##### Table of Contents

As filed with the Securities and Exchange Commission on June 30, 2010 

 

 

 

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**
 
**

**FORM 20-F**

 

**
 
**

**(Mark one)**

**OR**

 

**For the fiscal year ended December 31, 2009**

**OR**

 

**OR**

 

**For the transition period from              to            **

**Commission file number: 001-14950**

 

**
 
**

**ULTRAPAR PARTICIPAÇÕES S.A.**

**(Exact name of Registrant as specified in its charter)**

 

**
 
**

**ULTRAPAR HOLDINGS INC.**

**(Translation of Registrant’s name into English)**

 

**
 
**

**The Federative Republic of Brazil**

**(Jurisdiction of incorporation or organization)**

**Av. Brigadeiro Luis Antônio, 1343, 9o Andar**

**São Paulo, SP, Brazil 01317-910**

**Telephone: 55 11 3177 6695**

**(Address of principal executive offices)**

 

**
 
**

**Securitiesregistered or to be registered pursuant to Section 12(b) of the Act:**

 

**Securities registered or to be registered pursuant to Section 12(g) of the Act:**

**None**

**Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:**

**None**

Indicate the numberof outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report. 

The number of outstanding shares of each class as of December 31, 2009. 

 

Indicate by check markif the registrant is a well-known seasoned issuer, as defined in Rule 405 of the SecuritiesAct.    x  Yes     ̈  No 

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or15(d) of the Securities Exchange Act of 1934.     ̈  Yes    x  No 

Note—Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities ExchangeAct of 1934 from their obligations under those Sections. 

Indicate by check mark whether the registrant (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.    x  Yes     ̈  No 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post suchfiles).     ̈  Yes    x  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of“accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one): 

Large AcceleratedFiler  x    Accelerated Filer   ̈    Non-acceleratedFiler   ̈

Indicate by check mark which basis of accounting the registrant has usedto prepare the financial statements included in this filing: 

U.S. GAAP   ̈    International Financial Reporting Standards as 

issued by the International Accounting StandardsBoard   ̈    other  x

Indicate by check mark which financial statement item the registrant has elected to follow: 

Item 17   ̈    Item 18  x

If this is an annual report, indicate by check mark whether the registrant is a shellcompany (as defined in Rule 12b-2 of the Exchange Act).     ̈  Yes    x  No 

 

 

 

Table of Contents
**TABLE OF CONTENTS**

 
      **Page**
PART I 
  6
ITEM 1.
  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS  6
ITEM 2.
  OFFER STATISTICS AND EXPECTED TIME TABLE  6
ITEM 3.
  KEY INFORMATION  6
ITEM 4.
  INFORMATION ON THE COMPANY  21
ITEM 4A.
  UNRESOLVED STAFF COMMENTS  73
ITEM 5.
  OPERATING AND FINANCIAL REVIEW AND PROSPECTS  73
ITEM 6.
  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES  96
ITEM 7.
  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS  105
ITEM 8.
  FINANCIAL INFORMATION  107
ITEM 9.
  THE OFFER AND LISTING  115
ITEM 10.
  ADDITIONAL INFORMATION  116
ITEM 11.
  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  127
ITEM 12.
  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES  134
PART II 
  135
ITEM 13.
  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES  135
ITEM 14
  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS  136
ITEM 15.
  CONTROLS AND PROCEDURES  136
ITEM 16.
  [Reserved]  138
ITEM 16A.
  AUDIT COMMITTEE FINANCIAL EXPERT  138
ITEM 16B.
  CODE OF ETHICS  138
ITEM 16C.
  PRINCIPAL ACCOUNTANT FEES AND SERVICES  139
ITEM 16D.
  EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES  139
ITEM 16E.
  PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS  140
ITEM 16G.
  CORPORATE GOVERNANCE  140
PART III 
  142
ITEM 17.
  FINANCIAL STATEMENTS  142
ITEM 18.
  FINANCIAL STATEMENTS  142
ITEM 19.
  EXHIBITS  142
GLOSSARY OF PETROCHEMICAL INDUSTRY TERMS
  144
FINANCIAL STATEMENTS
  F-1
 

