | --- | --- | --- |
| EBITDA
R$/ton Ultragaz | 119 | 129 | 169 | 121 |
| EBITDA
R$/ton Oxiteno | 780 | 376 | 537 | 397 |

| Focus
on Human
Resources | 4Q02 | 4Q01 | Acum.
02 | Acum.
01 |
| --- | --- | --- | --- | --- |
| Number
of employees Ultrapar | 5,876 | 5,748 | 5,876 | 5,748 |
| Number
of employees Ultragaz | 4,032 | 4,051 | 4,032 | 4,051 |
| Number
of employees Oxiteno | 912 | 902 | 912 | 902 |
| Number
of employees Ultracargo | 743 | 627 | 743 | 627 |

| Focus
on Capital Markets | 4Q02 | 4Q01 | Acum.
02 | Acum.
01 |
| --- | --- | --- | --- | --- |
| Nº
of shares (MM) | 69,691 | 53,000 | 69,691 | 53,000 |
| Market
Capitalization – R$ million | 1,735 | 911 | 1,735 | 911 |
| Av.
daily trading volume BOVESPA – th. shares | 37,709 | 58,551 | 40,358 | 24,653 |
| Av.
daily trading volume BOVESPA– R$ th. | 862 | 961 | 860 | 427 |
| Av.
BOVESPA price – R$ / th. shares | 22.87 | 16.41 | 21.31 | 17.34 |
| Nº.
of ADRs 1 on the NYSE (th. ADRs) | 4,112 | 7,838 | 4,112 | 7,838 |
| Av.
daily trading volume NYSE – ADRs | 10,855 | 37,535 | 17,542 | 21,107 |
| Av.
daily trading volume NYSE–US$ th. | 70.2 | 231.3 | 136.8 | 150.5 |
| Av.
NYSE price – US$ / ADRs | 6.47 | 6.16 | 7.80 | 7.13 |
| Av.total 2 daily trading volume – th. shares | 48,564 | 96,086 | 57,900 | 45,761 |
| Av.total 2 daily financial volume– R$ th. | 1,124 | 1,558 | 1,233 | 787 |

1 1 ADR = 1.000 preferred shares 2 Total = BOVESPA + NYSE

12

ULTRAPAR PARTICIPAÇÖES S/A CONSOLIDATED BALANCE SHEET In millions of reais - Corporate law

| | QUARTERS
ENDED IN — DEC | DEC | SEP |
| --- | --- | --- | --- |
| | 2002 | 2001 | 2002 |
| ASSETS | | | |
| Cash and marketable
securities | 637.9 | 656.0 | 863.8 |
| Trade accounts
receivable | 271.7 | 149.3 | 248.0 |
| Inventories | 106.3 | 94.5 | 92.3 |
| Other | 171.0 | 145.4 | 152.3 |
| Total Current Assets | 1,186.9 | 1,045.2 | 1,356.4 |
| Investments | 33.0 | 88.8 | 45.2 |
| Property, plant
and equipment | 779.5 | 707.9 | 754.5 |
| Deferred charges | 81.1 | 68.1 | 76.7 |
| Other long term
assets | 47.4 | 42.0 | 67.1 |
| Total Long Term
Assets | 941.0 | 906.8 | 943.5 |
| TOTAL ASSETS | 2,127.9 | 1,952.0 | 2,299.9 |
| LIABILITIES
AND STOCKHOLDERS' EQUITY | | | |
| Loans | 219.8 | 124.5 | 223.0 |
| Suppliers | 104.4 | 88.4 | 68.6 |
| Salaries and related
contributions | 64.4 | 50.2 | 54.0 |
| Taxes | 11.9 | 7.8 | 20.8 |
| Other accounts
payable | 67.7 | 52.9 | 18.8 |
| Total Current Liabilities | 468.2 | 323.8 | 385.2 |
| Loans | 363.7 | 290.2 | 402.0 |
| Deferred income
tax | 34.8 | 24.0 | 39.6 |
| Other long term
liabilities | 39.2 | 74.2 | 79.2 |
| Total Long Term
Liabilities | 437.7 | 388.4 | 520.8 |
| TOTAL LIABILITIES | 905.9 | 712.2 | 906.0 |
| STOCKHOLDERS'
EQUITY | | | |
| Capital | 664.0 | 433.9 | 433.9 |
| Revalution reserve | 26.0 | 25.9 | 23.7 |
| Revenue reserves | 501.1 | 340.2 | 339.8 |
| Retained earnings | - | - | 95.9 |
| Total Stockholders'
Equity | 1,191.1 | 800.0 | 893.3 |
| Minority Interests | 30.9 | 439.8 | 500.6 |
| TOTAL STOCKHOLDERS'
EQUITY & M.I. | 1,222.0 | 1,239.8 | 1,393.9 |
| TOTAL LIAB.
AND STOCKHOLDERS' EQUITY | 2,127.9 | 1,952.0 | 2,299.9 |

13

| ULTRAPAR
PARTICIPAÇÖES S/A | | | | | |
| --- | --- | --- | --- | --- | --- |
| CONSOLIDATED
STATEMENT OF INCOME | | | | | |
| In
millions of reais (except per share data) - corporate law | | | | | |
| | QUARTERS
ENDED IN | | | ACCUMULATED | |
| | DEC | DEC | SEP | DEC | DEC |
| | 2002 | 2001 | 2002 | 2002 | 2001 |
| Net sales | 907.5 | 591.5 | 833.1 | 2,994.5 | 2,284.7 |
| Cost
of goods sold | (678.3) | (435.0) | (608.9) | (2,247.1) | (1,698.3) |
| Gross profit | 229.2 | 156.5 | 224.2 | 747.4 | 586.4 |
| Operating
expenses | | | | | |
| Selling | (45.8) | (39.7) | (32.2) | (130.2) | (120.0) |
| General
and administrative | (52.1) | (33.4) | (42.3) | (170.3) | (131.6) |
| Depreciation
and amortization | (20.9) | (18.5) | (20.9) | (81.8) | (66.2) |
| Other
operating results | (2.0) | (2.2) | 0.1 | 0.4 | 10.2 |
| EBIT | 108.4 | 62.7 | 128.9 | 365.5 | 278.8 |
| Financial
results | | | | | |
| Financial
income | (24.4) | (29.6) | 158.8 | 238.0 | 120.7 |
| Financial
expenses | 22.3 | 21.4 | (126.2) | (176.6) | (122.8) |
| Taxes
on financial activities | (5.1) | (8.0) | (12.4) | (32.9) | (29.0) |
| Equity
in earnings (losses) of affiliates | | | | | |
| Affiliates | (1.2) | 0.9 | (1.6) | (1.7) | 2.0 |
| Benefit
of tax holidays | 14.9 | 6.0 | 14.7 | 43.5 | 26.9 |
| Non-operating
income (expense) | 0.5 | (2.6) | (42.8) | (44.1) | (17.0) |
| Income before taxes | 115.4 | 50.8 | 119.4 | 391.7 | 259.6 |
| Social
contribution and income tax | (32.0) | (8.3) | (37.7) | (114.9) | (54.5) |
| Income before minority
interest | 83.4 | 42.5 | 81.7 | 276.8 | 205.1 |
| Minority
interest | 24.4 | (17.6) | (34.1) | (54.5) | (72.9) |
| Net
Income | 107.8 | 24.9 | 47.6 | 222.3 | 132.2 |
| EBITDA | 139.9 | 90.4 | 160.1 | 487.3 | 372.5 |

14

| ULTRAPAR
PARTICIPAÇÖES S/A | | | |
| --- | --- | --- | --- |
| CONSOLIDATED
CASH FLOW STATEMENT In
millions of reais - corporate law | | | |
| | | DEC | |
| | | 2002 | 2001 |
| Cash
Flows from operating activities | | 466.9 | 338.4 |
| | Net
income | 222.3 | 132.2 |
| | Minority
interest | 54.5 | 72.9 |
| | Depreciation
and amortization | 121.8 | 102.4 |
| | Working
capital | (125.7) | (56.0) |
| | Financial
expenses (A) | 116.2 | 74.1 |
| | Other
(E) | 77.8 | 12.8 |
| Cash Flows
from investing activities | | (426.4) | (205.3) |
| | Additions
to property, plant, equipment and deferred charges (D) | (220.0) | (203.0) |
| | Disposals
of permanent assets | 4.5 | 9.3 |
| | Acquisition
of minority interests (including treasury shares) | (212.8) | (13.8) |
| | Dividends
received from affiliates | 0.4 | 1.3 |
| | Other | 1.5 | 0.9 |
| Cash Flows
from financing activities | | (58.5) | (339.4) |
| | Short
term debt, net | 55.8 | (51.5) |
| | Issuances | 97.3 | 54.4 |
| | Debt
payments | (98.2) | (85.3) |
| | Related
companies | (2.3) | (1.2) |
| | Dividends
paid (B) | (60.7) | (244.3) |
| | Other | (50.4) | (11.4) |
| Net increase
(decrease) in cash and cash equivalents | | (18.0) | (206.3) |
| Cash and
cash equivalents at the beginning of the period | | 656.0 | 862.3 |
| Cash and
cash equivalents at the end of the period | | 637.9 | 656.0 |
| Supplemental
disclosure of cash flow information | | | |
| | Cash
paid for interest (C) | 46.6 | 38.3 |
| | Cash
paid for taxes on income (C) | 52.3 | 20.6 |
| | Supplier
financing of acquisition of property, plant and equipment | 2.8 | - |
| (A) | Not
including financial income. Comprised basically of financial expenses,
in particular, exchange variations. | | |
| (B) | Including
dividends paid by Ultrapar and its subsidiaries. | | |
| (C) | Included
in cash flow from operating activities. | | |
| (D) | Included
ICMS on the Property, plant and equipment according to Law Complemental
no. 102/2000. | | |

15

| ULTRAGAZ
PARTICIPAÇÖES S.A. | | | |
| --- | --- | --- | --- |
| CONSOLIDATED
BALANCE SHEET | | | |
| In
millions of reais - Corporate law | | | |
| | QUARTERS
ENDED IN | | |
| | DEC | DEC | SEP |
| | 2002 | 2001 | 2002 |
| OPERATING
ASSETS | | | |
| Trade
accounts receivable | 138.9 | 88.4 | 121.8 |
| Inventories | 13.1 | 14.8 | 13.2 |
| Other | 70.7 | 64.7 | 65.1 |
| Property,
plant & equipment | 365.4 | 333.3 | 346.4 |
| Deferred
charges | 76.5 | 67.6 | 73.6 |
| TOTAL OPERATING
ASSETS | 664.6 | 568.8 | 620.1 |
| OPERATING
LIABILITIES | | | |
| Suppliers | 45.5 | 53.9 | 34.5 |
| Salaries
and related contributions | 27.7 | 22.6 | 25.8 |
| Taxes | 1.7 | 0.9 | 1.2 |
| Other
accounts payable | 2.3 | 1.8 | 1.3 |
| TOTAL OPERATING
LIABILITIES | 77.2 | 79.2 | 62.8 |

16

| CONSOLIDATED
STATEMENT OF INCOME | | | | | |
| --- | --- | --- | --- | --- | --- |
| In
millions of reais- Corporate law | | | | | |
| | QUARTERS
ENDED IN | | | ACCUMULATED | |
| | DEC | DEC | SEP | DEC | DEC |
| | 2002 | 2001 | 2002 | 2002 | 2001 |
| Net sales | 554.3 | 365.2 | 525.9 | 1,942.7 | 1,381.1 |
| Cost
of goods sold | (470.2) | (288.8) | (421.9) | (1,585.1) | (1,105.2) |
| Gross profit | 84.1 | 76.4 | 104.0 | 357.6 | 275.9 |
| Operating
expenses | | | | | |
| Selling | (27.5) | (20.8) | (17.5) | (76.6) | (66.1) |
| General
and administrative | (18.6) | (12.9) | (15.8) | (64.5) | (49.4) |
| Depreciation
and amortization | (19.6) | (17.5) | (19.4) | (76.7) | (61.9) |
| Other
operating results | 0.9 | 0.5 | 1.0 | 3.2 | 2.7 |
| EBIT | 19.3 | 25.7 | 52.3 | 143.0 | 101.2 |
| EBITDA | 38.9 | 43.2 | 71.7 | 219.8 | 163.1 |
| Depreciation and
amortization | 19.6 | 17.5 | 19.4 | 76.8 | 61.9 |
| RATIOS | | | | | |
| Operating
margin | 3% | 7% | 10% | 7% | 7% |

17

| OXITENO
S.A - INDÚSTRIAE COMÉRCIO | | | |
| --- | --- | --- | --- |
| CONSOLIDATED
BALANCE SHEET | | | |
| In
millions of reais - Corporate law | | | |
| | QUARTERS
ENDED IN | | |
| | DEC | DEC | SEP |
| | 2002 | 2001 | 2002 |
| OPERATING
ASSETS | | | |
| Trade
accounts receivable | 117.3 | 50.2 | 113.3 |
| Inventories | 91.6 | 78.5 | 77.6 |
| Other | 28.4 | 27.8 | 22.5 |
| Property,
plant & equipment | 315.8 | 299.5 | 311.6 |
| Deferred
charges | 5.8 | 2.8 | 4.9 |
| TOTAL
OPERATING ASSETS | 558.9 | 458.8 | 529.9 |
| OPERATING
LIABILITIES | | | |
| Suppliers | 55.2 | 31.6 | 30.3 |
| Salaries
and related contributions | 30.6 | 23.7 | 23.2 |
| Taxes | 4.8 | 2.4 | 6.5 |
| Other
accounts payable | 16.2 | 17.4 | 15.5 |
| TOTAL
OPERATING LIABILITIES | 106.8 | 75.1 | 75.5 |

18

| CONSOLIDATED
STATEMENT OF INCOME | | | | | |
| --- | --- | --- | --- | --- | --- |
| In
millions of reais -
Corporate law | | | | | |
| | QUARTERS
ENDED IN | | | ACCUMULATED | |
| | DEC | DEC | SEP | DEC | DEC |
| | 2002 | 2001 | 2002 | 2002 | 2001 |
| Net
sales | 323.9 | 206.5 | 281.6 | 956.1 | 832.2 |
| Cost
of goods sold | | | | | |
| Variable | (172.2) | (112.9) | (145.4) | (517.0) | (465.0) |
| Fixed | (12.9) | (17.7) | (21.2) | (68.6) | (71.6) |
| Depreciation
and amortization | (7.4) | (7.0) | (7.4) | (29.2) | (27.2) |
| Gross
profit | 131.4 | 68.9 | 107.6 | 341.3 | 268.4 |
| Operating
expenses | | | | | |
| Selling | (18.3) | (18.8) | (14.7) | (53.6) | (53.9) |
| General
and administrative | (27.9) | (18.4) | (21.1) | (85.2) | (66.9) |
| Depreciation
and amortization | (0.9) | (0.7) | (1.1) | (3.6) | (2.9) |
| Other
operating results | 0.1 | - | (0.5) | 0.9 | 2.0 |
| EBIT | 84.4 | 31.0 | 70.2 | 199.8 | 146.7 |
| EBITDA | 92.7 | 38.6 | 78.7 | 232.6 | 176.8 |
| Depreciation
and amortization | 8.3 | 7.6 | 8.5 | 32.8 | 30.1 |
| RATIOS | | | | | |
| Operating
margin | 26% | 15% | 25% | 21% | 18% |
| EBITDA
margin | 29% | 19% | 28% | 24% | 21% |

