##### Table of Contents

**As filed with the Securities and Exchange Commission on April 30, 2013**

 

 

 

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**
 
**

**FORM 20-F**

 

**
 
**

(Mark one) 

**OR**

 

**For the fiscal year ended December 31, 2012**

**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)**

 

**
 
**

**ULTRAPARHOLDINGS INC.**

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

 

**
 
**

**The Federative Republic of Brazil**

**(Jurisdiction of incorporation or organization)**

**Av. Brigadeiro LuisAntônio, 1343, 9o Andar**

**São Paulo, SP, Brazil 01317-910**

**Telephone: 55 11 3177 6695**

**(Address of principal executive offices)**

 

**
 
**

**Securities registered or tobe 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 areporting obligation pursuant to Section 15(d) of the Act:**

**None**

Indicate the number of 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, 2012. 

 

Indicate by check mark if 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 or 15(d) of the Securities Exchange Act of1934.     ̈  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 Exchange Act of 1934 from their obligations under thoseSections. 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) ofthe 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 filing requirements for the past 90days.    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 File required to be submitted and posted pursuant to Rule405 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” inRule 12b-2 of the Exchange Act. (Check one): 

Large AcceleratedFiler  x    Accelerated Filer   ̈    Non-accelerated Filer   ̈

Indicate by check mark which basis of accounting the registrant has used to prepare the financialstatements included in this filing: 

 

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 shell company (as defined in Rule 12b-2 of the ExchangeAct).     ̈  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   24  
ITEM 4A.
  UNRESOLVED STAFF COMMENTS   84  
ITEM 5.
  OPERATING AND FINANCIAL REVIEW AND PROSPECTS   84  
ITEM 6.
  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES   111  
ITEM 7.
  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS   122  
ITEM 8.
  FINANCIAL INFORMATION   124  
ITEM 9.
  THE OFFER AND LISTING   132  
ITEM 10.
  ADDITIONAL INFORMATION   133  
ITEM 11.
  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   147  
ITEM 12.
  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES   154  
PART II
   156  
ITEM 13.
  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES   156  
ITEM 14
  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS   156  
ITEM 15.
  CONTROLS AND PROCEDURES   156  
ITEM 16.
  [Reserved]   158  
ITEM 16A.
  AUDIT COMMITTEE FINANCIAL EXPERT   158  
ITEM 16B.
  CODE OF ETHICS   158  
ITEM 16C.
  PRINCIPAL ACCOUNTANT FEES AND SERVICES   158  
ITEM 16D.
  EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES   159  
ITEM 16E.
  PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS   160  
ITEM 16F.
  CHANGE IN REGISTRANT’S INDEPENDENT PUBLIC ACCOUNTING FIRM   160  
ITEM 16G.
  CORPORATE GOVERNANCE   160  
ITEM 16H.
  MINE SAFETY DISCLOSURE   163  
PART III
   163  
ITEM 17.
  FINANCIAL STATEMENTS   163  
ITEM 18.
  FINANCIAL STATEMENTS   163  
ITEM 19.
  EXHIBITS   163  
FINANCIAL STATEMENTS
   F-1  
 
i 

Table of Contents
**INTRODUCTION**

Ultrapar is a Brazilian company with 75 years of history, with leading positions in the markets in which it operates: fuel distribution through Ultragaz and Ipiranga, production of specialty chemicalsthrough Oxiteno and liquid bulk storage services through Ultracargo. Ultragaz is the leader in liquid petroleum gas distribution in Brazil with a 24% market share in 2012 and one of the largest independent liquid petroleum gas distributors in theworld in terms of volume sold. We deliver liquid petroleum gas to an estimated 11 million households using our own vehicle fleet and our network of approximately 4,700 independent retailers in the bottled segment and to approximately44 thousand customers in the bulk segment. Ipiranga is the second largest fuel distributor in Brazil, with a network of 6,460 service stations and a 22% market share in 2012. Oxiteno is one of the largest producers of ethylene oxide and itsmain derivatives in Latin America, a major producer of specialty chemicals and the sole producer of fatty-alcohols and related by-products in Latin America. Oxiteno has eleven industrial units in Brazil, Mexico, the United States, Uruguay andVenezuela and commercial offices in Argentina, Belgium, China and Colombia. Ultracargo is the largest provider of storage for liquid bulk in Brazil, with eight terminals and a storage capacity of 765 thousand cubic meters as ofDecember 31, 2012. 