i 

Table of Contents
**INTRODUCTION**

With a track record of over 70 years, Ultrapar is one of the largest business groups in Brazil, with leading positions in the markets inwhich it operates: fuel distribution through Ultragaz and Ipiranga, chemicals through Oxiteno, and storage for liquid bulk through Ultracargo. Ultragaz is the leader in LPG distribution in Brazil with a 24% market share as of December 31, 2009and one of the largest independent LPG distributors in the world in terms of volume sold. We deliver LPG to an estimated 10 million households using our own vehicle fleet and our network of more than 4,000 independent retailers. Ipiranga is thesecond largest fuel distributor in Brazil, with a network of approximately 5.5 thousand service stations and a 21% market share as of December 31, 2009. Oxiteno is one of the largest producers of ethylene oxide and its main derivatives inLatin America, a major producer of specialty chemicals and the sole producer of fatty-alcohols and related by-products in Latin America. Oxiteno has nine industrial units in Brazil, Mexico and Venezuela and commercial offices in the United States,Argentina, and Belgium. Ultracargo is the largest provider of storage for liquid bulk in Brazil, with seven terminals and storage capacity of approximately 625,000 cubic meters. 

References in this annual report to “Ultrapar”, “we”, “our”, “us” and “the company” areto Ultrapar Participações S.A. and its consolidated subsidiaries (unless the context otherwise requires). In addition, all references in this annual report to: 

 
 • 
“ABTL” are to *Associação Brasileira de Terminais de Líquidos*, the Brazilian Association of Liquid Bulk TerminalOperators”; 

 
 • 
“ABIQUIM” are to *Associação Brasileira da Indústria Química*, the Brazilian Association of ChemicalIndustries; 

 
 • 
“ADRs” are to the American Depositary Receipts evidencing our ADSs; 

 
 • 
“ADSs” are to our American Depositary Shares, each representing one share of our non-voting preferred stock; 

 
 • 
“am/pm” are to Ipiranga’s convenience stores franchise network that operate under the brand am/pm, managed by am/pm ComestíveisLtda. and Conveniência Ipiranga Norte Ltda.; 

 
 • 
“ANFAVEA” are to *Associação Nacional dos Fabricantes de Veículos Automotores*, the Brazilian Association ofVehicle Producers; 

 
 • 
“ANP” are to the *Agência Nacional de Petróleo, Gás Natural e Biocombustíveis*, the Brazilian oil, naturalgas and biofuels regulatory agency; 

 
 • 
“BM&FBovespa” are to the BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros, the São Paulo Stock Exchange;

 
 • 
“Braskem” are to Braskem S.A.; 

 
 • 
“Brazilian Central Bank,” “BACEN,” “Central Bank of Brazil” or “Central Bank” are to the *Banco Central doBrasil*, the Brazilian central bank; 

 
 • 
“Brazilian Corporate Law” are to Law No. 6,404 enacted in December 1976, as amended by Law No. 9,457 enacted in May 1997, by LawNo. 10,303 enacted in October 2001, and by Law No. 11,638 enacted in December 2007 and by Law No. 11,941/09 (former Provisional Measure 449/08) enacted in May 2009; 

 
 • 
“Brazilian government” are to the federal government of the Federative Republic of Brazil; 

 
 • 
“CBPI” are to Companhia Brasileira de Petróleo Ipiranga*,*a company that was merged into IPP in November 2009;

 
 • 
“CBL” are to Chevron Brasil Ltda. (currently IPP), a former subsidiary of Chevron that, together with Galena, held Texaco;

 
 • 
“Chevron” are to Chevron Latin America Marketing LLC and Chevron Amazonas LLC; 

 
 • 
“Commission” or “SEC” are to the U.S. Securities and Exchange Commission; 

 
 • 
“CVM” are to *Comissão de Valores Mobiliários*, the Brazilian securities authority; 

 
 • 
“Deposit Agreement” are to the Deposit Agreement between Ultrapar Participações S.A. and the Bank of New York Mellon , datedJuly 12, 1999, and all subsequent amendments thereto; 

 
 • 
“DPPI” are to Distribuidora de Produtos de Petróleo Ipiranga S.A., a company that was merged into CBPI in December 2008;

 
 • 
“EMCA” are to Empresa Carioca de Produtos Químicos S.A.; 

 
 • 
“Galena” are to Sociedade Anônima de Óleo Galena Signal, a former subsidiary of Chevron that, together with CBL, held Texaco;