19

| ULTRACARGO
PARTICIPAÇÖES LTDA. | | | |
| --- | --- | --- | --- |
| CONSOLIDATED
BALANCE SHEET | | | |
| In
millions of reais - Corporate law | | | |
| | QUARTERS ENDED IN | | |
| | DEC | DEC | SEP |
| | 2002 | 2001 | 2002 |
| OPERATING ASSETS | | | |
| Trade
accounts receivable | 17.4 | 12.3 | 14.4 |
| Inventories | 1.5 | 1.2 | 1.4 |
| Other | 1.8 | 1.3 | 1.3 |
| Property,
plant & equipment | 84.5 | 60.7 | 82.6 |
| Deferred
charges | 1.1 | 0.3 | 0.5 |
| TOTAL OPERATING
ASSETS | 106.3 | 75.8 | 100.2 |
| OPERATING
LIABILITIES | | | |
| Suppliers | 5.6 | 4.3 | 4.9 |
| Salaries
and related contributions | 5.8 | 3.9 | 4.8 |
| Taxes | 3.4 | 2.8 | 3.0 |
| Other
accounts payable | 0.2 | 0.2 | - |
| TOTAL OPERATING
LIABILITIES | 15.0 | 11.2 | 12.7 |

20

| CONSOLIDATED
STATEMENT OF INCOME | | | | | |
| --- | --- | --- | --- | --- | --- |
| In
millions of reais- Corporate law | | | | | |
| | QUARTERS
ENDED IN | | | ACCUMULATED | |
| | DEC | DEC | SEP | DEC | DEC |
| | 2002 | 2001 | 2002 | 2002 | 2001 |
| Net sales | 38.9 | 28.8 | 34.7 | 131.4 | 105.3 |
| Cost
of sales | (25.3) | (17.6) | (22.1) | (82.8) | (63.0) |
| Gross profit | 13.6 | 11.2 | 12.6 | 48.6 | 42.3 |
| Operating
expenses | | | | | |
| Selling | - | - | - | - | - |
| General
and administrative | (10.0) | (6.3) | (7.3) | (30.7) | (23.4) |
| Depreciation
and amortization | (0.2) | (0.2) | (0.2) | (0.8) | (0.6) |
| Other
operating results | 0.2 | 0.1 | 0.1 | 0.6 | 9.1 |
| EBIT | 3.6 | 4.8 | 5.2 | 17.7 | 27.4 |
| EBITDA | 7.0 | 7.2 | 8.3 | 29.3 | 28.3 |
| Depreciation and
amortization | 3.4 | 2.4 | 3.1 | 11.6 | 9.6 |
| RATIOS | | | | | |
| Operating margin | 9% | 17% | 15% | 13% | 26% |
| EBTIDA margin | 18% | 25% | 24% | 22% | 27% |

21

| ULTRAPAR
PARTICIPAÇÖES S/A | | | | | |
| --- | --- | --- | --- | --- | --- |
| CONSOLIDATED
INCOME STATEMENT | | | | | |
| Corporate
law | | | | | |
| | QUARTERS
ENDED IN | | | ACCUMULATED | |
| | DEC | DEC | SEP | DEC | DEC |
| (US$
millions) | 2002 | 2001 | 2002 | 2002 | 2001 |
| Net sales | | | | | |
| Ultrapar | 247.3 | 232.0 | 266.2 | 1,025.1 | 972.0 |
| Ultragaz | 151.1 | 143.2 | 168.1 | 665.0 | 587.6 |
| Oxiteno | 88.3 | 81.0 | 90.0 | 327.3 | 354.0 |
| Ultracargo | 10.6 | 11.3 | 11.1 | 45.0 | 44.8 |
| EBIT | | | | | |
| Ultrapar | 29.5 | 24.6 | 41.2 | 125.2 | 118.7 |
| Ultragaz | 5.3 | 10.1 | 16.7 | 49.0 | 43.1 |
| Oxiteno | 23.0 | 12.2 | 22.4 | 68.4 | 62.4 |
| Ultracargo | 1.0 | 1.9 | 1.7 | 6.1 | 11.7 |
| Operating
margin | | | | | |
| Ultrapar | 12% | 11% | 15% | 12% | 12% |
| Ultragaz | 4% | 7% | 10% | 7% | 7% |
| Oxiteno | 26% | 15% | 25% | 21% | 18% |
| Ultracargo | 9% | 17% | 15% | 13% | 26% |
| EBITDA | | | | | |
| Ultrapar | 38.1 | 35.5 | 51.2 | 166.8 | 158.5 |
| Ultragaz | 10.6 | 16.9 | 22.9 | 75.2 | 69.4 |
| Oxiteno | 25.3 | 15.1 | 25.2 | 79.6 | 75.2 |
| Ultracargo | 1.9 | 2.8 | 2.7 | 10.0 | 12.0 |
| EBITDA
margin | | | | | |
| Ultrapar | 15% | 15% | 19% | 16% | 16% |
| Ultragaz | 7% | 12% | 14% | 11% | 12% |
| Oxiteno | 29% | 19% | 28% | 24% | 21% |
| Ultracargo | 18% | 25% | 24% | 22% | 27% |
| Net income | | | | | |
| Ultrapar | 29.4 | 9.8 | 15.2 | 76.1 | 56.3 |
| Net income/1000
shares (US$) | 0.42 | 0.18 | 0.22 | 1.17 | 1.06 |

22

| ULTRAPAR
PARTICIPAÇÖES S/A | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| LOANS,
CASH AND MARKETABLE SECURITIES | | | | | | | | | | |
| In
millionsof reais-Corporate law | | | | | | | | | | |
| Loans | Balance
in December/2002 | | | | | | Index/ Currency () | Interest
Rate % | | Maturity
and Amortization Schedule |
| | | | | Ultrapar Holding | | Ultrapar Consolidated | | | | |
| | Ultragaz | Oxiteno | Ultracargo | | Other | | | Minimum | Maximum | |
| Foreign
Currency | | | | | | | | | | |
| International
Finance Corporation -
IFC | - | 17.7 | - | - | - | 17.7 | US$ | 9.4 | 9.4 | Semi-annually
until 2003 |
| Syndicated
loan | 212.5 | - | - | - | - | 212.5 | US$ | 7.2 | 7.2 | Semi-annually
until 2004 |
| Financings
of Inventories and Property Plant
& Equipment | 1.5 | 2.3 | - | - | - | 3.8 | US$ | 1.8 | 6.0 | Semi-annually
and Anually until 2003 |
| Export
prepayment, net of linked operations | - | 23.2 | - | - | - | 23.2 | US$ | 8.0 | 16.3 | Semi-annually
and Anually until 2003 |
| National
Bank for Economic | | | | | | | | | | |
| and
Social Development - BNDES -
Exim | - | 17.8 | - | - | - | 17.8 | US$ | 5.3 | 5.3 | Quarterly
up to 2003 |
| Advances
on Foreign Exchange Contracts | - | 73.9 | - | - | - | 73.9 | US$ | 3.0 | 10.5 | Maximum
of 219 days |
| Subtotal | 214.0 | 134.9 | - | - | - | 348.9 | | | | |
| Local
Currency | | | | | | | | | | |
| National
Bank for Economic | 107.7 | 67.2 | 7.1 | - | - | 182.0 | TJLP
or IGP-M | 1.5 | 6.5 | Monthly,
quarterly and semi-annually until |
| and
Social Development - BNDES | 24.2 | 3.3 | 1.4 | - | - | 28.9 | UMBNDES | 10.6 | 12.5 | Monthly
until 2007 |
| Agency
for Financing Machinery and Equipment
(FINAME) | 4.9 | 4.6 | 14.2 | - | - | 23.7 | TJLP | 1.8 | 4.4 | Monthly
until 2007 |
| Subtotal | 136.8 | 75.1 | 22.7 | - | - | 234.6 | | | | |
| Total | 350.8 | 210.0 | 22.7 | - | - | 583.5 | | | | |
| Composition
per Annum | | | | | | | | | | |
| Up
to 1 Year | 46.1 | 167.5 | 6.2 | - | - | 219.8 | | | | |
| From
1 to 2 Years | 252.5 | 14.5 | 6.3 | - | - | 273.3 | | | | |
| From
2 to 3 Years | 26.8 | 11.7 | 4.6 | - | - | 43.1 | | | | |
| From
3 to 4 Years | 19.9 | 8.9 | 3.7 | - | - | 32.5 | | | | |
| From
4 to 5 Years | 5.5 | 5.6 | 1.9 | - | - | 13.0 | | | | |
| From
5 to 6 Years | - | 1.8 | - | - | - | 1.8 | | | | |
| Total | 350.8 | 210.0 | 22.7 | - | - | 583.5 | | | | |
| ()
TJLP - Long Term Interest Rate
/ IGPM - Market General
Price Index
/ UMBNDES - BNDES
Basket of Currencies | | | | | | | | | | |
| | Balance
in December/2002 | | | | | | | | | |
| | | | | Ultrapar Holding | | Ultrapar Consolidated | | | | |
| | Ultragaz | Oxiteno | Ultracargo | | Other | | | | | |
| Cash
and marketable securities | 118.2 | 392.8 | 21.9 | 79.0 | 26.0 | 637.9 | | | | |

23

Item 2

FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) STANDARDS-FORMS FINANCIAL STATEMENTS COMMERCIAL, INDUSTRIAL AND OTHER Corporate Legislation December 31, 2002

REGISTRATION WITH CVM SHOULD NOT BE CONSTRUED AS NA APPRECIATION ON THE COMPANY. COMPANY MANAGEMENT IS RESPONSIBLE FOR THE INFORMATION PROVIDED.

01.01 – IDENTIFICATION

| 1 –
CVM Code | 2 –
Company Name | 3 –
General Taxpayers' Registration Number – CNPJ |
| --- | --- | --- |
| 01846–5 | ULTRAPAR PARTICIPAÇÕES
S.A. | 33.256.439/0 001–39 |
| 4 –
Registration Number – NIRE 35.300.109.724 | | |

01.02 -HEAD OFFICE

| 1 -
FULL ADDRESS Av. Brigadeiro Luiz Antonio, 1343 9th floor — 3 -
ZIP CODE 01317-910 | | 2 -
SUBURB OR DISTRICT Bela Vista — 4 -
MUNICIPALITY Sao Paulo | | 5 - STATE SP |
| --- | --- | --- | --- | --- |
| 6 - AREA CODE 55 11 | 7 - TELEPHONE 3177-6513 | 8 - TELEPHONE 3177-6764 | 9 - TELEPHONE 3177-6475 | 10 - TELEX |
| 11 - AREA CODE 55 11 | 12 - FAX 3177-6107 | 13 - FAX 3177-6246 | 14 - FAX | |
| 15 -
E-MAIL invest@ultra.com.br | | | | |

01.03 – DIRECTOR OF INVESTORS RELATIONS (Address for correspondence with company)

| 1 - NAME Fabio Schvartsman — 3 - SUBURB
OR DISTRICT Bela Vista | 2 -
FULL ADDRESS Av. Brigadeiro Luiz Antonio, 1343 9 th floor — 4 - ZIP CODE 01317-910 | 5
- MUNICIPALITY Sao Paolo | | 6 - STATE SP |
| --- | --- | --- | --- | --- |
| 7 - AREA CODE 55 11 | 8 - TELEPHONE 3177-6482 | 9 - TELEPHONE | 10
- TELEPHONE | 11 - TELEX |
| 12 -
AREA CODE 55 11 | 13 - FAX 3287-1931 | 14 - FAX | 15 - FAX | |
| 16 - E-MAIL fabiosch@ultra.com.br | | | | |

01.04 – AUDITOR/ INFORMATION

YEAR
1 - BEGINNING	2 - END
01.01.2002	12.31.2002
01.01.2001	12.31.2001
01.01.2000	12.31.2000
9 -
NAME OF AUDITOR Delloitte Touche Tohmatsu	10- CVM CODE 00385-9
11 -
NAME OF RESPONSIBLE ACCOUNTANT Altair Tadeu Rossato	12 - TAXPAYER ID
OF RESPONSIBLE ACCOUNTANT 060.977.208-23

01.05 – CAPITAL COMPOSITION

| Number of
Shares (THOUSAND) | 12.31.2002 | 12.31.2001 | 12.31.2000 |
| --- | --- | --- | --- |
| Subscribed
Capital | | | |
| 1 –
Common | 51,264,622 | 37,984,013 | 37,984,013 |
| 2 –
Preferred | 18,426,647 | 15,015,987 | 15,015,987 |
| 3 –
Total | 69,691,269 | 53,000,000 | 53,000,000 |
| Treasury
Stock | | | |
| 4 –
Common | 0 | 0 | 0 |
| 5 –
Preferred | 20,200 | 0 | 0 |
| 6 –
Total | 20,200 | 0 | 0 |

01.06 -CHARACTERISTICS OF THE COMPANY

1 - TYPE OF COMPANY Commercial, industrial and other
2
– SITUATION Operating
3
-SHARE CONTROL NATURE Holding National
4
-ACTIVITY CODE 1170000 -Participation and Administration
5
-MAIN ACTIVITY Industrial, commercial and other
6
-CONSOLIDATION TYPE Total

01.07 -COMPANIES EXCLUDED FROM THE CONSOLIDATED STATEMENTS

1 - ITEM - 2 - CNPJ - 3 - NAME -

01.08 – DIVIDENDS APPROVED AND/OR PAID

1 - ITEM	2 - EVENT	3 - DATE APPROVED	4 - AMOUNT	5 - DATE OF PAYMENT	6 - TYPE OF SHARE	7 - YIELD PER SHARE
01	RCA	08.06.2002	Dividends	09.03.2002	ON	0.0003671120
02	RCA	08.06.2002	Dividends	09.03.2002	PN	0.0004038230
03	RCA	02.12.2003	Dividends	03.06.2003	ON	0.000629268
04	RCA	02.12.2003	Dividends	03.06.2003	PN	0.000692195