References in this annual report to “Ultrapar”, “we”, “our”,“us” and “the company” are to 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 (i) one common share, with respect to any period on or afterAugust 17, 2011; or (ii) one non-voting preferred share, with respect to any period prior to August 17, 2011; 

 
 • 
“AGT” are to AGT Armazéns Gerais e Transporte Ltda.; 

 
 • 
“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.; 

 
 • 
“American Chemical” are to American Chemical I.C.S.A., a company that was acquired by Oxiteno in November 2012; 

 
 • 
“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; 

 
 • 
“Arch Andina” are to Arch Química Andina, C.A., a company that was acquired by Oxiteno in September 2007;

 
 • 
“Aqces” are to Aqces Logística Internacional Ltda.; 

 
 • 
“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. and Quattor Participações S.A. (“Quattor”), currently Braskem Qpar S.A., acquired byBraskem in April, 2010; 

 
 • 
“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, by Law No. 11,638 enacted in December 2007, by Law No. 11,941/09 enacted in May 2009, and by Law No. 12,431 enacted in June 2011; 

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

 
 • 
“Canamex” are to the chemical business formerly owned by the Berci Group, a company that was acquired by Oxiteno in December 2003;

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

 
1 

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

 
 • 
“CDI” are to the Brazilian money market interest rate *(Certificados de Depósito Interbancário)*;

 
 • 
“Central Bank” are to the *Banco Central do Brasil*, the Brazilian central bank; 

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

 
 • 
“ConectCar” are to ConectCar Soluções de Mobilidade Eletrônica S.A., a company constituted with Odebrecht TransPortParticipações in November 2012; 

 
 • 
“Conversion” are to the conversion of all preferred shares issued by the company into common shares, at a ratio of 1 (one) preferred sharefor 1 (one) common share, as approved at the extraordinary general shareholders’ meeting and the special preferred shareholders’ meeting, both held on June 28, 2011; 

 
 • 
“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, datedSeptember 16, 1999, and all subsequent amendments thereto; 

 
 • 
“DNP” are to Distribuidora Nacional de Petróleo Ltda., a company that was acquired by Ipiranga in October 2010;

 
 • 
“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;

 
 • 
“IFRS” are to International Financial Reporting Standards, as issued by the International Accounting Standards Board (“IASB”);

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

 
 • 
“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 2.5, 2.6, 2.7, 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; 

 
 • 
“LPG International” are to LPG International Inc.; 

 
 • 
“Maxfácil” are to Maxfácil Participações S.A.; 

 
 • 
“New Ultra S.A. Shareholders’ Agreement” has the meaning given in “Item 4.A. Information on the Company — History andDevelopment of the Company”, “Item 7.A. Major Shareholders and Related Party Transactions — Major Shareholders” and “Item 10. Additional Information — Material Contracts”; 

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

 
2 

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

 
 • 
“*Novo Mercado*” are to *Novo Mercado* listing segment of BM&FBOVESPA; 

 
 • 
“Oleoquímica” are to Oleoquímica Indústria e Comércio de Produtos Químicos Ltda.;

 
 • 
“Oxiteno Andina” are to the business of Oxiteno carried out in Venezuela; 

 
 • 
“Oxiteno Mexico” are to the business of Oxiteno carried out in Mexico; 

 
 • 
“Oxiteno Nordeste” are to Oxiteno Nordeste S.A. Indústria e Comércio; 

 
 • 
“Oxiteno Overseas” are to Oxiteno Overseas Co.; 

 
 • 
“Oxiteno USA” are to Oxiteno USA LLC, the business of Oxiteno carried out in the United States; 

 
 • 
“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 Petrobras – Petróleo Brasileiro S.A.; 

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

 
 • 
“Petrolog” are to Petrolog Serviços e Armazéns Gerais Ltda.; 

 
 • 
“PFIC” are to Passive Foreign Investment Company; 

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

 
 • 
“Repsol” are to Repsol Gás Brasil S.A., a company that was acquired by Ultragaz in October 2011; 