 
 • 
“Ipiranga” are to Ultrapar’s subsidiaries that operate in the fuel distribution business and related activities;

 

1 

Table of Contents • 
“Ipiranga Group” are to RPR, DPPI, CBPI, Ipiranga Química S.A. (“IQ”), Ipiranga Petroquímica S.A. (“IPQ”),Companhia Petroquímica do Sul S.A. (“Copesul”) and their respective subsidiaries prior to their sale to Ultrapar, Petrobras and Braskem; 

 
 • 
“Ipiranga Group SPA” are to the Share Purchase Agreement entered into and among Ultrapar, with the consent of Petrobras and Braskem, and theKey Shareholders on March 18, 2007; 

 
 • 
“Ipiranga Group Transaction Agreements” are to agreements related to the acquisition of Ipiranga Group by Ultrapar, Petrobras and Braskem.Each Ipiranga Group Transaction Agreement is incorporated by reference to Exhibits 2.6, 2.7, 2.8, 4.4, 4.5, 4.6 and 4.7 to Form 20-F of Ultrapar Participações S.A. filed on June 7, 2007; 

 
 • 
“IPP” are to Ipiranga Produtos de Petróleo S.A., formerly CBL; 

 
 • 
“Key Shareholders” are to Ipiranga Group’s former controlling shareholders prior to the closing of the Ipiranga Group SPA;

 
 • 
“Latin America” are to countries in America other than the United States and Canada; 

 
 • 
“LPG” are to liquefied petroleum gas; 

 
 • 
“NYSE” are to the New York Stock Exchange; 

 
 • 
“Northern Distribution Business” are to former CBPI’s fuel and lubricant distribution businesses located in the North, Northeast andMid-West regions of Brazil; 

 
 • 
“Oil Refining Operations” are to the oil refining operations of RPR; 

 
 • 
“Oxiteno” are to Oxiteno S.A. – Indústria e Comércio, our wholly owned subsidiary and its subsidiaries that produceethylene oxide and its principal derivatives, fatty alcohols and other specialty chemicals; 

 
 • 
“Petrobras” are to Petróleo Brasileiro S.A.; 

 
 • 
“Petrochemical Business” are to IQ, IPQ and IPQ’s stake in Copesul; 

 
 • 
“Quattor” are to Quattor Participações S.A, acquired by Braskem in May 2010; 

 
 • 
“Quattor Química” are to Quattor Química S.A.*,*formerly Petroquímica União S.A., a subsidiary of Quattor;

 
 • 
“*real*”, “*reais*” or “R$” are to Brazilian *reais*, the official currency of Brazil;

 
 • 
“RPR” are to Refinaria de Petróleo Riograndense S.A. (formerly Refinaria de Petróleo Ipiranga S.A.), a company engaged in oilrefining; 

 
 • 
“SBP” are to Sociedade Brasileira de Participações Ltda., a company that was merged into IPP in August 2009;

 
 • 
“Securities Act” are to the U.S. Securities Act of 1933, as amended; 

 
 • 
“Share Exchange” are to the exchanges of RPR’s, DPPI’s and CBPI’s preferred shares and any remaining common shares forUltrapar’s preferred shares in connection with the acquisition of Ipiranga Group; 

 
 • 
“Sindigás” are to the Brazilian Association of LPG Distributors; 

 
 • 
“Sindicom” are to the Brazilian Association of Fuel Distributors; 

 
 • 
“Southern Distribution Business” are to Ipiranga Group’s fuel and lubricant distribution businesses located in the South and Southeastregions of Brazil and their related activities; 

 
 • 
“Texaco” are to the Texaco-branded fuels marketing business in Brazil, previously carried-out by CBL and Galena;

 
 • 
“TRR” are to Retail Wholesale Resellers, specialized resellers in the fuel distribution; 

 
 • 
“Ultra S.A.” are to Ultra S.A. Participações, the controlling shareholder of Ultrapar; 

 
 • 
“Ultracargo” are to Ultracargo Operações Logísticas e Participações Ltda., our wholly owned subsidiary andits subsidiaries that provide road transportation, storage, handling and logistics services for liquid bulk cargo; 

 
 • 
“Ultragaz” are to Ultrapar’s subsidiaries that operate in the distribution of LPG; 

 
 • 
“União Terminais” are to União Terminais e Armazéns Gerais Ltda., a company that was merged into Terminal Químicode Aratu S.A. – Tequimar in December 2008; 

 
 • 
“União/Vopak” are to União/Vopak Armazéns Gerais Ltda., a company in which União Terminais had a 50% stake;

 
 • 
“Unipar” are to União das Indústrias Petroquímicas S.A.; and 

 
 • 
“US$”, “dollars” or “U.S. dollars” are to the United States dollar. 