01.09 – DIRECTOR OF INVESTORS RELATIONS

2

1 – DATE 02.12.2003 2 – SIGNATURE

02.01 - BALANCE SHEET - ASSETS (R$ thousands)

| 1
- CODE | 2
– DESCRIPTION | 3 -
12.31.2002 | 4 –
12.31.2001 | 5 -
12.31.2000 |
| --- | --- | --- | --- | --- |
| 1 | Total
assets | 1,700,884 | 901,369 | 993,011 |
| 1.01 | Current
assets | 148,402 | 78,204 | 317,340 |
| 1.01.01 | Cash
and temporary cash investments | 79,044 | 41,592 | 300,629 |
| 1.01.01.01 | Cash
and banks | 60 | 3 | 256 |
| 1.01.01.02 | Temporary
cash investments | 78,984 | 41,589 | 300,373 |
| 1.01.02 | Receivables | 69,358 | 36,612 | 16,711 |
| 1.01.02.01 | Recoverable
taxes | 13,744 | 15,012 | 6,624 |
| 1.01.02.02 | Dividends
receivable | 55,605 | 21,600 | 10,087 |
| 1.01.02.03 | Other | 9 | 0 | 0 |
| 1.01.03 | Inventories | 0 | 0 | 0 |
| 1.01.04 | Other | 0 | 0 | 0 |
| 1.02 | Noncurrent
assets | 48,727 | 98,788 | 45,434 |
| 1.02.01 | Others
accounts receivables | 0 | 0 | 0 |
| 1.02.02 | Related
companies | 46,694 | 97,198 | 44,459 |
| 1.02.02.01 | Affiliates | 0 | 0 | 0 |
| 1.02.02.02 | Subsidiary
companies | 46,600 | 97,132 | 44,393 |
| 1.02.02.03 | Other
companies | 94 | 66 | 66 |
| 1.02.03 | Other | 2,033 | 1,590 | 975 |
| 1.02.03.01 | Defered
income and social contribution taxes | 2,033 | 1,590 | 975 |
| 1.02.03.02 | Other | 0 | 0 | 0 |
| 1.03 | Permanent
assets | 1,503,755 | 724,377 | 630,237 |
| 1.03.01 | Investments | 1,503,755 | 724,377 | 630,237 |
| 1.03.01.01 | Affiliates | 0 | 0 | 0 |
| 1.03.01.02 | Subsidiary
and associated companies | 1,503,562 | 724,192 | 630,072 |
| 1.03.01.03 | Other | 193 | 185 | 165 |
| 1.03.02 | Property,
plant and equipment | 0 | 0 | 0 |
| 1.03.03 | Deferred
charges | 0 | 0 | 0 |

3

02.02 - BALANCE SHEET - LIABILITIES AND STOCKHOLDERS' EQUITY (R$ thousands)

| 1
- CODE | 2
– DESCRIPTION | 3 -
12.31.2002 | 4 -
12.31.2001 | 5 -
12.31.2000 |
| --- | --- | --- | --- | --- |
| 2 | Total
liabilities | 1,700,884 | 901,369 | 993,011 |
| 2.01 | Current
liabilities | 45,500 | 22,270 | 14,808 |
| 2.01.01 | Financing | 0 | 0 | 0 |
| 2.01.02 | Debentures | 0 | 0 | 0 |
| 2.01.03 | Suppliers | 58 | 259 | 170 |
| 2.01.04 | Taxes | 29 | 0 | 1,970 |
| 2.01.05 | Dividends
payable | 45,012 | 22,011 | 12,668 |
| 2.01.06 | Provisions | 280 | 0 | 0 |
| 2.01.06.01 | Salaries
and related charges | 280 | 0 | 0 |
| 2.01.07 | Payables
to related companies | 0 | 0 | 0 |
| 2.01.08 | Other | 121 | 0 | 0 |
| 2.02 | Long-term
liabilities | 464,300 | 79,206 | 80,499 |
| 2.02.01 | Financing | 0 | 0 | 0 |
| 2.02.02 | Debentures | 0 | 0 | 0 |
| 2.02.03 | Provision | 0 | 0 | 0 |
| 2.02.04 | Related
companies | 458,597 | 74,810 | 77,797 |
| 2.02.05 | Other | 5,703 | 4,396 | 2,702 |
| 2.02.05.01 | Other
taxes | 5,703 | 4,396 | 2,702 |
| 2.03 | Deferred
income | 0 | 0 | 0 |
| 2.05 | Stockholders’
equity | 1,191,084 | 799,893 | 897,704 |
| 2.05.01 | Capital | 663,952 | 433,857 | 433,857 |
| 2.05.02 | Capital
reserves | 0 | 0 | 0 |
| 2.05.03 | Revaluation
reserve | 26,036 | 25,862 | 29,111 |
| 2.05.03.01 | Own
assets | 0 | 0 | 0 |
| 2.05.03.02 | Subsidiary/affiliated
companies | 26,036 | 25,862 | 29,111 |
| 2.05.04 | Profit
reserves | 501,096 | 340,174 | 314,804 |
| 2.05.04.01 | Legal | 28,546 | 17,431 | 10,821 |
| 2.05.04.02 | Statutory | 0 | 0 | 0 |
| 2.05.04.03 | For
contingencies | 0 | 0 | 0 |
| 2.05.04.04 | Unrealized
profits | 40,593 | 0 | 303,983 |
| 2.05.04.05 | Retention
of profits | 432,355 | 322,743 | 0 |
| 2.05.04.06 | Special
for undistributed dividends | 0 | 0 | 0 |
| 2.05.04.07 | Other | (398) | 0 | 0 |
| 2.05.05 | Retained
earnings | 0 | 0 | 119,932 |

4 03.01 - STATEMENT OF INCOME (R$ thousands)

| 1
- CODE | 2
– DESCRIPTION | 3 - 01.01.2002
to 12.31.2002 | 4 - 01.01.2001
to 12.31.2001 | 5 - 01.01.2000
to 12.31.2000 |
| --- | --- | --- | --- | --- |
| 3.01 | Gross
sales and services | 0 | 0 | 0 |
| 3.02 | Deductions | 0 | 0 | 0 |
| 3.03 | Net
sales and services | 0 | 0 | 0 |
| 3.04 | Cost
of sales and services | 0 | 0 | 0 |
| 3.05 | Gross
profit | 0 | 0 | 0 |
| 3.06 | Operating
income/expenses | 229,260 | 131,586 | 140,944 |
| 3.06.01 | Selling | 0 | 0 | 0 |
| 3.06.02 | General
and administrative | (535) | (774) | (164) |
| 3.06.02.01 | General
and administrative | (240) | (738) | (125) |
| 3.06.02.02 | Management
compensation | (295) | (36) | (39) |
| 3.06.03 | Financial | 15,029 | 29,900 | 51,189 |
| 3.06.03.01 | Financial
income | 16,916 | 32,745 | 54,165 |
| 3.06.03.02 | Financial
expenses | (1,887) | (2,845) | (2,976) |
| 3.06.04 | Other
operating income, net | 361 | 34 | 34 |
| 3.06.05 | Other
operating expenses | 0 | 0 | 0 |
| 3.06.06 | Equity in
the results of subsidiary and associated companies | 214,405 | 102,426 | 89,885 |
| 3.07 | Operating
income | 229,260 | 131,586 | 140,944 |
| 3.08 | Nonoperating
expenses, net | (143) | 0 | 0 |
| 3.08.01 | Revenue | 0 | 0 | 0 |
| 3.08.02 | Expenses | (143) | 0 | 0 |
| 3.09 | Income
before income and social contribution taxes | 229,117 | 131,586 | 140,944 |
| 3.10 | Provision
for income and social contribution taxes | (7,260) | 0 | (9,484) |
| 3.11 | Deferred
income taxes | 443 | 615 | (2,963) |
| 3.12 | Statutory
profit sharing and contribution | 0 | 0 | 0 |
| 3.12.01 | Profit
sharing | 0 | 0 | 0 |
| 3.12.02 | Contribution | 0 | 0 | 0 |
| 3.13 | Reversal
of interest on own capital | 0 | 0 | 0 |
| 3.15 | Net
income for the period | 222,300 | 132,201 | 128,497 |
| | Number
of shares, excluding treasury (in thousands) | 69,671,069 | 53,000,000 | 53,000,000 |
| | Net
income per share | 0.00319 | 0.00249 | 0.00242 |
| | Loss
per share | 0 | 0 | 0 |

5

04.01 - STATEMENT OF CHANGES IN FINANCIAL POSITION - (R$ thousands)

| 1
- CODE | 2
– DESCRIPTION | 3 - 01.01.2002
to 12.31.2002 | 4 - 01.01.2001
to 12.31.2001 | 5 - 01.01.2000
to 12.31.2000 |
| --- | --- | --- | --- | --- |
| 4.01 | Total
sources of funds | 499,526 | 52,451 | 53,840 |
| 4.01.01 | Operations | 8,785 | 30,851 | 43,752 |
| 4.01.01.01 | Net
income | 222,300 | 132,201 | 128,497 |
| 4.01.01.02 | Items
not affecting working capital | (213,515) | (101,350) | (84,745) |
| 4.01.01.02.01 | Equity
in results of subsidiary and associated companies | (214,405) | (102,426) | (89,885) |
| 4.01.01.02.02 | Long-term
interest and monetary variations | 686 | 499 | 189 |
| 4.01.01.02.03 | Deferred
income and social contribution taxes | (443) | (615) | 2,963 |
| 4.01.01.02.04 | Amortization
of goodwill and negative goodwill on investments | (4) | (4) | (4) |
| 4.01.01.02.05 | Other
long-term taxes | 651 | 1,196 | 1,977 |
| 4.01.01.02.06 | Residual
value of disposed permanent assets | 0 | 0 | 15 |
| 4.01.02 | Shareholders | 0 | 0 | 0 |
| 4.01.02.01 | Payment
of capital | 0 | 0 | 0 |
| 4.01.03 | Third
parties | 490,741 | 21,600 | 10,088 |
| 4.01.03.01 | Increase
in long-term liabilities | 383,757 | 0 | 0 |
| 4.01.03.02 | Decrease
in noncurrent assets | 50,504 | 0 | 0 |
| 4.01.03.03 | Proposed
dividends and interest on capital (gross) | 56,430 | 21,600 | 10,088 |
| 4.01.03.04 | Working
capital from merger | 50 | 0 | 0 |
| 4.02 | Total
use of funds | 452,558 | 299,049 | 93,136 |
| 4.02.01 | Dividends
and interest on capital | 65,000 | 229,593 | 31,106 |
| 4.02.02 | Transfer
from long-term to current liabilities | 0 | 0 | 28,954 |
| 4.02.03 | Increase
in noncurrent assets | 0 | 52,739 | 33,076 |
| 4.02.04 | Investments | 387,160 | 13,730 | 0 |
| 4.02.05 | Decrease
in long-term liabilities | 0 | 2,987 | 0 |
| 4.02.06 | Acquisition
of treasury shares | 398 | 0 | 0 |
| 4.03 | Increase
(decrease) in working capital | 46,968 | (246,598) | (39,296) |
| 4.04 | Variance
in current assets | 70,198 | (239,136) | (39,356) |
| 4.04.01 | At
beginning of year | 78,204 | 317,340 | 356,696 |
| 4.04.02 | At
end of year | 148,402 | 78,204 | 317,340 |
| 4.05 | Variance
in current liability | 23,230 | 7,462 | (60) |
| 4.05.01 | At
beginning of year | 22,270 | 14,808 | 14,868 |
| 4.05.02 | At
end of year | 45,500 | 22,270 | 14,808 |

6

05.01 – STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY AT JANUARY 1, 2002 TO DECEMBER 31, 2002 (R$ thousands )

| 1
- CODE | 2
– DESCRIPTION | 3 –
Capital | 4 –
Capital reserves | 5 –
Revaluation reserve | 6 –
Revenue reserves | 7 –
Retained earnings | 8 –
Stockholder's equity |
| --- | --- | --- | --- | --- | --- | --- | --- |
| 5.01 | Beggining
balance | 433,857 | 0 | 25,862 | 340,174 | 0 | 799,893 |
| 5.02 | Prior
year adjustment | 0 | 0 | 0 | 0 | 0 | 0 |
| 5.03 | Increase/decrease
of capital | 230,095 | 0 | 0 | 0 | 0 | 230,095 |
| 5.03.01 | Capital
increase due to merger | 230,095 | 0 | 0 | 0 | 0 | 230,095 |
| 5.04 | Reserves
realization | 0 | 0 | 174 | 0 | 4,020 | 4,194 |
| 5.04.01 | Revaluation
due to merger | 0 | 0 | 5,139 | 0 | 0 | 5,139 |
| 5.04.02 | Realization
of revaluation reserve | 0 | 0 | (5,084) | 0 | 4,384 | (700) |
| 5.04.03 | Income
and social contribution taxes on realization of revaluation reserves
of subsidiaries | 0 | 0 | 119 | 0 | (364) | (245) |
| 5.05 | Aquisition
of treasury shares | 0 | 0 | 0 | (398) | 0 | (398) |
| 5.06 | Net
income | 0 | 0 | 0 | 0 | 222,300 | 222,300 |
| 5.07 | Appropriation
of net income | 0 | 0 | 0 | 161,320 | (226,320) | (65,000) |
| 5.07.01 | Legal
reserve | 0 | 0 | 0 | 11,115 | (11,115) | 0 |
| 5.07.02 | Interim
dividends | 0 | 0 | 0 | 0 | (20,000) | (20,000) |
| 5.07.03 | Proposed
dividends | 0 | 0 | 0 | 0 | (45,000) | (45,000) |
| 5,07,04 | Reserve
for unrealized profits | 0 | 0 | 0 | 40,593 | (40,593) | 0 |
| 5.07.05 | Retention
of profits reserve | 0 | 0 | 0 | 109,612 | (109,612) | 0 |
| 5.08 | Final
balance | 663,952 | 0 | 26,036 | 501,096 | 0 | 1,191,084 |

7

05.02 – STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY AT JANUARY 1, 2001 TO DECEMBER 31, 2001 (R$ thousands )

| 1
- CODE | 2
– DESCRIPTION | 3 -
Capital | 4 –
Capital reserves | 5 –
Revaluation reserve | 6 –
Revenue reserves | 7 –
Retained earnings | 8 –
Stockholder's equity |
| --- | --- | --- | --- | --- | --- | --- | --- |
| 5.01 | Beggining
balance | 433,857 | 0 | 29,111 | 314,804 | 119,932 | 897,704 |
| 5.02 | Prior
year adjustment | 0 | 0 | 0 | (58,788) | 41,195 | (17,593) |
| 5.02.01 | Complementary
dividends | 0 | 0 | 0 | (58,788) | 41,195 | (17,593) |
| 5.03 | Increase/decrease
of capital | 0 | 0 | 0 | 0 | 0 | 0 |
| 5.04 | Reserves
realization | 0 | 0 | (3,249) | (245,195) | 248,025 | (419) |
| 5.04.01 | Realization
of revaluation reserve | 0 | 0 | (3,414) | 0 | 3,325 | (89) |
| 5.04.02 | Income
And social contribution taxes on realization of revaluation reserves
of subsidiaries | 0 | 0 | 165 | 0 | (495) | (330) |
| 5.04.03 | Realization
of unrealized profit reserve | 0 | 0 | 0 | (245,195) | 245,195 | 0 |
| 5.05 | Aquisition
of treasury shares | 0 | 0 | 0 | 0 | 0 | 0 |
| 5.06 | Net
income | 0 | 0 | 0 | 0 | 132,201 | 132,201 |
| 5.07 | Appropriation
of net income | 0 | 0 | 0 | 329,353 | (541,353) | (212,000) |
| 5.07.01 | Legal
reserve | 0 | 0 | 0 | 6,610 | (6,610) | 0 |
| 5.07.02 | Dividends
for the year | 0 | 0 | 0 | 0 | (181,000) | (181,000) |
| 5.07.03 | Interest
on own capital | 0 | 0 | 0 | 0 | (31,000) | (31,000) |
| 5.07.04 | Retention
of profits reserve | 0 | 0 | 0 | 322,743 | (322,743) | 0 |
| 5.08 | Other | 0 | 0 | 0 | 0 | 0 | 0 |
| 5.09 | Final
balance | 433,857 | 0 | 25,862 | 340,174 | 0 | 799,893 |