 
 • 
“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;

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

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

 
 • 
“Serma” are to *Associação dos Usuários de Equipamentos de Processamento de Dados e Serviços Correlatos*,our wholly owned company, responsible for providing IT services to Ultrapar; 

 
 • 
“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; 

 
 • 
“STF” are to Supremo Tribunal Federal, the Brazilian Supreme Federal Court; 

 
 • 
“Temmar” are to Terminal Marítimo do Maranhão S.A., a company that was acquired by Ultracargo in August 2012;

 
 • 
“Tequimar” are to Terminal Químico de Aratu S.A., Ultrapar’s subsidiary that operates in the liquid bulk storage segment;

 
 • 
“Texaco” are to the Texaco-branded fuels marketing business in Brazil, previously carried-out by CBL and Galena, companies that were acquiredby Ipiranga in March 2009; 

 
 • 
“Tropical” are to Tropical Transportes Ipiranga Ltda.; 

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

 
 • 
“Ultra S.A.” are to Ultra S.A. Participações, a holding company owned by members of the founding family and senior managementof Ultrapar. Ultra S.A. is the largest shareholder of Ultrapar, holding 24% of its total capital stock. Prior to the Conversion, Ultra S.A. owned 66% of the voting capital of Ultrapar; 

 
3 

Table of Contents • 
“Ultracargo” are to Ultracargo Operações Logísticas e Participações Ltda., our wholly owned subsidiary andits subsidiaries that provide 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 Tequimar in December2008; 

 
 • 
“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.; 

 
 • 
“U.S. Holder” has the meaning given in “Item 10. Additional Information – E. Taxation – Material U.S. Federal Income TaxConsiderations”; and 

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

Unless otherwise specified, data related to (i) the Brazilian petrochemical industry included in this annual report were obtainedfrom ABIQUIM, (ii) the LPG business 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. 

**PRESENTATION OF FINANCIAL INFORMATION**

Our audited consolidated financial statements included in Item 18 were prepared in accordance with IFRS and include our consolidated balance sheets as of December 31, 2012 and 2011, andstatements of income, comprehensive income, changes in shareholders’ equity and cash flows for the years ended December 31, 2012, 2011 and 2010, as well as notes thereto. 

The company first adopted IFRS for the consolidated financial statements for the year ended December 31, 2010. The transition datechosen by the company for the application of IFRS was January 1, 2009, the date on which the company prepared its opening balance sheet in accordance with IFRS. As permitted by the applicable rules to first-time adopters of IFRS, we have notincluded in the selected financial data in this annual report our consolidated balance sheets and statements of income as of and for the year ended December 31, 2008. The financial information presented in this annual report should be read inconjunction with our consolidated financial statements. 

In August 2008, Ultrapar executed a sale and purchase agreement forthe acquisition 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 ofthe Company — Description of the Acquisition of Texaco.” 

On April 19, 2013 the exchange rate for *Reais*into U.S. dollars was R$2.009 to US$1.00, based on the commercial selling rate as reported by the Central Bank. The commercial selling rate was R$2.044 to US$1.00 on December 31, 2012, and R$1.876 to US$1.00 on December 31, 2011. 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, 2012 of R$2.044 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. See “Item 7.B.Major Shareholders and Related Party Transactions — Related Party Transactions” for more information on intercompany transactions. 

 
4 

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Certain figures included in this annual report have 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. 

**Market shareand economic information**

All market share information, unless otherwise specified, related to (i) the LPG businesswas obtained from 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 areobtained from the *Instituto Brasileiro de Geografia e Estatística*—IBGE, *Fundação Getulio Vargas*—FGV and the Central Bank. Although we do not have any reason to believe any of this information isinaccurate in any material respect, we have not independently verified any such information. 

**FORWARD-LOOKING STATEMENTS**

This annual report contains forward-looking statements within the meaning of Section 27A of the Securities Actsubject to risks and uncertainties, including our estimates, plans, forecasts and expectations regarding future events, strategies and projections. Forward-looking statements speak only as of the date they were made, and we undertake no obligationto update publicly or revise any forward-looking statements after we distribute this 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-lookingstatements. We have made forward-looking statements with respect to, 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: 

 
 • 
the effect of the global economic situation on the Brazilian and Latin American economic condition; 

 
 • 
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 

 
 • 
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.