 

2 

Table of Contents
The “Glossary of Petrochemical Industry Terms” that begins on page 143provides definitions of certain technical terms used in this annual report. Unless otherwise specified, data related to (i) the Brazilian petrochemical industry included in this annual report were obtained from ABIQUIM, (ii) the LPGbusiness were obtained from Sindigás and ANP, (iii) the fuel distribution business were obtained from Sindicom and ANP, and (iv) the liquid bulk storage industry were obtained from ABTL. 

 

3 

Table of Contents
**PRESENTATION OF FINANCIAL INFORMATION**

Our audited consolidated financial statements include our consolidated balance sheets as of December 31, 2009 and 2008 and ourconsolidated statements of income, cash flows, changes in shareholders’ equity and value added for the years ended December 31, 2009, 2008 and 2007, as well as notes thereto. We have not included our consolidated balance sheets as ofDecember 31, 2007, 2006 and 2005 and our consolidated statements of income, cash flows, changes in shareholders’ equity and value added including the notes thereto for the years ended in December 31, 2006 and 2005 in this annualreport. The financial information presented in this annual report should be read in conjunction with our consolidated financial statements. 

In April 2007, Ultrapar acquired the Southern Distribution Business and EMCA and a one-third stake in RPR as a result of the acquisitionof the Ipiranga Group. See “Item 4.A. Information on the Company — History and Development of the Company — Description of the Acquisition of Ipiranga Group”. Accordingly, the financial information of the Southern DistributionBusiness and EMCA have been fully consolidated into Ultrapar’s financial statements and the financial information of RPR has been proportionally consolidated into Ultrapar’s financial statements since April 1, 2007. 

In addition, between April 1, 2007 and January 1, 2008, EMCA’s financial information was consolidated into Ipiranga’sfinancial statements. Since January 1, 2008, EMCA’s financial information has been consolidated into Oxiteno, to reflect the effective management responsibility for the business. The financial information of Oxiteno and Ipiranga in thisannual report prior to January 1, 2008 reflects the current consolidation retrospectively, which differs from those reported in the Annual Report Form 20-F for the year ended December 2007, filed with the SEC on June 7, 2007. 

In June 2008, Ultrapar executed a sale and purchase agreement for the acquisition of 100% of the shares of União Terminais, acompany engaged in the storage and handling of liquid bulk. In connection with this agreement, Ultrapar acquired port terminals in Santos and Rio de Janeiro in October 2008 and a 50% stake in União/Vopak, a company that owns a port terminalin Paranaguá (in the state of Paraná), in November 2008. The results of operations of the acquired businesses were consolidated into Ultrapar’s financial statements after their respective closing dates. Ultrapar’s financialstatements as of and for the periods prior to such dates do not reflect any financial information of the acquired businesses. See “Item 4.A. Information on the Company — History and Development of the Company — Description of theAcquisition of União Terminais”. 

In August 2008, Ultrapar executed a sale and purchase agreement for theacquisition of Texaco’s fuel distribution business in Brazil, which was closed on March 31, 2009. The results of operations of the businesses acquired were consolidated into Ultrapar’s financial statements as from April 1, 2009.Ultrapar’s financial statements as of and for the periods prior to April 1, 2009 do not reflect any financial information of the acquired businesses. See “Item 4.A. Information on the Company — History and Development of theCompany —  Description of the Acquisition of Texaco”. 