8

05.03 - STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY AT JANUARY 1, 2000 TO DECEMBER 31, 2000 (R$ thousands )

| 1
- CODE | 2
– DESCRIPTION | 3
- Capital | 4 -
Capital reserves | 5 –
Revaluation reserve | 6 –
Revenue reserves | 7 -
Retained earnings | 8 –
Stockholder's equity |
| --- | --- | --- | --- | --- | --- | --- | --- |
| 5.01 | Beggining
balance | 433,857 | 0 | 53,456 | 224,919 | 107,326 | 819,558 |
| 5.02 | Prior
year adjustment | 0 | 0 | 0 | 0 | 0 | 0 |
| 5.03 | Increase/decrease
of capital | 0 | 0 | 0 | 0 | 0 | 0 |
| 5.04 | Reserves
realization | 0 | 0 | (24,345) | 0 | 5,100 | (19,245) |
| 5.04.01 | Realization
of revaluation reserve | 0 | 0 | (6,190) | 0 | 6,190 | 0 |
| 5.04.02 | Income
And social contribution taxes on realization of revaluation reserves
of subsidiaries | 0 | 0 | 825 | 0 | (1,090) | (265) |
| 5.04.03 | Partial
reversal of revaluation reserve | 0 | 0 | (18,980) | 0 | 0 | (18,980) |
| 5.05 | Treasury
stocks | 0 | 0 | 0 | 0 | 0 | 0 |
| 5.06 | Net
income | 0 | 0 | 0 | 0 | 128,497 | 128,497 |
| 5.07 | Appropriation
of net income | 0 | 0 | 0 | 89,885 | (120,991) | (31,106) |
| 5.07.01 | Legal
reserve | 0 | 0 | 0 | 6,425 | (6,425) | 0 |
| 5.07.02 | Reserve
for unrealized profits | 0 | 0 | 0 | 83,460 | (83,460) | 0 |
| 5.07.03 | Interim
dividends | 0 | 0 | 0 | 0 | (16,456) | (16,456) |
| 5.07.04 | Interest
on own capital | 0 | 0 | 0 | 0 | (14,650) | (14,650) |
| 5.08 | Other | 0 | 0 | 0 | 0 | 0 | 0 |
| 5.09 | Final
balance | 433,857 | 0 | 29,111 | 314,804 | 119,932 | 897,704 |

9

06.01 - CONSOLIDATED BALANCE SHEET - ASSETS (R$ thousands)

| 1
– CODE | 2
– DESCRIPTION | 3 -
12.31.2002 | 4 -
12.31.2001 | 5 -
12.31.2000 |
| --- | --- | --- | --- | --- |
| 1 | Total
assets | 2,127,913 | 1,951,922 | 2,014,526 |
| 1.01 | Current
assets | 1,186,895 | 1,045,186 | 1,190,836 |
| 1.01.01 | Cash
and temporary cash investments | 637,939 | 655,957 | 862,271 |
| 1.01.01.01 | Cash
and banks | 53,569 | 35,621 | 33,127 |
| 1.01.01.02 | Temporary
cash investments | 584,370 | 620,336 | 829,144 |
| 1.01.02 | Receivables | 439,509 | 291,401 | 240,045 |
| 1.01.02.01 | Trade
accounts receivable | 271,654 | 149,272 | 139,200 |
| 1.01.02.02 | Recoverable
taxes | 115,060 | 121,198 | 82,201 |
| 1.01.02.03 | Other
receivables | 52,795 | 20,931 | 18,644 |
| 1.01.03 | Inventories | 106,250 | 94,467 | 86,455 |
| 1.01.04 | Other | 3,197 | 3,361 | 2,065 |
| 1.02 | Noncurrent
assets | 47,382 | 41,969 | 35,759 |
| 1.02.01 | Accounts
receivable | 0 | 0 | 0 |
| 1.02.02 | Related
companies | 2,603 | 1,680 | 1,460 |
| 1.02.02.01 | Affiliates | 2,603 | 1,680 | 1,460 |
| 1.02.02.02 | Subsidiary
companies | 0 | 0 | 0 |
| 1.02.02.03 | Other
companies | 0 | 0 | 0 |
| 1.02.03 | Other | 44,779 | 40,289 | 34,299 |
| 1.02.03.01 | Deferred
income and social contribution taxes | 33,257 | 27,282 | 22,965 |
| 1.02.03.02 | Escrow
deposits | 6,992 | 6,666 | 6,780 |
| 1.02.03.03 | Other | 4,530 | 6,341 | 4,554 |
| 1.03 | Permanent
assets | 893,636 | 864,767 | 787,931 |
| 1.03.01 | Investments | 33,036 | 88,813 | 87,770 |
| 1.03.01.01 | Subsidiary
and associated companies | 6,984 | 63,033 | 61,085 |
| 1.03.01.02 | Subsidiary
companies | 0 | 0 | 0 |
| 1.03.01.03 | Other | 26,052 | 25,780 | 26,685 |
| 1.03.02 | Property,
plant and equipment | 779,467 | 707,869 | 655,949 |
| 1.03.03 | Deferred
charges | 81,133 | 68,085 | 44,212 |

10

06.02 - CONSOLIDATED BALANCE SHEET - LIABILITIES AND STOCKHOLDERS' EQUITY (R$ thousands)

| 1
– CODE | 2
– DESCRIPTION | 3 -
12.31.2002 | 4 -
12.31.2001 | 5 –
12.31.2000 |
| --- | --- | --- | --- | --- |
| 2 | Total
liabilities | 2,127,913 | 1,951,922 | 2,014,526 |
| 2.01 | Current
liabilities | 468,230 | 323,918 | 321,608 |
| 2.01.01 | Financing | 219,827 | 124,525 | 134,064 |
| 2.01.02 | Debentures | 0 | 0 | 0 |
| 2.01.03 | Suppliers | 104,436 | 88,446 | 86,843 |
| 2.01.04 | Taxes | 9,952 | 5,767 | 8,605 |
| 2.01.05 | Dividends
payable | 48,953 | 33,554 | 27,091 |
| 2.01.06 | Provisions | 66,299 | 52,231 | 49,258 |
| 2.01.06.01 | Income
and social contribution taxes | 1,920 | 2,053 | 4,569 |
| 2.01.06.02 | Salaries
and social related charges | 64,379 | 50,178 | 44,689 |
| 2.01.07 | Related
companies | 0 | 0 | 0 |
| 2.01.08 | Other | 18,763 | 19,395 | 15,747 |
| 2.02 | Long-term
liabilities | 437,649 | 388,359 | 383,969 |
| 2.02.01 | Financing | 363,639 | 290,166 | 291,777 |
| 2.02.02 | Debentures | 0 | 0 | 0 |
| 2.02.03 | Provisions | 61,438 | 86,351 | 76,945 |
| 2.02.03.01 | Deferred
Income and social contribution taxes | 34,791 | 23,973 | 23,497 |
| 2.02.03.02 | Other
taxes | 26,647 | 62,378 | 53,448 |
| 2.02.04 | Related
companies | 10,217 | 11,036 | 11,595 |
| 2.02.05 | Other | 2,355 | 806 | 3,652 |
| 2.03 | Deferred
income | 0 | 0 | 0 |
| 2.04 | Minority
interest | 30,950 | 439,752 | 411,245 |
| 2.05 | Stockholders’
equity | 1,191,084 | 799,893 | 897,704 |
| 2.05.01 | Capital | 663,952 | 433,857 | 433,857 |
| 2.05.02 | Capital
reserves | 0 | 0 | 0 |
| 2.05.03 | Revaluation
reserve | 26,036 | 25,862 | 29,111 |
| 2.05.03.01 | Own
assets | 0 | 0 | 0 |
| 2.05.03.02 | Subsidiary/
affiliated companies | 26,036 | 25,862 | 29,111 |
| 2.05.04 | Profit
reserves | 501,096 | 340,174 | 314,804 |
| 2.05.04.01 | Legal | 28,546 | 17,431 | 10,821 |
| 2.05.04.02 | Statutory | 0 | 0 | 0 |
| 2.05.04.03 | For
contingencies | 0 | 0 | 0 |
| 2.05.04.04 | Unrealized
profits | 40,593 | 0 | 303,983 |
| 2.05.04.05 | Retention
of profits | 432,355 | 322,743 | 0 |
| 2.05.04.06 | Special
for undistributed dividends | 0 | 0 | 0 |
| 2.05.04.07 | Others | (398) | 0 | 0 |
| 2.05.05 | Retained
earnings | 0 | 0 | 119,932 |

11

07.01 - CONSOLIDATED STATEMENT OF INCOME (R$ thousands)

| 1
– CODE | 2
– DESCRIPTION | 3 -
01.01.2002 to
12.31.2002 | 4 –
01.01.2001 to
12.31.2001 | 5 –
01.01.2000 to
12.31.2000 |
| --- | --- | --- | --- | --- |
| 3.01 | Gross
sales and services | 3,795,322 | 2,862,551 | 2,301,172 |
| 3.02 | Deductions | (800,816) | (577,832) | (423,169) |
| 3.03 | Net
sales and services | 2,994,506 | 2,284,719 | 1,878,003 |
| 3.04 | Cost
of sales and services | (2,247,128) | (1,698,324) | (1,399,634) |
| 3.05 | Gross
profit | 747,378 | 586,395 | 478,369 |
| 3.06 | Operanting
(expenses ) income | (311,571) | (309,787) | (182,143) |
| 3.06.01 | Selling | (130,190) | (120,023) | (95,802) |
| 3.06.02 | General
and administrative | (252,078) | (197,710) | (170,420) |
| 3.06.02.01 | General
and administrative | (131,356) | (105,983) | (95,288) |
| 3.06.02.02 | Employees’
profit sharing | (34,194) | (21,763) | (24,860) |
| 3.06.02.03 | Management
compensation | (4,704) | (3,726) | (3,469) |
| 3.06.02.04 | Depreciation
and amortization | (81,824) | (66,238) | (46,803) |
| 3.06.03 | Financial | 28.509 | (31,112) | 43,402 |
| 3.06.03.01 | Financial
income | 237,996 | 120,718 | 139,961 |
| 3.06.03.02 | Financial
expenses | (209,487) | (151,830) | (96,559) |
| 3.06.03.03.03 | Financial
expenses on interest own capital | 0 | 0 | 0 |
| 3.06.04 | Other
operating income | 428 | 10,170 | 1,346 |
| 3.06.05 | Other
operating expenses | 0 | 0 | 0 |
| 3.06.06 | Equity
in the results of subsidiary and associated companies | 41,760 | 28,888 | 39,331 |
| 3.07 | Operating
income | 435,807 | 276,608 | 296,226 |
| 3.08 | Nonoperating
expenses, net | (44,067) | (16,987) | (16,527) |
| 3.08.01 | Revenue | 0 | 0 | 0 |
| 3.08.02 | Expenses | (44,067) | (16,987) | (16,527) |
| 3.09 | Income
before income and social contribution taxes | 391,740 | 259,621 | 279,699 |
| 3.10 | Provision
for income and social contribution taxes | (110,067) | (58,377) | (81,705) |
| 3.11 | Deferred
income tax | (4,843) | 3,903 | 4,678 |
| 3.12 | Statutory
profit sharing and contribution | 0 | 0 | 0 |
| 3.12.01 | Profit
sharing | 0 | 0 | 0 |
| 3.12.02 | Contribution | 0 | 0 | 0 |
| 3.13 | Reverse
of interest on own capital | 0 | 0 | 0 |
| 3.14 | Minority
interest | (54,530) | (72,946) | (74,175) |
| 3.15 | Net
income for the period | 222,300 | 132,201 | 128,497 |
| | Number
of shares, excluding treasury (in thousands) | 69,671,069 | 53,000,000 | 53,000,000 |
| | Net
income per share | 0.00319 | 0.00249 | 0.00242 |
| | Loss
per share | 0 | 0 | 0 |

12

08.01 - STATEMENT OF CHANGES IN FINANCIAL POSITION CONSOLIDATED (R$ thousands)

| 1
– CODE | 2
– DESCRIPTION | 3 -
01.01.2002 to 12.31.2002 | 4 –
01.01.2001 to 12.31.2001 | 5 -
01.01.2000 to 12.31.2000 |
| --- | --- | --- | --- | --- |
| 4.01 | Total
sources of Funds | 648,371 | 418,674 | 422,808 |
| 4.01.01 | Operations | 578,512 | 364,000 | 354,527 |
| 4.01.01.01 | Net
income | 222,300 | 132,201 | 128,497 |
| 4.01.01.02 | Items
not affecting working capital | 356,212 | 231,799 | 226,030 |
| 4.01.01.02.01 | Equity
in results of subsidiary and associated companies | (41,760) | (28,888) | (39,331) |
| 4.01.01.02.02 | Depreciation
and amortization | 121,809 | 102,406 | 90,796 |
| 4.01.01.02.03 | Long-term
interest and monetary variations | 98,285 | 34,514 | 22,627 |
| 4.01.01.02.04 | Tax
incentives | 43,467 | 26,961 | 29,599 |
| 4.01.01.02.05 | Deferred
income and social contribution taxes | 4,843 | (3,903) | (4,678) |
| 4.01.01.02.06 | Minority
interests | 54,530 | 72,946 | 74,175 |
| 4.01.01.02.07 | Net
book value of permanent assets written off | 29,931 | 31,200 | 29,426 |
| 4.01.01.02.08 | Amortization
of goodwill and negative goodwill on investments | (352) | (8,697) | 225 |
| 4.01.01.02.09 | Allowance
(Reversal of provision) for losses on permanent assets | 40,551 | (5,343) | (5,205) |
| 4.01.01.02.10 | Loss
(Gain) in the percentage holding variation | 0 | 0 | 2,942 |
| 4.01.01.02.11 | Other
long-term taxes | 8,568 | 10,603 | 25,454 |
| 4.01.01.02.12 | Gain
on change in ownership percentage | (3,660) | 0 | 0 |
| 4.01.02 | Shareholders | 0 | 0 | 0 |
| 4.01.02.01 | Payment
of capital | 0 | 0 | 0 |
| 4.01.03 | Third
parties | 69,859 | 54,674 | 68,281 |
| 4.01.03.01 | Increase
in long-term liabilities | 0 | 0 | 884 |
| 4.01.03.02 | Proposed
dividends and interest on capital | 430 | 1,275 | 0 |
| 4.01.03.03 | Long-term
financing | 68,748 | 52,928 | 64,537 |
| 4.01.03.04 | Decrease
in noncurrent assets | 631 | 471 | 2,860 |
| 4.01.03.05 | Working
capital from merger | 50 | 0 | 0 |
| 4.02 | Total
use of funds | 650,974 | 566,634 | 310,207 |
| 4.02.01 | Investments | 0 | 17 | 774 |
| 4.02.02 | Property,
plant and equipment | 171,543 | 145,687 | 149,004 |
| 4.02.03 | Deferred
charges | 51,265 | 57,357 | 32,580 |
| 4.02.04 | Dividends
and interest on capital | 76,252 | 250,766 | 54,328 |
| 4.02.05 | Transfer
from long-term to current liabilities | 85,965 | 86,745 | 71,289 |
| 4.02.06 | Increase
in long-term receivable | 0 | 0 | 0 |
| 4.02.07 | Decrease
in minority interest | 966 | 13,809 | 1,541 |
| 4.02.08 | Taxes
on realization of revaluation reserve | 758 | 716 | 691 |
| 4.02.09 | Decrease
in long-term liabilities | 51,233 | 11,537 | 0 |
| 4.02.10 | Aquisition
of treasure stocks | 398 | 0 | 0 |
| 4.02.11 | Aquisition
of shares from Minority stockholders | 212,594 | 0 | 0 |
| 4.03 | Increase
(decrease) in working capital | (2,603) | (147,960) | 112,601 |
| 4.04 | Current
assets variance | 141,709 | (145,650) | 77,930 |
| 4.04.01 | Current
assets at the beginning of the year | 1,045,186 | 1,190,836 | 1,112,906 |
| 4.04.02 | Current
assets of the end of the year | 1,186,895 | 1,045,186 | 1,190,836 |
| 4.05 | Variance
in current liability | 144,312 | 2,310 | (34,671) |
| 4.05.01 | At
beginning of year | 323,918 | 321,608 | 356,279 |
| 4.05.02 | At
end of year | 468,230 | 323,918 | 321,608 |

13

Report of Independent Accountants

To the Stockholders and Management of Ultrapar Participações S.A. São Paulo –SP

1. We have audited the balance sheets (Company and Consolidated) of Ultrapar Participações S.A. and subsidiaries as of December 31, 2002, and the related statements of income, changes in stockholders’ equity (Company), and changes in financial position for the year then ended, all expressed in Brazilian reais. 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 audit.