 
5 

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**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 with IFRS. The consolidated balance sheet information as of December 31, 2012 and 2011, and the consolidated statements ofincome, statements of comprehensive income, cash flows and changes in shareholders’ equity for the years ended December 31, 2012, 2011 and 2010 are derived from our audited consolidated financial statements included in this annual report.The following table presents our selected financial information in accordance with IFRS at the dates and for each of the periods indicated. 

 
   **Year Ended December 31,**    **IFRS**    **2012(1)**  **2012**  **2011**  **2010**  **2009**    **(in millions, except per share data)** 
**Income Statements:**
  ** ****US$****  ** ** ****R$****  ** ** ****R$****  ** ** ****R$****  ** ** ****R$****  **
**Net revenue from sales and services**
  ** ****26,385.8****  ** ** ****53,919.4****  ** ** ****48,661.3****  ** ** ****42,481.7****  ** ** ****36,097.1****  **
Cost of products and services sold
   (24,368.6)   (49,797.2)   (45,139.6)   (39,322.9)   (33,443.6)   
 

 
  
 

 
  
 

 
  
 

 
  
 

 
 
**Gross profit**
  ** ****2,017.2****  ** ** ****4,122.2****  ** ** ****3,521.7****  ** ** ****3,158.8****  ** ** ****2,653.5****  **
**Operating income (expenses)**
      
Selling and marketing
   (773.9)   (1,581.5)   (1,349.9)   (1,164.4)   (1,020.3) 
General and administrative
   (447.0)   (913.4)   (793.2)   (759.7)   (751.4) 
Income from disposal of assets
   1.8    3.7    21.4    79.0    18.9  
Other operating income, net
   38.1    77.9    52.0    10.8    19.3  
**Operating income before financial income (expenses) and share of profit of associates**
  ** ****836.2****  ** ** ****1,708.9****  ** ** ****1,452.0****  ** ** ****1,324.5****  ** ** ****920.0****  **
Financial income
   106.7    218.1    322.4    267.0    176.2  
Financial expenses
   (235.2)   (480.6)   (618.9)   (531.1)   (467.7) 
Share of profit of associates
   0.1    0.2    0.2    0.0    0.2    
 

 
  
 

 
  
 

 
  
 

 
  
 

 
 
**Income before income and social contribution taxes**
  ** ****707.8****  ** ** ****1,446.6****  ** ** ****1,155.7****  ** ** ****1,060.4****  ** ** ****628.8****  **
**Income and social contribution taxes**
      
Current
   (178.6)   (365.0)   (243.2)   (191.2)   (182.2) 
Deferred
   (52.5)   (107.2)   (85.9)   (134.7)   (26.4) 
Taxes incentives — SUDENE
   21.3    43.4    28.2    30.7    20.6    
 

 
  
 

 
  
 

 
  
 

 
  
 

 
   ** ****(209.8****) ** ** ****(428.8****) ** ** ****(300.9****) ** ** ****(295.2****) ** ** ****(188.0****) **  
 

 
  
 

 
  
 

 
  
 

 
  
 

 
 
**Net income for the year**
  ** ****498.0****  ** ** ****1,017.9****  ** ** ****854.8****  ** ** ****765.2****  ** ** ****440.7****  **
Net income for the year attributable to:
        
 

 
  
 

 
  
 

 
  
 

 
  
 

 
 
Shareholders of the company
   494.6    1,011.0    848.8    765.3    437.1    
 

 
  
 

 
  
 

 
  
 

 
  
 

 
 
Non-controlling interests in subsidiaries
   3.4    6.9    6.0    (0.1)   3.6    
 

 
  
 

 
  
 

 
  
 

 
  
 

 
 
Earnings per share(2)
      
Basic
   0.93    1.89    1.59    1.43    0.82    
 

 
  
 

 
  
 

 
  
 

 
  
 

 
 
Diluted
   0.93    1.89    1.58    1.43    0.82    
 

 
  
 

 
  
 

 
  
 

 
  
 

 
 
Dividends per common shares(3)
   0.57    1.17    0.98    0.80    0.52    
 

 
  
 

 
  
 

 
  
 

 
  