On June 25, 2010 the exchange rate for *reais*into U.S. dollars was R$1.778 to US$1.00, based on the commercial selling rate as reported by the Central Bank. The commercial selling rate was R$1.741 to US$1.00 on December 31, 2009, and R$2.337 to US$1.00 on December 31, 2008. The*real*/dollar exchange rate fluctuates widely, and the current commercial selling rate may not be indicative of future exchange rates. See “Item 3.A. Key Information — Selected Consolidated Financial Data — Exchange Rates”for information regarding exchange rates for the Brazilian currency. Solely for the convenience of the reader, we have translated some amounts included in “Item 3.A. Key Information — Selected Consolidated Financial Information” andelsewhere in this annual report from *reais* into U.S. dollars using the commercial selling rate as reported by the Central Bank at December 31, 2009 of R$1.741 to US$1.00. These translations should not be considered representations thatany such amounts have been, could have been or could be converted into U.S. dollars at that or at any other exchange rate. Such translations should not be construed as representations that the *real* amounts represent or have been or could beconverted into U.S. dollars as of that or any other date. 

Segment information for our businesses is presented on anunconsolidated basis. Consequently, intercompany transactions have not been eliminated in segment information, and such information may differ from consolidated financial information provided elsewhere in this annual report. In addition, unless thecontext requires otherwise, segment information with respect to Ipiranga includes financial and operating information of Ipiranga before its acquisition by us. See “Item 7.B. Major Shareholders and Related Party Transactions — RelatedParty Transactions” for more information on intercompany transactions. 

Certain figures included in this annual reporthave been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them. 

 

4 

Table of Contents
**Brazilian GAAP and U.S. GAAP**

Our consolidated financial statements were prepared in accordance with accounting policies derived from the Brazilian Corporate Law andCVM (“Brazilian GAAP”), including, with respect to our financial statements as of and for the years ended December 31, 2009 and 2008, Laws 11,638/07 and 11,941/09 (former Provisional Measure 449/08), which amended the accountingpolicies adopted in Brazil and were enacted on December 28, 2007 and May 27, 2009, respectively. Our financial information under Brazilian GAAP as of and for any period prior to the year ended December 31, 2008 does not reflect anychanges resulting from Laws 11,638/07 and 11,941/09, as allowed by CVM. See Note 2 to our consolidated financial statements. 

Brazilian GAAP differs in certain material respects from the accounting principles generally accepted in the United States of America(“U.S. GAAP”). See Note 24 to our consolidated financial statements for a summary of the differences between Brazilian GAAP and U.S. GAAP, and a reconciliation of shareholders’ equity as of December 31, 2009 and 2008 and netincome for the years ended December 31, 2009, 2008 and 2007 from Brazilian GAAP to U.S. GAAP. During the year ended December 31, 2009, the Accounting Pronouncement Committee (*Comitê de Pronunciamentos Contábeis*), orCPC, issued and the CVM approved a series of accounting standards for the convergence of the Brazilian GAAP to the International Financial Reporting Standards (“IFRS”). These new standards apply as of and for the year endedDecember 31, 2010 and to the comparative financial information for the year ended December 31, 2009. 

**Market share and economicinformation**

All market share information, unless otherwise specified, related to (i) the LPG business was obtainedfrom Sindigás and ANP, (ii) the fuel distribution business was obtained from Sindicom and ANP, and (iii) the liquid bulk storage industry was obtained from ABTL. Unless otherwise specified, all macroeconomic data are obtained fromthe *Instituto Brasileiro de Geografia e Estatística*—IBGE, *Fundação Getúlio Vargas*—FGV and the Central Bank. Although we do not have any reason to believe any of this information is inaccurate inany material respect, we have not independently verified any such information. 

**FORWARD-LOOKING STATEMENTS**

This annual report contains estimates and forward-looking statements subject to risks and uncertainties, including our plans, forecastsand expectations regarding future events, strategies and projections. Forward-looking statements speak only as of the date they were made, and we undertake no obligation to update publicly or revise any forward-looking statements after we distributethis annual report because of new information, future events and other factors. Words such as “believe”, “expect”, “may”, “will”, “plan”, “strategy”, “prospect”,“foresee”, “estimate”, “project”, “anticipate”, “can”, “intend” and similar words are intended to identify forward-looking statements. We have made forward-looking statements with respectto, among other things, our: 

 
 • 
strategy for marketing and operational expansion; 

 
 • 
capital expenditures forecasts; and 

 
 • 
development of additional sources of revenue. 