2. We conducted our audit in accordance with generally accepted auditing standards in Brazil, which included: (a) planning of the engagement, considering the materiality of the balances, the volume of transactions and the accounting and internal control system of the Company and its subsidiaries; (b) examination, on a test basis, of the evidence and records supporting the amounts and disclosures in the financial statements; and (c) evaluation of the accounting principles used and significant estimates adopted by management, as well as the overall financial statement presentation.

14

1. In our opinion, the financial statements referred in paragraph 1 present fairly, in all material respects, the financial positions (Company and Consolidated) of Ultrapar Participações S.A. and subsidiaries as of December 31, 2002, and the results of their operations, the changes in stockholders’ equity (Company) and the changes in their financial positions for the year then ended in conformity with accounting practices adopted in Brazil.

2. The financial statements for the year ended December 31, 2001, presented for comparative purposes, were audited by other independent auditors whose report, dated January 31, 2002, expressed an unqualified opinion.

3. These financial statements have been translated into English solely for the convenience of the readers outside Brazil.

São Paulo, January 24, 2003

| DELOITTE
TOUCHE TOHMATSU | Altair
Tadeu Rossato |
| --- | --- |
| Auditores
Independentes | Accountant |
| CRC
No. 2 SP 011609/O-8 | CRC
No. 1 SP 182515/O-5 |

MANAGEMENT REPORT

Dear Shareholders

As per regulations and the company by-laws, the Management of ULTRAPAR PARTICIPAÇÕES S.A. presents the following Management Report, Balance Sheet and other Financial Statements for the fiscal year 2002 to its shareholders. All data herein has been prepared according to corporate law and is accompanied by an independent auditor’s report. On December 20, 2002, Ultrapar concluded its corporate restructuring and with the completion of this process, the results for the fiscal year also include the performance of the incorporated company stakes for the period from July to December 2002.

ECONOMIC BACKGROUND FOR 2002

The macroeconomic environment in 2002 was tense and volatile, partially provoked by the presidential election campaign. This panorama of uncertainty, the result of Brazil’s fragile foreign exchange position, fed through to the principal economic indicators with the Real posting an approximately 50% depreciation over the period and basic interest rates rising by six percentage points - all of which, directly impacting the productive sector of the economy. For the segments in which Ultrapar operates, the year was also characterized by major changes and challenges. During 2002, the Brazilian government sought to create a market, which was more favorable to developing new sources of Liquefied Petroleum Gas – LPG, by changing pricing parameters. As from January 2002, Petrobras, the only Brazilian producer, was allowed to fix its own prices for LPG sold on the domestic market, proceeding to adopt the international price plus an overprice as its benchmark for the product. The Brazilian chemicals industry posted sales of US$ 37.5 billion in 2002 unchanged from 2001, while the sector’s trade balance continued to register deficits, ending the year with a negative balance of US$ 6.3 billion. Meanwhile, the transportation and storage sectors were adversely impacted by the increased price of diesel fuel and the decline in economic activity.

ULTRAPAR

(1) Financial Performance

Ultrapar’s business philosophy based on the creation of value, having as its foundation, people, the lowest costs in the industry and the permanent focus on the customer, enabled the company to report unique results in this context with net income up by 68%.

CONSOLIDATED VALUES IN R$ MILLIONS

	2002	2001	Change
Gross
revenue	3,795.3	2,862.5	33%
Net
revenue	2,994.5	2,284.7	31%
EBITDA
(a)	487.3	372.5	31%
Operating
income (b)	365.5	278.8	31%
Income
before minority interests	276.8	205.1	35%
Net
income	222.3	132.2	68%

(a) Calculated as operating income before equity income, amortization of goodwill and negative goodwill, financial results and depreciation and amortization

(b) Before equity income and financial results.

Ultragaz reported a decline of 3% in sales volume in 2002, while the overall LPG market decreased 5%. Net revenue was R$ 1.942,7 million, a year-on-year increase of 41%. Oxiteno’s sales mix reported an improved margin profile, and increased sales to the domestic market. It`s revenue reached R$ 956.1 million, 15% higher than last year, offsetting the decline of 3% in its sales volume. At Ultracargo, net revenue grew 25% in 2002, reaching R$ 131.4 million. The combination of investment strategies and the focus on constantly perfecting our business vision based on people, customers and costs, produced an EBITDA growth of 31% at Ultrapar in 2002. Ultragaz’s EBITDA posted a growth of 35%, Oxiteno, 32% and Ultracargo 3%. Net income was R$ 222.3 million in 2002, 68% higher than the R$ 132.2 million registered in 2001.

In 2002, Ultrapar’s total investments were R$ 432.8 million, including the acquisition of minority stakes. The principal investments were allocated to technological upgrading and improving Ultrapar companies’ information systems. Capex was also dedicated to extending Ultragaz’s non-residential segment, geographical coverage, increasing installed capacity at Oxiteno, renewing Ultracargo’s truck fleet and upgrading its tank storage capacity.

CONSOLIDATED VALUES IN R$ MILLIONS

	2002	2001
Cash
flow from operating activities:	466.9	338.4
Net
Income	222.3	132.2
Minority
Interests	54.5	72.9
Depreciation
and Amortization	121.8	102.4
Changes
in working capital	(125.7)	(56.0)
Monetary
variations (a)	116.2	74.1
Others
(b)	77.8	12.8
Cash
burn from investment activities:	(426.4)	(205.3)
Additions
to PPE and deferred charges (c)	(220.0)	(203.0)
Acquisition
of shareholding stakes (including treasury stock)	(212.8)	(13.8)
Others
(d)	6.4	11.5
Cash
flow (burn) from financing activities:	(58.5)	(339.4)
Financing	97.3	54.4
Amortizations	(42.4)	(136.8)
Dividends	(60.7)	(244.3)
Others	(52.7)	(12.7)
Net
increase (decrease) in cash and marketable securities	(18.0)	(206.3)

| (a) | Does
not include income from marketable securities. Comprised basically of
interest and translation of foreign exchange variations on financing
that are non-cash items. |
| --- | --- |
| (b) | Comprised
mainly of accrued and deferred taxes, net book value of permanent assets
written off. |
| (c) | Adjusted
for long-term PPE acquisitions. Included ICMS on the Property, plant
and equipment according to Law Complemental no. 102/2000. |
| (d) | Comprised
mainly of fixed asset sales revenue |

(2) Corporate Governance

Since its listing in 1999, Ultrapar has taken some major initiatives in seeking to improve its corporate governance practices. In 2000, the company conceded tag along rights to its shareholders assuring equitable treatment to minority shareholders in the event of the sale of a controlling stake in the company. At Ultrapar, the tag along rights guarantee 100% of the acquisition price irrespective of share class. In accordance with the principles of commitment to shareholders’ interests, in 2001, Ultrapar implemented the system for measuring returns using EVA – EconomicValue Added in all the business units. Since 2002, all variable executive compensation in the various businesses has been linked to performance as measured by EVA. With the objective of giving a new dimension to the importance of minority shareholders, and underscoring their essential role in creating value, the company extended to them the right to elect a representative to the Board of Directors. Ultrapar also changed its auditing company in 2002, anticipating the CVM orientation requiring the rotation of independent auditors.

Corporate Restructuring

During the course of 2002, the company underwent a corporate restructuring with the incorporation of Gipóia and the shares of Oxiteno by Ultrapar. The restructuring sought to simplify the corporate structure and concentrate share market liquidity into a single vehicle. This operation was given substantial coverage in the specialized financial press being cited as the year’s most outstanding corporate event. With the completion of the restructuring, Ultrapar’s stake in Oxiteno S.A. increased from 48% to 100% of the total capital stock, Oxiteno becoming a wholly owned subsidiary. Similarly, through the incorporation of Gipóia, Ultrapar now holds 100% of Ultragaz Participações’ capital.

Capital Markets

Throughout 2002, the São Paulo Stock Exchange was adversely impacted by a combination of external and, principally, domestic factors. In spite of operating in this extremely volatile environment, Ultrapar’s stock exchange performance was a good one with its preferred shares appreciating by 33% while the Ibovespa slumped 17% over the same period. The improvement in the capital markets was not limited to an appreciation in the stock price, but also reflected in an increase in liquidity. Ultrapar’s average daily trading volume including both movement on the São Paulo and New York stock exchanges reported a growth of 57% to reach R$ 1,233,000 against an average of R$ 787,000 recorded in 2001.

(3) Added Value

Ultrapar generated added value of R$ 848.0 million in the fiscal year 2002 distributed in accordance with the following pie chart:

(4) Businesses

Liquefied Petroleum Gas – LPG

Parent : Ultragaz Participações S.A . , Subsidiaries : Companhia Ultragaz S.A.; Bahiana Distribuidora de Gás Ltda. and Utingás Armazenadora S.A. Ultragaz holds a 19.6% share of the domestic market. The Brazilian LPG market has experienced a year of major changes in its structure, notably in relation to domestic prices, which were previously subsidized, but are now benchmarked to international prices. In 2002, LPG aquisition prices reported an average increase of 123%, thus depressing domestic consumption which fell 5%. Due to its competitive position in the market, Ultragaz posted a better than market performance with a year-on-year decline of 3% and sales registering 1,303 thousand tons. Annual net revenue was R$ 1,942.7 million and EBITDA, R$ 219.8 million, 41% and 35% higher year-on-year, respectively. Investments in operations were R$ 127.8 million, largely for increasing UltraSystem’s distribution capacity, in the construction of a new gas filling plant and the acquisition of new gas cylinders. Ultragaz divides its operations in two segments: the residential segment using 13 kg gas cylinders and the non-residential segment. Ultragaz’s growth strategy for the residential segment has been through increasing the geographical area covered. In 2001 two new gas-filling plants were brought on stream: one in the State of Ceará and the other in the State of Rio de Janeiro. During 2002 a further plant has been built in the State of Minas Gerais, to begin operations in 2003. Due to these recent investments, Ultragaz now covers practically the whole of the country. Since 1994 company has been increasing its coverage in the non-residential segment, which serves the commercial and industrial customers. In 1995, Ultragaz pioneered a system in Brazil for its commercial customers whereby LPG is supplied directly by trucks to large tanks installed at the customers’ facilities. This technology, known as UltraSystem, has made the supply of LPG much more practical, agile and safe, avoiding the handling of numerous gas cylinders. Today, UltraSystem largely focuses its business on hotels, apartment buildings, bakeries, restaurants and laundries. Ultragaz has successfully held its leadership in market share in this segment. The year 2002 not only brought important changes in the market for Ultragaz, but also the beginning of a new phase represented by the challenge of the “Ultragaz Without Frontiers” project. The project’s principal object is to ensure that Ultragaz is recognized for its excellence. For this purpose, in 2003, the company is to implement the Balanced Scorecard to manage its corporative strategy. The Balanced Scorecard is an instrument for continually improving quality, productivity, safety and environmental preservation and is aligned to Ultrapar’s business vision, which has as its foundation, the focus on people, customers and costs. A Matrix Budget System was implemented in 2002 for establishing costs and productivity standards using systematic comparisons, developing a set of company cost indicators, that will be used as cost parameters in the Balanced Scorecard. In 2003, Ultragaz is to conclude the installation of the ERP – Enterprise Resource Planning, an integrated management software that will manage and control all the operational aspects inside the organization such as procurement, sales, billing, inventories and collections, allowing the company to respond faster and more reliably and to control its processes more effectively. Aiming to reach Ultragaz’s objectives of it’s personnel professional development, in 2002 Ultragaz heavily invested in training totaling 26.5 thousand hours, an average of 6.5 hours/employee. Ultragaz is the only LPG distributor in the South, Southeast, Midwest and Northeast of the country to be ISO 9000 certified and in 2002, began to implement its Environmental Management program. Ultragaz invests systematically in the implementation of Quality Management Systems for the dissemination of management concepts to all employees, resulting in a continuous improvement in processes and consequently, greater customer satisfaction.

Chemicals and Petrochemicals

Parent : Oxiteno S.A Industria e Comércio.; S ubsidiary : Oxiteno Nordeste S.A. - Indústria e Comércio. Oxiteno is a ethylene oxide and chemical specialties producer. The Company began its operations in 1973 and now has four industrial plants in the three Brazilian petrochemical complexes. Oxiteno continues to report good results thanks in recent years to continuous efforts dedicated to upgrading merchandising and technological capabilities, together with the training of human resources. Net revenue for 2002 was R$ 956.1 million, year-on-year 15 % higher while net income was R$ 186.9 million and 50% up on 2001. The operating cash flow indicator, EBITDA posted R$ 232.6 million, surpassing the figure posted for 2001 by 32%. Oxiteno’s sales were 433.5 thousand tons in 2002, year-on-year 3% lower. This reduction was largely due to restrictions on raw material supplies following a prolonged maintenance stoppage at the company that produces basic chemicals at the Camaçari Petrochemical Complex. Oxiteno sold 263.7 thousand tons to the domestic market, 3% more than in 2001. The company exported 169.7 thousand tons, 10% down in volume terms compared with the preceding year and reflecting the priority given to supplying the domestic market in the light of raw material shortages. In 2002, Oxiteno invested R$ 55.8 million, principally in the industrial area and particularly in projects for increasing the capacity of new product lines and optimizing operations. In 2001, Oxiteno implemented the Balanced Scorecard system to manage corporate strategy. One of the principal spin offs from management practices based on the Balanced Scorecard technique is the Value Creation Project which seeks to enhance quality in the relationship with Oxiteno’s customer base, transforming this into one more competitive advantage. The Project, developed during 2001, was implemented on different fronts in 2002, but with the same objective: to anticipate demand and surprise the customers with the quality of the products and services. Also in 2002, Oxiteno began the process of installing the Oracle Integrated System. The principal objectives of this new system are greater velocity in information processing, allowing greater time for analysis and strategic decisions, the increase in automation levels and the simplification and standardization of processes. Initiatives in the Human Resources area include an Appraisal Program together with Individual Development Plans compatible with the principal short and medium term challenges faced by Oxiteno. The company’s training programs in 2002 focused on the areas of management of quality, health, safety and environment, production technology and team synergies with a behavioral emphasis. These programs totaled 42,280 hours of training, representing an average of 46 hours/employee. Oxiteno’s obsession with the customer and the desire to attend customer demands and expectations have given birth to the Quality Management System, based on the requirements of various international standards and programs such as ISO 9001, QS-9000 (the automotive segment), ISO 14001, Responsible Care and Good Manufacturing Practices. At the beginning of 2002, Oxiteno obtained SA 8000 certification, the first Brazilian chemicals industry to do so. The SA 8000 certificate establishes requirements for the Quality Management System targeted to Social Responsibility. All Oxiteno’s plants are ISO 14001 certified with respect to Environmental Management requirements. Oxiteno opened its capital in 1986, and since then its shares have been traded on the São Paulo Stock Exchange. Under the recent corporate restructuring, Oxiteno’s shares were incorporated by Ultrapar with Oxiteno subsequently delisted, the purpose being to better align the interests of Oxiteno’s and Ultrapar’s shareholders by creating a single shareholding base focused on Ultrapar. Oxiteno Nordeste’s preferred Class B shares were auctioned through a public offering as a further initiative designed to simplify the corporate structure. Following the auction in April, Oxiteno Nordeste’s capital was closed, with Oxiteno’s stake in the Oxiteno Nordeste’s total capital stock increasing from 96.6% to 99.0%.