 

 
 
**Other financial data**
      
Cash flows from operating activities(4)
   1,198.9    2,449.9    1,710.1    1,508.2    1,742.1  
Cash flows from investing activities(4)
   (769.1)   (1,571.7)   (1,457.9)   (903.6)   (1,609.0) 
Cash flows from financing activities(4)
   (302.7)   (618.6)   (1,104.4)   153.6    484.5  
Depreciation and amortization(5)
   340.8    696.3    580.1    530.8    529.3  
**EBITDA(6)**
  ** ****1,177.1****  ** ** ****2,405.4****  ** ** ****2,032.3****  ** ** ****1,855.3****  ** ** ****1,449.6****  **
Net cash (debt)(7)
   (1,505.7)   (3,077.0)   (2,779.3)   (2,175.7)   (2,131.8) 
Number of common shares (in thousands)(8)
   544,384.0    544,384.0    544,384.0    197,719.6    197,719.6  
Number of preferred shares (in thousands)(8)
   —      —      —      346,664.4    346,664.4    
 

 
  
 

 
  
 

 
  
 

 
  
 

 
 
 
6 

Table of Contents
 
(1)The figures in *Reais* for December 31, 2012 have been converted into dollars using the exchange rate of US$1.00 = R$2.044, 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)Earnings per share are calculated based on the net income attributable to Ultrapar’s shareholders and the weighted average shares outstanding during each of theyears presented. Earnings per share have been retroactively adjusted for the 1:4 stock split approved in the extraordinary general shareholders’ meeting held on February 10, 2011 described under “Item 4.A. Information on the Company— History and Development of the Company.” (3)See “Item 8.A. Financial Information — Consolidated Statements and Other Financial Information — Dividends and Distribution Policy” for informationregarding declaration and payment of dividends. Dividends per share were retroactively adjusted for the 1:4 stock split approved in the extraordinary general shareholders’ meeting held on February 10, 2011 described under “Item 4.A.Information on the Company — History and Development of the Company.” (4)Cash flows information has been derived from our consolidated financial statements prepared in accordance with IFRS. See our consolidated financial statements.(5)Represents depreciation and amortization expenses included in cost of products and services sold and in selling, marketing, general and administrative expenses.
 
7 

Table of Contents(6)EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) presented in this document represents the net income before (i) income and socialcontribution taxes, (ii) net financial expense (income) and (iii) depreciation and amortization, presented in accordance with CVM Instruction 527/12. The purpose of including EBITDA information is to provide a measure used by themanagement for internal assessment of our operating results, and because a portion of our employee profit sharing plan is linked directly or indirectly to EBITDA performance. It is also a financial indicator widely used by investors and analysts tomeasure our ability to generate cash from operations and our operating performance. We also calculate EBITDA in connection with covenants related to some of our financing, as described in Note 14 to our consolidated financial statements. We believeEBITDA allows a better understanding not only of our financial performance but also of our capacity of meeting the payment of interest and principal from our debt and of obtaining resources for our investments and working capital. Our definition ofEBITDA may differ from, and, therefore, may not be comparable with similarly titled measures used by other companies, thereby limiting its usefulness as a comparative measure. Because EBITDA excludes net financial expense (income), income and socialcontribution taxes and depreciation and amortization, it provides an indicator of general economic performance that is not affected by debt restructurings, fluctuations in interest rates or changes in income and social contribution taxes,depreciation and amortization. EBITDA is not a measure of financial performance under accounting practices adopted in Brazil or IFRS, and it should not be considered in isolation, or as a substitute for net income, as a measure of operatingperformance, as a substitute for cash flows from operations or as a measure of liquidity. EBITDA has material limitations that impair its value as a measure of a company’s overall profitability since it does not address certain ongoing costs ofour business that could significantly affect profitability such as financial expense (income) and income and social contribution taxes, depreciation and amortization. The tables below provide a reconciliation of net income to EBITDA of Ultrapar anda reconciliation of operating income to EBITDA of Ultrapar, Ultragaz, Ipiranga, Oxiteno and Ultracargo for the years ended December 31, 2012, 2011, 2010 and 2009: 
 