The risks and uncertainties described above include, but are not limited to: 

 
 • 
general economic and business conditions, including the price of crude oil and other commodities, refining margins and prevailing foreign exchangerates; 

 
 • 
competition; 

 
 • 
ability to produce and deliver products on a timely basis; 

 
 • 
ability to anticipate trends in the LPG, fuels, chemicals and logistics industries, including changes in capacity and industry price movements;

 
 • 
changes in official regulations; 

 
 • 
receipt of official authorizations and licenses; 

 
 • 
political, economic and social events in Brazil; 

 
 • 
access to sources of financing and our level of indebtedness; 

 
 • 
ability to integrate acquisitions; 

 
 • 
regulatory issues relating to acquisitions; 

 
 • 
instability and volatility in the financial markets; 

 
 • 
availability of tax benefits; and 

 

5 

Table of Contents • 
other factors contained in this 20-F under “Item 3.D. Key Information—Risk Factors”. 

Forward-looking statements involve risks and uncertainties and are not a guaranty of future results. In light of the risks anduncertainties described above, the forward-looking events and circumstances discussed in this annual report might not occur and our future results may differ materially from those expressed in or suggested by these forward-looking statements.

**PART I**

 
**ITEM 1.****IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS**
Not applicable. 

 
**ITEM 2.****OFFER STATISTICS AND EXPECTED TIMETABLE**
Not applicable. 

 
**ITEM 3.****KEY INFORMATION**
**A. SelectedConsolidated Financial Data**

We have selected the following consolidated financial data from our audited consolidatedfinancial statements, for the periods indicated. You should read our selected consolidated financial data in conjunction with “Item 5. Operating and Financial Review and Prospects” and our consolidated financial statements and notesthereto included in this annual report. 

Our consolidated financial statements are prepared in *reais* in accordance withBrazilian GAAP, which differ in certain material respects from the U.S. GAAP. See Note 24 to our consolidated financial statements for a summary of the differences between Brazilian GAAP and U.S. GAAP. 

The following table presents our selected financial information at the dates and for each of the periods indicated in Brazilian GAAP and,where indicated, in U.S. GAAP. The consolidated balance sheet information as of December 31, 2009 and 2008 and the consolidated statements of income, cash flows, changes in shareholders’ equity and value added for the years endedDecember 31, 2009, 2008 and 2007 are derived from our audited consolidated financial statements included in this annual report. The consolidated balance sheet information as of December 31, 2007, 2006 and 2005 and the consolidatedstatements of income, cash flows, changes in financial position and changes in shareholders’ equity for the years ended December 31, 2006 and 2005 are derived from our audited consolidated financial statements that are not included in thisannual report. 

Our consolidated financial statements were prepared in accordance with accounting policies derived fromBrazilian GAAP, including, with respect to our financial statements as of and for the years ended December 31, 2009 and 2008, Laws 11,638/07 and 11,941/09 (former Provisional Measure 449/08), which amended the accounting policies adopted inBrazil and were enacted on December 28, 2007 and May 27, 2009, respectively. Our financial information under Brazilian GAAP as of and for any period prior to the year ended December 31, 2008 does not reflect any changes resulting fromLaws 11,638/07 and 11,941/09, as allowed by CVM. See Note 2 to our consolidated financial statements. 

 
  **Year Ended December 31**   **2009(1)**  **2009**  **2008**  **2007**  **2006**  **2005**   **(in millions, except per share data)** 
**Income Statements:**
 **US$****  ** **R$****  ** **R$****  ** **R$****  ** **R$****  ** **R$****  **
Gross revenue from sales and services
 21,738.7   37,851.4   29,536.4   20,841.1   5,229.9   5,158.0  
Deductions
 (996.7)  (1,735.5)  (1,268.4)  (919.8)  (435.8)  (464.2) 
**Net revenue from sales and services**
 **20,742.0****  ** **36,115.9****  ** **28,268.0****  ** **19,921.3****  ** **4,794.1****  ** **4,693.8****  **
Cost of products and services sold
 (19,189.1)  (33,412.0)  (26,152.3)  (18,224.2)  (3,859.9)  (3,783.4)                   
**Gross income**
 **1,552.9****  ** **2,703.9****  ** **2,115.7****  ** **1,697.1****  ** **934.2****  ** **910.4****  **
Operating (expenses) revenues
      