Logistics and Special Products Storage

Parent: Ultracargo Participações Ltda., Subsidiaries: Transultra Armazenamento e Transporte Especializado Ltda. and Terminal Químico de Aratu S.A. – Tequimar. Ultracargo is currently the sole company in the market to provide integrated transport and liquid bulk storage services to the petrochemical segment. Ultracargo operates through its Transultra and Tequimar subsidiaries. Transultra operates in the field of developing projects of logistics solutions for products and operations that require special handling care. Among the solutions Transultra offers are integrated multi-modal transportation, loading and unloading operations at its customers’ installations and the management of third party trucking fleets. Tequimar maintains and operates storage installations at port terminals and rail junctions for the movement of chemical and petrochemical products. It has facilities at Aratu and Camaçari (Bahia), Maceió (Alagoas), Paulínia and Santos (São Paulo) and Suape (Pernambuco). The company’s considerable storage capacity and the strategic location of its assets, facilitates product movement along its multi-modal logistics system. Besides storage services, Tequimar offers ship loading and unloading services, the operation of pipelines, logistics programming and installation engineering. In 2002, Ultracargo faced major challenges due to the continual increases in the raw material costs, notably diesel oil. In the storage segment, Ultracargo has renewed long term rental contracts for its two terminals at Aratu – until 2022 - and Suape - until 2030 in readiness for the expansion of its operations in the petrochemical and chemical products segments. The first expansion program has already been completed with an increase of 20,000m3 in storage capacity at the Aratu terminal with new tanks to be in operation by February 2003. As part of the process to reduce costs and increase customer loyalty, Ultracargo is developing an information technology program known as Integra, which will enable it to develop rapid and cheap personalized information solutions for its customers. In 2002, 90% of the company’s employees participated in training courses for handling dangerous products and safety and ISO 14001 related matters, among others. Ultracargo has been ISO 9000 certified since 1996 and is a signatory of ABIQUIM’s “Responsible Action” program. Compared with 2001, Ultracargo increased the number of kilometers driven by 38%, its net revenue by 25% and EBITDA by 3%.

OUTLOOK

Ultrapar has reported significant growth of 28%ªª in net revenue and 30%ªª in EBITDA over the past five years. It continues alert to new growth opportunities, always having as a parameter, the creation of value as its core business philosophy. Combining planning, modernization and consistency of investments, Ultragaz has been successful in its objective of providing the market with an outstandingly competitive service. Over the next few years, Ultragaz should continue to report outstanding results thanks to the geographical expansion which has already taken place. Through the development of new technologies, the improvement in employee skills and the daily effort being made to reduce production costs, Oxiteno has been investing in the quality of its products. Always focused on the principle of doing more and doing it better, in 2003, Oxiteno will continue pursuing growth targets through the search for opportunities, product development, prospecting new markets or through the acquisition of new businesses. Ultracargo is expected to continue expanding its businesses. In 2003 the company is scheduled to start the construction of a new bulk liquids terminal in Santos in line with the growing foreign trade in petrochemicals, vegetable oils and alcohol. A construction of a new liquid terminal in Santos (São Paulo) is scheduled to take place in 2003, following the growth in oil, oil derivatives and alcohol international trade. With the commencement of the new Brazilian President and the more optimistic outlook which, little by little, is beginning to materialize, the challenges will continue to increasingly demand much more from those companies, which like Ultrapar, wish to become benchmarks of excellence. We are convinced that we are more solid and better structured to move forward and transform the opportunities that arise into reality. Finally, we wish to thank all those that have collaborated to making 2002 as one more year of important achievements for the company.

The Management

1. OPERATIONS

The Company invests in commercial and industrial activities, and also subscribes for or purchases shares and quotas of other companies with similar activities.

Through its subsidiaries, the Company distributes liquefied petroleum gas - LPG in Brazil, produces and sells chemical and petrochemical products, and transports and stores LPG and chemical products.

1. PRESENTATION OF THE FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES

The accounting practices adopted to record transactions and prepare the financial statements are those prescribed by Brazilian corporate law and specific standards established by the Brazilian Securities Commission (CVM).

a) Determination of net income

Determined on the accrual basis of accounting.

b) Current and noncurrent assets

Temporary cash investments, which consist mostly of fixed income securities, are stated at cost, plus accrued earnings (on a “pro rata temporis” basis). The recorded balances approximate market value.

The allowance for doubtful accounts is based on estimated losses and is considered by management to be sufficient to cover potential losses on the realization of accounts receivable.

Inventories are stated at the average cost of acquisition or production, or at market or net realizable value, whichever is lower.

Other assets are stated at the lower of cost or probable realizable values, including, when applicable, accrued earnings and monetary variations or net of allowances for potential losses.

c) Permanent assets

Stated at cost monetarily restated through Year="1995">December 31, 1995, and in nominal amounts from that date, combined with the following aspects:

• Significant investments in subsidiary and associated companies are recorded under the equity method, as shown in Note 11.
• Property, plant and equipment include revaluation write-ups based on appraisal reports issued by independent appraisers.
• Depreciation is calculated on the straight-line basis at the annual rates described in Note 12, based on the economic useful lives of the assets.
• Deferred charges mainly comprise costs incurred in the implementation of projects to install equipment at customers’ facilities and projects to modernize systems, as mentioned in Note 13.

d) Current and long-term liabilities

Stated at known or estimated amounts including, when applicable, accrued charges and monetary variations. The accrual for income tax includes tax incentives, when applicable. Deferred income and social contribution taxes on temporary differences are recorded as set forth by CVM Resolution No. 273/98.

e) Reclassifications - statements of income

To comply with the provisions of CVM Circular No. 01/03, the amounts related to employees’ profit sharing for the Company and its subsidiaries were recorded separately under operating expenses in 2002 and 2001.

1. CONSOLIDATION PRINCIPLES

The consolidated financial statements were prepared in conformity with the consolidation principles determined in Brazilian corporate law and standards established by the CVM, and include the following direct and indirect subsidiaries:

| | Ownership
- % — 2002 | | 2001 | |
| --- | --- | --- | --- | --- |
| | Direct | Indirect | Direct | Indirect |
| Ultragaz
Participações S.A. | 100 | - | 77 | - |
| Companhia Ultragaz S.A. | - | 86 | - | 66 |
| Bahiana Distribuidora de Gás Ltda. | - | 100 | - | 77 |
| Utingás Armazenadora S.A. | - | 56 | - | 43 |
| LPG International Inc. | - | 100 | - | - |
| Ultraquímica
Participações S.A. | 100 | - | 100 | - |
| Ultraquímica Florestal Ltda. | - | - | - | 100 |
| Melamina Ultra S.A. Indústria Química | - | 93 | - | 93 |
| Oleoquímica do Nordeste Ltda. | - | 100 | - | 100 |
| Oxiteno S.A.
- Indústria e Comércio | 100 | - | - | 48 |
| Camaçari Renovada S.A. | - | - | - | 48 |
| Oxiteno Nordeste S.A. - Indústria e Comércio | - | 99 | - | 46 |
| Oxiteno International Co. | - | 100 | - | 48 |
| Oxiteno Overseas Co. | - | 100 | - | 48 |
| Ultracargo
Participações Ltda. | 100 | - | 100 | - |
| Transultra - Armazenamento e Transporte Especializado Ltda. | - | 100 | - | 100 |
| Terminal Químico de Aratu S.A. – Tequimar | - | 99 | - | 89 |
| Ultratecno
Participações Ltda. | 100 | - | 100 | - |
| Ultradata
S/C Ltda. | - | - | 100 | - |
| Imaven Imóveis
e Agropecuária Ltda. | 100 | - | 100 | - |
| Imaven Importadora e Exportadora Ltda. | - | - | - | 98 |

Intercompany investments, asset and liability balances, income and expenses, as well as the effects arising from significant intercompany transactions, were eliminated. Minority interest in subsidiary companies is presented separately in the financial statements.

In March 2002, the subsidiary Oxiteno S.A. - Indústria e Comércio made a public offer for the acquisition of the shares of its subsidiary Oxiteno Nordeste S.A. - Indústria e Comércio. This public offer was concluded on April 16, 2002 with the acquisition of 93,871 shares of Oxiteno Nordeste S.A. - Indústria e Comércio by Oxiteno S.A. - Indústria e Comércio, representing approximately 73.3% of the shares held by minority stockholders. Oxiteno S.A. - Indústria e Comércio, which previously held 97% of the total capital of Oxiteno Nordeste S.A. - Indústria e Comércio, became the holder of a 99% interest. On May 22, 2002, the registration of Oxiteno Nordeste S.A. - Indústria e Comércio as a public company with the Brazilian Securities Commission (CVM) was canceled.

In November 2002, Imaven Importadora e Exportadora Ltda. and Camaçari Renovada S.A. were extinguished, and Ultraquímica Florestal Ltda. and Ultradata S/C Ltda. were merged into Oleoquímica do Nordeste Ltda. and Ultraquímica Participações S.A., respectively.

1. CORPORATE REORGANIZATION

In 2002, the Company undertook a corporate reorganization, disclosed in a relevant event published on October 15, 2002, and approved at the Extraordinary Stockholders’ Meeting on October 30, 2002. This reorganization was primarily aimed at: (i) streamlining the corporate structure of subsidiaries and associated companies, (ii) cost rationalization, and (iii) concentration of capital market liquidity in one company. The main effects of the reorganization were:

I) Merger of Gipóia Participações Ltda.: increase of the Company’s interest in Ultragaz Participações S.A., from 77% to 100% of total capital, with the issuance of 7,850,603,880 common shares.

II) Merger of Oxiteno S.A. - Indústria e Comércio Shares: increase of the Company’s interest in Oxiteno S.A. - Indústria e Comércio, from 48% to 100% of total capital. With the merger, 5,430,005,398 common shares and 3,410,659,550 preferred shares were issued by the Company to the stockholders of Oxiteno S.A. - Indústria e Comércio, who opted to remain with the Company. The dissident stockholders of Oxiteno S.A. - Indústria e Comércio were paid a total of R$ 208,028, net of withholding income tax.

The corporate reorganization was based on the balance sheets as of June 30, 2002. As a consequence, the Company had full participation in the results of Ultragaz Participações S.A. and Oxiteno S.A. - Indústria e Comércio beginning July 1, 2002.

1. TEMPORARY CASH INVESTMENTS

These investments, contracted with first-line banks, are comprised substantially of fixed income securities, funds linked to interbank deposit (CDI) rates and currency hedge, which are stated at cost plus accrued income (on a “pro rata temporis” basis).

	Company — 2002	2001	Consolidated — 2002	2001
Fixed
income securities and funds	78,984	41,589	417,879	556,691
Foreign
investments (*)	-	-	127,019	81,104
Bills
of exchange	-	-	-	2,310
Currency
hedge (**)	-	-	39,472	(19,769)
	78,984	41,589	584,370	620,336

(*) Investments made by the indirect subsidiary Oxiteno Overseas Co., principally in money market funds.

(**) Accumulated gain or loss on swap positions. The total amount hedged through these swaps is US$ 104,668 thousand.

1. ACCOUNTS RECEIVABLE (CONSOLIDATED)

	2002	2001
Local
customers	246,080	148,477
Foreign
customers	81,373	59,826
(-)
Advances on foreign exchange contracts	(43,400)	(49,648)
(-)
Allowance for doubtful accounts	(12,399)	(9,383)
	271,654	149,272

1. INVENTORIES (CONSOLIDATED)

	2002	2001
Finished
products	67,565	59,540
Raw
material	20,070	15,384
Liquefied
petroleum gas (LPG)	7,908	7,844
Supplies
and cylinders for resale	10,707	11,699
	106,250	94,467

1. RECOVERABLE TAXES

Represented, substantially, by credit balances of State Value-Added Tax - ICMS, Federal Excise Tax - IPI, and prepaid income and social contribution taxes, for offset against future taxes payable.

	Company — 2002	2001	Consolidated — 2002	2001
Income and
social contribution taxes	13,744	15,012	68,288	54,129
State Value-Added
Tax - ICMS	-	-	42,561	59,564
Federal Excise
Tax - IPI	-	-	1,876	6,159
Other	-	-	2,335	1,346
	13,744	15,012	115,060	121,198

1. RELATED COMPANIES

| | Company — Loans | | Consolidated — Loans | | Trade
accounts | | Transactions | | Financial income (expense) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | Assets | Liabilities | Assets | Liabilities | Receivable | Payable | Sales | Purchases | |
| Ultraquímica
Participações S.A. | 35 | 387,160 | - | - | - | - | - | - | - |
| Serma
Associação dos Usuários de Equipamentos de Processamentos de Dados e Serviços Correlatos | - | 2,287 | 778 | 2,287 | - | 398 | - | - | - |
| Petroquímica
União S.A. | - | - | - | - | - | 3,579 | - | 64,530 | - |
| Oxicap
Indústria de Gases Ltda. | - | - | - | - | - | 539 | 12 | 4,905 | - |
| Agip
do Brasil S.A. | - | - | - | - | 181 | - | 3,287 | - | - |
| Companhia
Ultragaz S.A. | 36,978 | - | - | - | - | - | - | - | - |
| Ultracargo
Participações Ltda. | - | 2,130 | - | - | - | - | - | - | - |
| Ultratecno
Participações Ltda. | 9,587 | 8,148 | - | - | - | - | - | - | - |
| Química
da Bahia Indústria e Comércio S.A. | - | - | - | 6,641 | - | - | 8 | 1 | (631) |
| Imaven
Imóveis e Agropecuária Ltda. | - | 22,673 | - | - | - | - | - | - | - |
| Petróleo
Brasileiro S.A. - Petrobras | - | - | - | - | - | 13,896 | 37 | 1,334,806 | - |
| Petrogaz
Distribuidora S.A. | - | - | - | - | 31 | - | 557 | 2,180 | - |
| Copagaz
Distribuidora de Gás S.A. | - | - | - | - | 53 | - | 1,141 | - | - |
| Oleoquímica
do Nordeste Ltda. | - | 35,524 | - | - | - | - | | - | - |
| Braskem
S.A. | - | - | - | - | - | 13,070 | 38,567 | 271,202 | - |
| Supergasbras
Distribuidora de Gás S.A. | - | - | - | - | 114 | - | 1,934 | - | - |
| Cia.
Termelétrica do Planalto Paulista - TPP | - | - | 1,049 | - | - | - | - | - | 257 |
| Plenogás
– Distribuidora de Gás S.A. | - | - | - | 1,032 | - | - | - | - | - |
| Other
related companies | 94 | 675 | 776 | 257 | 78 | 414 | 1,388 | 1,076 | - |
| Total
as of December 31, 2002 | 46,694 | 458,597 | 2,603 | 10,217 | 457 | 31,896 | 46,931 | 1,678,700 | (374) |
| Total
as of December 31, 2001 | 97,198 | 74,810 | 1,680 | 11,036 | 595 | 42,591 | 18,383 | 1,236,160 | (467) |

The loan balances with Química da Bahia Indústria e Comércio S.A. and Cia. Termelétrica do Planalto Paulista - TPP are indexed based on the Brazilian long-term interest rate (TJLP). The other loans do not have financial charges nor determined maturity dates. Transactions refer principally to purchases of raw material, other materials and storage services, carried out at usual market prices and conditions. The loan agreement with Ultraquímica Participações S.A. results from the sale of shares issued by Oxiteno S.A. – Indústria e Comércio to the Company, intended to avoid the occurrence of reciprocal shareholdings due to the corporate reorganization, as mentioned in Note 4.