Selling, general and administrative expenses
 (1,038.5)  (1,808.2)  (1,424.4)  (1,223.3)  (605.1)  (551.7) 
Other net operating income
 11.1   19.3   22.1   12.3   1.3   (0.4)                   
Total operating expenses
 (1,027.4)  (1,788.9)  (1,402.3)  (1,211.0)  (603.8)  (552.1) 
**Operating income before financial income and other income**
 **525.5****  ** **915.0****  ** **713.4****  ** **486.1****  ** **330.4****  ** **358.3****  **
 

6 

Table of Contents  **Year Ended December 31**   **2009(1)**  **2009**  **2008**  **2007**  **2006**  **2005**   **(in millions, except per share data)** 
Net financial income (expense)
 (159.8)  (278.2)  (168.8)  (119.4)  30.6   (27.3) 
Other income
 11.7   20.3   11.2   8.8   (18.5)  (1.8)                   
Income before income and social contribution taxes, equity in income of affiliates and employees statutoryinterest
 377.4   657.1   555.8   375.5   342.5   329.2  
Income tax and social contribution
 (107.5)  (187.0)  (151.6)  (85.9)  (56.1)  (28.8) 
Income before equity in income of affiliates and employees statutory interest
 269.9   470.1   404.2   289.6   286.4   300.4  
Equity in income of affiliates
 0.1   0.2   —     0.6   1.0   1.6  
Employees statutory interest
 —     —     (9.4)  (7.3)  —     —    
**Net income for the year**
 **270.2****  ** **470.3****  ** **394.8****  ** **282.9****  ** **287.4****  ** **302.0****  **
**Net income attributable to Ultrapar**
 **268.1****  ** **466.7****  ** **390.3****  ** **181.9****  ** **282.1****  ** **299.2****  **
Net income attributable to non-controlling interests(2)
 2.1   3.6   4.5   101.0   5.3   2.8  
Earnings per share(3)
 1.97   3.43   2.87   2.19   3.55   3.73                    
Dividends per common share(4)
 1.19   2.08   1.78   1.78   1.78   1.94                    
Dividends per preferred share(4)
 1.19   2.08   1.78   1.78   1.78   1.94                    
**Other financial data**
      
Cash flows from operating activities(5)
 792.9   1,380.6   373.5   468.2   384.3   410.0  
Cash flows from investing activities(5)
 (826.9)  (1,439.8)  (1,299.0)  (999.4)  (915.5)  (676.3) 
Cash flows from financing activities(5)
 (388.6)  676.7   1,330.4   1,061.7   (183.6)  762.0  
Depreciation and amortization(6)
 252.3   439.3   375.5   300.6   185.8   187.7  
**Adjusted EBITDA(7)**
 **777.8****  ** **1,354.4****  ** **1,079.4****  ** **779.4****  ** **516.2****  ** **546.0****  **
Net cash (debt)(8)
 (1,182.9)  (2,059.6)  (1,538.2)  (1,434.1)  120.7   191.2  
Number of common shares (in thousands)(9)
 49,429.9   49,429.9   49,429.9   49,429.9   49,429.9   49,429.9  
Number of preferred shares (in thousands)(9)
 86,666.1   86,666.1   86,666.1   86,666.1   31,895.5   31,895.5                    
**U.S. GAAP:**
      
Net income attributable to Ultrapar(11)
 222.8   387.9   415.2   217.5   280.5   288.9  
Basic and diluted earnings per common share(10)(11)
 1.67   2.90   3.09   2.55   3.46   3.57  
Basic and diluted earnings per preferred share(10)(11)
 1.67   2.90   3.09   2.55   3.46   3.57  
Depreciation and amortization
 242.1   421.6   288.6   220.7   143.9   137.4                    
 
(1)The figures in *reais* for December 31, 2009 have been converted into dollars using the exchange rate of US$1.00 = R$1.741, which is the commercial ratereported by the Central Bank on this date. This information is presented solely for the convenience of the reader. You should not interpret the currency conversions in this annual report as a statement that the amounts in *reais* currentlyrepresent such values in U.S. dollars. Additionally, you should not interpret such conversions as statements that the amounts in *reais* have been, could have been or could be converted into U.S. dollars at this or any other foreign exchangerates. See “Item 3.A. Key Information — Selected Consolidated Financial Data — Exchange Rates”. (2)Non-controlling interests of Ultrapar’s results amounted to R$101 million in 2007, reflecting the stake held by minority shareholders of RPR, DPPI and CBPI priorto the Share Exchange. As of September 30, 2007, Ultrapar held, directly and indirectly, 11.52% of CBPI’s total shareholder capital, 32.45% of DPPI’s total shareholder capital and 30.02% of RPR’s total shareholder capital. Afterthe Share Exchange in December 2007, the correspondent portion of the minority interest in these companies was reduced and, since October 2007, Ultrapar consolidates 100% of the results of the businesses acquired. (3)Net earnings per share are calculated based on the net income attributable to Ultrapar and the weighted average shares outstanding during each of the periods presented.Under Brazilian GAAP, net earnings per share are not retroactively adjusted for the stock dividend but are retroactively adjusted for the reverse stock split described under “Item 4.A. Information on the Company — History and Developmentof the Company”. (4)See “Item 8.A. Financial Information — Consolidated Statements and Other Financial Information — Dividend and Distribution Policy” for informationregarding declaration and payment of dividends. Dividends per share do not reflect any adjustments related to the stock dividend described under “Item 4.A. Information on the Company — History and Development of the Company”.
 

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Table of Contents(5)Cash flow information has been derived from our consolidated financial statements prepared in accordance with Brazilian GAAP. See our consolidated financial statements.(6)Represents depreciation and amortization expenses included in cost of products and services sold and in selling, general and administrative expenses.(7)The purpose of including adjusted EBITDA information is to provide a measure for assessing our ability to generate cash from our operations. Adjusted EBITDA is equal tonet income before non-controlling interests, equity in income of affiliates, income tax and social contribution, other income, net financial income (expense) and depreciation and amortization. In managing our business we rely on adjusted EBITDA as ameans for assessing our operating performance and a portion of our employee profit sharing plan is linked to adjusted EBITDA performance. Because adjusted EBITDA excludes equity in income of affiliates, income tax and social contribution, otherincome, net financial income (expense), depreciation and amortization, it provides an indicator of general economic performance that is not affected by debt restructurings, fluctuations in interest rates or effective tax rates, or levels of otherincome, depreciation and amortization. Accordingly, we believe that this type of measurement is useful for comparing general operating performance from period to period and making certain related management decisions. We also calculate adjustedEBITDA in connection with covenants related to some of our financing. We believe that adjusted EBITDA enhances the understanding of our financial performance and our ability to satisfy principal and interest obligations with respect to ourindebtedness as well as to fund capital expenditures and working capital requirements. Adjusted EBITDA is not a measure of financial performance under U.S. GAAP or Brazilian GAAP. Adjusted EBITDA should not be considered in isolation, or as asubstitute for net income, as a measure of operating performance, as a substitute for cash flows from operations or as a measure of liquidity. Adjusted EBITDA has material limitations that impair its value as a measure of a company’s overallprofitability since it does not address certain ongoing costs of our business that could significantly affect profitability such as financial expenses and income taxes, depreciation or capital expenditures and associated charges.
The tables below provide a reconciliation of our net income to our adjusted EBITDA, of our operating incomebefore financial income and other income to our adjusted EBITDA and of the operating income before financial income and other income of Ultragaz, Ipiranga, Oxiteno and Ultracargo and their respective Adjusted EBITDA for the years endedDecember 31, 2009, 2008, 2007, 2006 and 2005: 

 
   **Ultrapar**    **Reconciliation of net income to adjusted EBITDA**    **Year ended December 31,**    **2009**  **2008**  **2007**  **2006**  **2005**    **(in millions of*****reais*****)** 
Net income for the year
  470.3   394.8   282.9   287.4   302.0  
Equity in income of affiliates
  (0.2)  —     (0.6)  (1.0)  (1.6) 
Income tax and social contribution
  187.0   151.6   85.9   56.1   28.8  
Other income
  (20.3)  (11.2)  (8.8)  18.5   1.8  
Net financial income (expense)
  278.2   168.8   119.4   (30.6)  27.3  
Depreciation and amortization
  439.3   375.5   300.6   185.8   187.7                  
**Adjusted EBITDA**
  **1,354.4****  ** **1,079.4****  ** **779.4****  ** **516.2****  ** **546.0****  **                
 

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Table of Contents   **Ultrapar**   **Reconciliation of operating income before**