1. INCOME AND SOCIAL CONTRIBUTION TAXES a) Deferred income and social contribution taxes The Company and its subsidiaries recognize tax assets and liabilities which do not expire, arising from tax loss carryforwards, temporary add-backs, revaluation of property, plant and equipment, and others. The tax credits are substantiated by continued operating profitability. Management expects to realize these tax credits over a maximum period of three years. Deferred income and social contribution taxes are presented in the following principal categories:

	Company — 2002	2001	Consolidated — 2002	2001
Noncurrent
assets:
Deferred income and social contribution taxes on:
Accruals tax-deductible only when the expenses are incurred	2,033	1,584	27,605	24,051
Income and social contribution tax loss carryforwards	-	6	5,652	3,231
	2,033	1,590	33,257	27,282
Long-term
liabilities:
Deferred income and social contribution taxes on:
Revaluation of property, plant and equipment	-	-	2,113	2,512
Income earned abroad	-	-	32,678	21,461
	-	-	34,791	23,973

b) Reconciliation of income and social contribution taxes in the statement of income

Income and social contribution taxes are reconciled to official tax rates as follows:

	Company — 2002	2001	Consolidated — 2002	2001
Income before
taxes, equity in results of
subsidiary and associated companies and minority interest	14,712	29,160	349,980	230,733
Official
tax rates - %	34.00	34.00	34.00	34.00
Income
and social contribution taxes at
official
rates	(5,002)	(9,914)	(118,993)	(78,449)
Adjustments
to the effective tax rate:
Operating
provisions and nondeductible
expenses/nontaxable revenues	31	(11)	(1,217)	6,165
Adjustments
to estimated income	-	-	3,094	3,377
Realization
of inflationary profit	-	-	-	1,983
Interest
on capital (received) paid	(1,870)	10,540	157	10,540
Other	-	-	83	1,279
Income and
social contribution taxes before
tax
benefits	(6,841)	615	(116,876)	(55,105)
Tax benefits:
Workers’
meal program (PAT)	-	-	721	299
Cultural
incentives	24	-	1,245	332
Income and
social contribution taxes per statement of income	(6,817)	615	(114,910)	(54,474)
Current	(7,260)	-	(110,067)	(58,377)
Deferred	443	615	(4,843)	3,903

c) Tax exemption The following indirect subsidiaries have partial or total exemption from income tax in connection with a government program for the development of the Northeast Region of Brazil, as follows:

Subsidiary	Units	Exemption - %	Expiration date
Oxiteno
Nordeste S.A. - Indústria e Comércio	Camaçari
plant	100	2006
Bahiana Distribuidora
de Gás Ltda.	Mataripe
base	100	2003
	Juazeiro
base	100	2004
	Suape base	100	2007
Terminal
Químico de Aratu S.A. - Tequimar	Aratu
Terminal	100	2003
	Suape Terminal
(acetic acid
	and
butadiene byproducts)	100	2005

Tax benefits from income tax exemption are recorded in a specific capital reserve account in stockholders’ equity by the subsidiaries. These benefits are recognized in income by the Company through the equity pick-up, as shown in Note 11. Bahiana Distribuidora de Gás Ltda. has certain requests under analysis by Federal Revenue authorities relating to the Ilhéus and Aracaju bases which, once approved, will represent a reduction of 37.5% of income tax starting in 2003.

1. INVESTMENTS

a) Subsidiaries of the Company

| | 2002 — Ultragaz Participações S.A. () | Ultraquímica Participações S.A. () | Ultracargo Participações Ltda. () | Ultratecno Participações Ltda. () | Imaven Imóveis e Agropecuária Ltda. () | Oxiteno
S.A. - Indústria
e Comércio
() | Imaven
II Agropecuária S.A. (*) |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Number of
shares or quotas held | 4,336,063 | 2,461,339 | 2,856,736 | 65,158,617 | 27,733,974 | 35,102,127 | 11,551 |
| Net equity
- R$ | 202,068 | 512,404 | 101,949 | 8,619 | 41,986 | 636,414 | 356 |
| Net
income (loss) for the year - R$ | 50,924 | 66,028 | 9,426 | (164) | 4,855 | 186,935 | 3 |

| | 2002 — Ultragaz Participações S.A.
() | Ultraquímica Participações S.A. () | Ultracargo Participações Ltda. () | Ultratecno Participações Ltda. () | Ultradata Participações S/C Ltda.
() | Imaven Imóveis e Agropecuária Ltda. () | Oxiteno
S.A. - Indústria
e Comércio
() | Imaven
II Agropecuária S.A. () | | | | 2001 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | Subtotal | Others | Total | Total |
| Changes
in investments: | | | | | | | | | | | | |
| Balance at beginning of year | 126,571 | 454,679 | 92,612 | 8,783 | 4,416 | 37,131 | - | - | 724,192 | 185 | 724,377 | 630,237 |
| Payment of capital | - | - | - | - | - | - | - | - | - | - | - | 13,710 |
| Taxes on reserve for revaluation in subsidiaries | (163) | - | (89) | - | - | - | - | - | (252) | - | (252) | (416) |
| Acquisition | - | - | - | - | - | - | - | - | - | - | - | 20 |
| Write-off of revaluation reserve | - | (700) | - | - | - | - | - | - | (700) | - | (700) | - |
| Dividends and interest (net) on capital Receivable | (12,094) | (12,372) | - | - | - | - | (31,139) | - | (55,605) | - | (55,605) | (21,600) |
| Withholding tax on interest on capital | (825) | - | - | - | - | - | - | - | (825) | - | (825) | - |

a) Subsidiaries of the Company

| | 2002 — Ultragaz Participações S.A. () | Ultraquímica Participações S.A. () | Ultracargo Participações Ltda. () | Ultratecno Participações Ltda. () | Ultradata Participações S/C Ltda.
() | Imaven Imóveis e Agropecuária Ltda. () | Oxiteno
S.A. - Indústria
e Comércio
() | Imaven
II Agropecuária S.A. () | | | | 2001 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | Subtotal | Others | Total | Total |
| Purchase of shares | - | - | - | - | - | - | 387,160 | - | 387,160 | - | 387,160 | - |
| Merger of shares | - | - | - | - | - | - | 191,568 | - | 191,568 | - | 191,568 | 102,426 |
| Merger of companies | 43,484 | 4,769 | - | - | (4,769) | - | - | 135 | 43,619 | 8 | 43,627 | - |
| Equity pick-up | 45,095 | 66,028 | 9,426 | (164) | 353 | 4,855 | 88,803 | 9 | 214,405 | - | 214,405 | |
| Balance
at end of year | 202,068 | 512,404 | 101,949 | 8,619 | - | 41,986 | 636,392 | 144 | 1,503,562 | 193 | 1,503,755 | 724,377 |

b) Associated companies (Consolidated)

| | 2002 — Química
da Bahia Indústria e Comércio S.A. () | Oxicap
Indústria de Gases Ltda. () | Nordeste
Química S.A. - Norquisa () | Plenogás Distribuidora de Gás S.A. () |
| --- | --- | --- | --- | --- |
| Number
of shares or quotas held | 3,174,501 | 125 | 60,426,077 | 1,384,308 |
| Adjusted
net equity - R$ | 10,118 | 2,470 | - | (2,133) |
| Loss
for the year - R$ | - | (269) | - | (811) |
| Ownership
percentage - % | 45.56 | 25.00 | 8.73 | 33.33 |

| | 2002 — Química
da Bahia Indústria e Comércio S.A. () | Oxicap
Indústria de Gases Ltda. () | Fábrica
Carioca de Catalisadores S.A. - FCC () | Nordeste
Química S.A. - Norquisa () | Total | 2001 — Total |
| --- | --- | --- | --- | --- | --- | --- |
| Changes
in investments: | | | | | | |
| Balance at beginning of year | 4,610 | 707 | 15,409 | 42,307 | 63,033 | 61,085 |
| Write-off of revaluation reserve | - | - | (2,664) | - | (2,664) | (220) |
| Dividends received | - | - | (430) | - | (430) | (1,275) |
| Equity pick-up | - | (89) | (1,017) | - | (1,106) | 3,443 |
| Cost of investments sold | - | - | (11,298) | - | (11,298) | - |
| Allowance for loss | - | - | - | (40,551) | (40,551) | - |
| Balance
at end of year | 4,610 | 618 | - | 1,756 | 6,984 | 63,033 |

(*) Financial statements audited or reviewed by our independent auditors.

(**) Financial statements audited by other independent auditors.

The consolidated amount of equity in the results of subsidiary and associated companies presented in the statement of income includes R$ 43,456 (2001 - R$ 26,961) of income tax incentives arising substantially from operations in regions eligible for such incentives.

In the consolidated financial statements, the investments of subsidiary Oxiteno S.A. - Indústria e Comércio in associated companies Oxicap Indústria de Gases Ltda. and Química da Bahia Indústria e Comércio S.A. are carried under the equity method based on their financial statements as of November 30, 2002, and the investment in associated company Nordeste Química S.A. - Norquisa is carried under the equity method through July 31, 2001, based on the degree of management influence, as established by CVM Instruction No. 247/96, net of a reserve for loss on realization in the amount of R$ 40,551 (see Note 17).

In November 2002, the investment in associated company Fábrica Carioca de Catalisadores S.A. - FCC was sold for R$ 30,697.

1. PROPERTY, PLANT AND EQUIPMENT (CONSOLIDATED)

| | Annual depreciation rates
- % | 2002 — Revalued cost | Accumulated depreciation | Net book value | 2001 — Net book value |
| --- | --- | --- | --- | --- | --- |
| Land | - | 47,151 | - | 47,151 | 39,065 |
| Buildings | 4 | 321,113 | (109,874) | 211,239 | 204,491 |
| Machinery
and equipment | 5
to 10 | 769,488 | (378,083) | 391,405 | 366,154 |
| Vehicles | 20
to 30 | 107,506 | (72,360) | 35,146 | 30,191 |
| Furniture
and fixtures | 10 | 11,890 | (4,157) | 7,733 | 6,792 |
| Construction
in progress | - | 39,141 | - | 39,141 | 29,888 |
| Imports
in transit | - | 835 | - | 835 | 5,436 |
| Other | 10
to 20 | 72,650 | (25,833) | 46,817 | 25,852 |
| | | 1,369,774 | (590,307) | 779,467 | 707,869 |

Construction in progress refers mainly to renovations of the industrial complexes of the subsidiaries; imports in transit refer mainly to equipment and parts for the Ultrasystem project (small and medium-sized LPG installations for commercial and residential customers). Other items primarily comprise computer equipment and commercial property rights.

On July 11, 2002, the indirect subsidiary Terminal Químico de Aratu S.A. - Tequimar won the auction and signed the contract for use of the site on which it operates the Aratu Terminal for another 20 years, renewable for the same period. The goodwill paid by Tequimar amounted to R$ 12,000, and will be amortized over 40 years, equivalent to annual amortization of R$ 300. In the course of this negotiation, Tequimar obtained a reduction of approximately R$ 150 in the annual cost of leasing this area.

1. DEFERRED CHARGES (CONSOLIDATED)

Represented substantially by costs incurred on the implementation of systems modernization projects R$19,866 (2001 - R$ 10,986), being amortized over five to ten years, and expenditures for the installation of Ultrasystem equipment at customers’ locations R$ 58,044 (2001 - R$ 55,913), to be amortized over the lives of the LPG supply contracts with these customers.

1. FINANCING (CONSOLIDATED)

| Description | 2002 | 2001 | Index/ Currency | Annual interest rate - % | Maturity
and amortization |
| --- | --- | --- | --- | --- | --- |
| Foreign currency: | | | | | |
| Eurobonds | - | 139,642 | US$ | 9.0 | |
| International Finance Corporation - IFC | 17,736 | 23,289 | US$ | 9.38 | Semiannually
to 2003 |
| Syndicated loan | 212,503 | - | US$ | 7.15 | Semiannually
to 2004 |
| Financing for inventories and property additions | 3,786 | 8,687 | US$ | From
1.75 to 6.01 | Semiannually
and annually to 2003 |
| Advances on foreign exchange contracts | 73,883 | 33,582 | US$ | From 3.04
to 10.5 | Maximum
of 219 days |
| National Bank for Economic and Social Development
(BNDES) - Exim | 17,849 | - | US$ | 5.25 | Quarterly
to 2003 |
| Export
prepayments, net of linked operations | 23,165 | - | US$ | From 8.0
to 16.3 | Semiannually
and annually to 2003 |
| Subtotal | 348,922 | 205,200 | | | |
| Local
currency: | | | | | |
| National Bank for Economic and Social Development | 181,995 | 169,889 | TJLP+
IGP-M | From
1.5 to 6.5 | Monthly,
quarterly and semiannually to 2008 |
| (BNDES) | 28,863 | 10,365 | UMBNDES | From 10.57
to 12.47 | Monthly
to 2007 |
| FINAME | 23,665 | 27,675 | TJLP | From 1.8
to 4.4 | Monthly
to 2007 |
| Onlending operations | - | 1,544 | TJLP | | Monthly
to 2002 |
| Other | 21 | 18 | | Various | |
| Subtotal | 234,544 | 209,491 | | | |
| Total financing | 583,466 | 414,691 | | | |
| Current liabilities | (219,827) | (124,525) | | | |
| Long-term
liabilities | 363,639 | 290,166 | | | |

TJLP = long-term interest rate

IGP-M = general market price index

UMBNDES = BNDES monetary unit

FINAME = government agency for machinery and equipment financing

The long-term portion matures as follows:

	2002	2001
2003	-	72,725
2004	273,270	39,112
2005	43,145	161,338
2006	32,535	12,637
2007 and
thereafter	14,689	4,354
	363,639	290,166

In June 1997, the subsidiary Companhia Ultragaz S.A. issued Eurobonds in the total amount of US$ 60 million, maturing in 2005, with put/call options in 2002, and guaranteed by Ultrapar Participações S.A. and Ultragaz Participações S.A. In June 2002, the indirect subsidiary LPG International Inc. exercised the call option for these securities by using funds from a syndicated loan maturing in August 2004.

The loan from International Finance Corporation - IFC to the indirect subsidiary Oxiteno Nordeste S.A. - Indústria e Comércio is equivalent to US$ 5 million and matures in 2003. The loan was earmarked for the expansion and modernization of the Camaçari plant in the state of Bahia, which started activities in 1997.

The financing is collateralized by liens on property, plant and equipment, shareholdings, and by promissory notes and sureties provided by the Company and its subsidiaries.

1. OTHER TAXES (CONSOLIDATED)

The Company and its subsidiaries obtained preliminary injunctions to pay taxes on revenues (PIS and COFINS) without the changes introduced by Law No. 9,718/98. The Companies are contesting the addition of 1% in the COFINS rate, as well as the incidence of PIS and COFINS on other revenues. The principal issue, however, concerns the collection of these taxes by the refinery which supplies LPG using the tax substitution system on behalf of the subsidiary companies Companhia Ultragaz S.A. and Bahiana Distribuidora de Gás Ltda. The tax substitution method, which increased the calculation basis of PIS and COFINS by four times the LPG price practiced by the refineries, continued until June 30, 2000, when the rates of these taxes were increased for the refineries and reduced to zero for distributors. However, based on legal counsel’s opinion, Company management opted to pay, on November 26, 2002, the amounts previously accrued for the PIS and COFINS tax substitution, as well as the increment of 1% in the COFINS rate on billings, therefore taking advantage of the benefit provided in Executive Act No. 75 of October 24, 2002.

The Company and its subsidiaries are still challenging in court the incidence of these taxes on other revenues. The unpaid amounts were accrued in the financial statements of the Company and its subsidiaries and amount to R$ 23,730 (2001 - R$ 49,329).

Terminal Químico de Aratu S.A. - Tequimar obtained a favorable decision on its lawsuit contesting the payment of the social contribution tax introduced by Law No. 7,689/88. The favorable decision to this subsidiary was final and unappealable; however, the Federal Government filed a motion for a new trial to reverse the previous decision. Based on legal counsel’s opinion and the outcome of recent cases judged by the Federal Supreme Court, the subsidiary opted to pay this tax on July 31, 2002, using the tax benefit provided by Executive Act No. 38 of May 14, 2002, and Federal Revenue Authority Regulation No. 900 of July 19, 2002.

1. STOCKHOLDERS’ EQUITY

a) Capital

The Company is a listed corporation with shares traded on the São Paulo and New York Stock Exchanges. Subscribed and paid-up capital is represented by 69,691,268,828 shares without par value, 51,264,621,778 common and 18,426,647,050 preferred shares.

On December 31, 2002, 4,112,155 preferred shares were outstanding in the foreign market, in the form of American Depositary Receipts - ADRs. The following table shows the effects of the corporate reorganization detailed in Note 4.

| Events | Capital — - R$ (000) | Number
of shares — Common | Preferred | Total |
| --- | --- | --- | --- | --- |
| At
December 31, 2001 | 433,857 | 37,984,012,500 | 15,015,987,500 | 53,000,000,000 |
| Shares
issued for: | | | | |
| Merger of Gipóia Participações Ltda. | 38,527 | 7,850,603,880 | - | 7,850,603,880 |
| Merger of shares of Oxiteno S.A. - Indústria e Comércio | 191,568 | 5,430,005,398 | 3,410,659,550 | 8,840,664,948 |
| At December
31, 2002 | 663,952 | 51,264,621,778 | 18,426,647,050 | 69,691,268,828 |

Preferred shares are nonconvertible into common shares and nonvoting, and entitle their holders to minimum dividends at least 10% higher than those attributable to common shares, and priority in capital redemption, without premium, in the event of liquidation of the Company.

b) Treasury shares

The Company was authorized to acquire its own shares at market price, without capital reduction, to be held in treasury.

In 2002, preferred shares were acquired at the average price of R$ 19.67 per thousand shares, which, after the corporate reorganization, totaled 20,199,760 and held in treasury as of December 31, 2002.

c) Revaluation reserve

This reserve reflects the revaluation write-up of assets of subsidiary and associated companies; realization occurs on depreciation, write-off or sale of the revalued assets and is transferred to retained earnings, net of the related tax effects.

In some cases, taxes on the revaluation reserves of certain subsidiary and associated companies are recognized only on realization of this reserve since the revaluations occurred prior to the publication of CVM Resolution No. 183/95. Deferred tax charges on these reserves total R$ 8,553 (2001 - R$ 9,272).

d) Reserve for retention of profits

This reserve is supported by the investment program, in conformity with article 196 of Brazilian corporate law (see item f) below), and includes both a portion of net income and realization of revaluation reserves.

e) Reserve for unrealized profits

This reserve is established in conformity with article 197 of Brazilian corporate law; realization normally occurs on receipt of dividends or sale or write-off of investments.

f) Dividends and appropriation of net income

Stockholders are entitled by the bylaws of a minimum annual dividend of 50% of adjusted net income, calculated under the terms of Brazilian corporate law.

Proposed dividends as stated in the Company’s financial statements, subject to approval at the Stockholders’ Annual Meeting, are calculated under the terms of Brazilian corporate law, particularly articles 196 and 197, as follows:

	2002
Net income	222,300
Legal reserve	(11,115)
Retention
of profits - article 196	(105,592)
Compulsory
dividends	105,593
Reserve for
unrealized profits	(40,593)
Interim dividends (R$ 0.367112 and R$ 0.403823 per thousand common and preferred shares, respectively)	(20,000)
Proposed dividends payable (R$ 0.629268 and R$ 0.692195 per thousand common and preferred shares, respectively)	(45,000)
	-

Management proposes to transfer the remaining balance of net income to the “reserve for retention of profits” account, in order to support the business expansion project established in its investment plan.

1. NONOPERATING EXPENSES (CONSOLIDATED)

Composed substantially by recognition of the reserve for loss, in the amount R$ 40,551, on the investment of Oxiteno Nordeste S.A. - Indústria e Comércio in Nordeste Química S.A. - Norquisa, which reflects the estimated market value of the assets as well as the results on sales of permanent assets, especially on sales of cylinders and of the indirect participation in Fábrica Carioca de Catalisadores S.A. - FCC.

1. RISKS AND FINANCIAL INSTRUMENTS (CONSOLIDATED)

The main risk factors to which the Company and its subsidiaries are exposed reflect strategic-operating and economic-financial aspects. Strategic-operating risks (such as demand behavior, competition, technological innovation, and relevant structural changes in industry, among others) are addressed by the Company management model. Economic-financial risks mainly reflect customer default, macroeconomic variables such as exchange and interest rates, as well as the characteristics of the financial instruments used by the Company. These risks are managed through control policies, specific strategies and the determination of limits, as follows:

• Customer default - These risks are managed by specific policies for accepting customers and credit analysis and are mitigated by diversification of sales. Oxiteno S.A. - Indústria e Comércio and Oxiteno Nordeste S.A. - Indústria e Comércio recorded allowances of R$ 6,833 (2001 - R$ 9,383) for potential losses on receivables. Additionally, Companhia Ultragaz S.A., in response to a market situation of sharply increased prices and reduced volumes, implemented stricter monitoring of its customers’ situations, resulting in the recording of an allowance for potential loss of R$ 8,251 on the realization of its accounts receivable.
• Interest rates - The Company and its subsidiaries adopt conservative policies to obtain and invest funds and to minimize the cost of capital. The short-term investments of the Company and its subsidiaries are comprised substantially of transactions linked to interbank deposit (CDI) rates, as described in Note 5. A portion of the financial assets is destined for foreign currency hedges, as mentioned below. Funds obtained originate from BNDES financing and from abroad, as mentioned in Note 14.
• Exchange rate - Basically, the subsidiaries use foreign currency hedge instruments available in the financial market to cover their liabilities in foreign currency. Given the volatility of exchange rates during the year 2001, the Company fully hedged its foreign currency exposure. Such hedges have amounts, periods and indexes equivalent to bank loans in foreign currency, to which they are linked. The following summary shows the assets and liabilities in foreign currency, translated into Brazilian reais at December 31, 2002:

	Book value
Assets:
Currency
hedge transactions and interest	381,048
Foreign cash and cash equivalents	127,318
Receivables
from foreign customers, net of advances
on export contracts	37,972
Total	546,338
Liabilities:
Foreign
currency financing	348,922
Import
transactions payables	12,521
Total	361,443
Net asset
position	184,895

Given the characteristics of the financial instruments described above, the managements of the Company and its subsidiaries believe that market values approximate the book values of these financial instruments. The exchange variation on cash and cash investments of the subsidiary Oxiteno Overseas Co. was recorded as financial income in the statement of income for the year ended 2002, in the amount of R$ 44,087 (2001 - R$ 12,814). The Company and its subsidiaries recorded in income the net effect of the devaluation of the Brazilian real in 2001, and did not use the deferral option provided for by CVM Resolution No. 404/01. Except for the interest held by Oxiteno S.A. - Indústria e Comércio in Petroquímica União S.A., mentioned below, the other financial instruments recorded in the financial statements as of December 31, 2002 were determined in conformity with the accounting criteria and practices described in these notes.

The investment in Petroquímica União S.A., representing 1.95% of total capital, was acquired at a privatization auction held in 1994, and is presented in the financial statements at cost restated through December 31, 1995, amounting to R$ 18,694. The market value of this investment at December 31, 2002, based on the quotation of the investee’s shares on the Stock Exchange, was approximately R$ 12,558.

Management believes that no valuation reserve is necessary for this investment, in view of its clear strategic and permanent nature, since the investee is an important supplier of raw material to Oxiteno S.A. - Indústria e Comércio. Also, the acquisition of this investment was made using long-term financing from BNDES, at favorable interest rates compared to those prevailing in the market.

1. INSURANCE COVERAGE FOR SUBSIDIARIES

The subsidiaries maintain insurance coverage in amounts considered sufficient to cover potential losses from damage to assets, as well as for civil responsibility for involuntary, material and/or physical damages caused to third parties arising from their industrial and commercial operations, considering the nature of their activities and the advice of their insurance consultants.

1. RESPONSIBILITIES FOR SURETIES AND GUARANTEES

The Company is responsible for sureties and guarantees offered on behalf of its subsidiaries, amounting to R$ 359,604.

1. CONTINGENCIES AND COMMITMENTS (CONSOLIDATED)

The Petrochemical Industry Labor Union, which represents the employees of Oxiteno Nordeste S.A. - Indústria e Comércio, filed class action suits against the subsidiary in 1991, demanding compliance with the adjustments established in collective labor agreements or other specific indexes, in lieu of the salary policies effectively followed. Based on the opinion of its legal counsel, who analyzed the final decision of the Federal Supreme Court on the class action suit in which such Union is a plaintiff, as well as the status of the specific suit against the subsidiary, its management does not believe that it is necessary to record a reserve at December 31, 2002.

The Company and its subsidiaries have other ongoing administrative and judicial proceedings; legal counsel consider the risks to be low or remote and, therefore, no reserves for potential losses on these cases have been recorded.

Oxiteno Nordeste S.A. - Indústria e Comércio has a supply contract with Braskem S.A. (present name of Copene Petroquímica do Nordeste S.A.) effective through 2012, which establishes a minimum annual ethylene consumption level. The minimum purchase commitment and the actual demand for the years ended December 31, 2002 and 2001, expressed in tons of ethylene, are summarized below. If the minimum purchase commitment is not met, the subsidiary is liable for a fine of 40% of the current ethylene price for the quantity not purchased.

| | Minimum
purchase commitment | Actual
demand — 2002 | 2001 |
| --- | --- | --- | --- |
| In
tons | 137,900 | 164,534 | 184,772 |

1. STOCK OPTION PLAN

At the Annual and Extraordinary Meetings held on April 27, 2001, the stockholders approved a Stock Option Plan, to be offered to managers and employees in positions of responsibility in the Company and its subsidiaries. No options had been granted under this plan as of December 31, 2002.

1. EMPLOYEE BENEFITS AND PRIVATE PENSION PLAN (CONSOLIDATED)

The Company and its subsidiaries offer benefits to their employees, such as life insurance, health care and a pension plan. In addition, they offer loans for the acquisition of vehicles and personal computers to employees of certain subsidiary companies. These benefits are recorded on the accrual basis and terminate at the end of the employment relationship.

In August 2001, the Company and its subsidiaries began to offer their employees a defined contribution pension plan. Adoption of this plan, managed by Ultraprev - Associação de Previdência Complementar, was approved at the Board of Directors’ Meeting on February 15, 2001. Under the terms of the plan, the basic contribution of each participating employee is defined annually by the participant between 0% and 11% of his/her salary. The sponsoring companies provide a matching contribution in an identical amount as the basic contribution. As participants retire, they may opt to receive monthly: (i) a percentage varying between 0.5% and 1.0% of the fund accumulated in their name at Ultraprev, or (ii) a fixed monthly amount which will extinguish the fund accumulated in the participant’s name during a period of between 5 and 25 years. As such, neither the Company nor its subsidiaries assume responsibility for guaranteeing the levels of amounts or periods of receipt for the participants that retire under this plan. In 2002, the Company and its subsidiaries contributed R$ 2,925 to Ultraprev, which was charged to income for the year. The total number of employee participants as of December 31, 2002 was 4,948, with no participants retired to date.

Additionally, Ultraprev has 2 active participants and 33 former employees receiving defined benefits according to the policies of a previous plan. Considering that the fair market value for the plan’s assets significantly exceeds the present actuarial value of the accumulated benefit obligations, the sponsoring entities have not been contributing to the plan for these 35 participants. On the other hand, the sponsoring entities do not believe that it would be possible to recover any amounts from the plan, based on legislation applicable to closed private pension entities. As a result, no asset or liability relating to these participants has been recorded in the financial statements of the sponsoring companies.

Item 3.

NOTICE TO SHAREHOLDERS

ULTRAPAR PARTICIPAÇÕES S.A.

CNPJ nº 33.256.439/0001-39

A PUBLICLY HELD COMPANY

COMPLIMENTARY DIVIDENDS

The Board of Directors of Ultrapar Participações S.A., at its meeting held on February 12, 2003, decided to distribute complimentary dividends, payable from net income for the fiscal year ending December 31, 2002, for the amount of R$ 45,000,036.78 (forty five million and thirty six reais and seventy eight centavos), to be paid from March 6, 2003 without remuneration or monetary restatement.

The holders of common and preferred shares will receive the dividend of R$ 0.629268 per thousand shares and R$ 0.692195 per thousand shares, respectively.

The record date for dividend rights will be February 24, 2003. The shares will be traded an ex-dividend basis on the São Paulo Stock Exchange as from February 25, 2003 and on the New York Stock Exchange as from February 20, 2003.

São Paulo, February 12, 2003.

Fabio Schvartsman Investor Relations Director