   **Ultrapar**    **Reconciliation of net income to EBITDA**    **Year ended December 31**    **2012**   **2011**   **2010**   **2009**    **(in millions of Reais)** 
Net income for the year
   1,017.9     854.8     765.2     440.7  
Income and social contribution taxes
   428.8     300.9     295.2     188.0  
Net financial expense (income)
   262.5     296.5     264.1     291.5  
Depreciation and amortization
   696.3     580.1     530.8     529.3    
 

 
   
 

 
   
 

 
   
 

 
 
**EBITDA**
  ** ****2,405.4****  **  ** ****2,032.3****  **  ** ****1,855.3****  **  ** ****1,449.6****  **  
 

 
   
 

 
   
 

 
   
 

 
    **Ultrapar**    **Reconciliation of operating income to EBITDA**    **Year ended December 31**    **2012**   **2011**   **2010**   **2009**    **(in millions of Reais)** 
Operating income
   1,708.9     1,452.0     1,324.5     920.0  
Depreciation and amortization
   696.3     580.1     530.8     529.3  
Share of profit of associates
   0.2     0.2     0.0     0.2    
 

 
   
 

 
   
 

 
   
 

 
 
**EBITDA**
  ** ****2,405.4****  **  ** ****2,032.3****  **  ** ****1,855.3****  **  ** ****1,449.6****  **  
 

 
   
 

 
   
 

 
   
 

 
 
 
8 

Table of Contents   **Ultragaz**    **Reconciliation of operating income to EBITDA**    **Year ended December 31**    **2012**  **2011**  **2010**  **2009**    **(in millions of Reais)** 
Operating income
   111.8    162.7    181.2    171.3  
Depreciation and amortization
   131.4    117.5    118.8    113.6  
Share of profit of associates
   0.0    0.0    (0.0)   0.0    
 

 
  
 

 
  
 

 
  
 

 
 
**EBITDA**
  ** ****243.2****  ** ** ****280.1****  ** ** ****300.0****  ** ** ****284.9****  **  
 

 
  
 

 
  
 

 
  
 

 
    **Oxiteno**    **Reconciliation of operating income to EBITDA**    **Year ended December 31**    **2012**  **2011**  **2010**  **2009**    **(in millions of Reais)** 
Operating income
   226.6    154.8    114.1    68.5  
Depreciation and amortization
   123.1    106.3    104.1    102.6  
Share of profit of associates
   (0.1)   0.0    (0.0)   0.3    
 

 
  
 

 
  
 

 
  
 

 
 
**EBITDA**
  ** ****349.6****  ** ** ****261.1****  ** ** ****218.3****  ** ** ****171.4****  **  
 

 
  
 

 
  
 

 
  
 

 
    **Ultracargo**    **Reconciliation of operating income to EBITDA**    **Year ended December 31**    **2012**  **2011**  **2010**  **2009**    **(in millions of Reais)** 
Operating income
   106.1    88.9    115.8    58.2  
Depreciation and amortization
   38.9    29.3    28.9    52.8  
Share of profit of associates
   —      (0.0)   —      (0.0)   
 

 
  
 

 
  
 

 
  
 

 
 
**EBITDA**
  ** ****144.9****  ** ** ****118.2****  ** ** ****144.7****  ** ** ****111.1****  **  
 

 
  
 

 
  
 

 
  
 

 
    **Ipiranga**    **Reconciliation of operating income to EBITDA**    **Year ended December 31**    **2012**  **2011**  **2010**  **2009**    **(in millions of Reais)** 
Operating income
   1,249.0    1,037.1    879.5    586.6  
Depreciation and amortization
   390.7    316.2    269.1    251.4  
Share of profit of associates
   0.3    0.2    0.0    (0.0)   
 

 
  
 

 
  
 

 
  
 

 
 
**EBITDA**
  ** ****1,640.1****  ** ** ****1,353.5****  ** ** ****1,148.6****  ** ** ****837.9****  **  
 

 
  
 

 
  
 

 
  
 

 
 
 
9 

Table of Contents
The reconciliation of EBITDA to cash flows from operating activities for the years endingDecember 31, 2012, 2011, 2010 and 2009 is presented in the table below. 

 
   **2012**  **2011**  **2010**  **2009**    **(in millions of*****Reais*****)** 
**Net income for the year**
  ** ****1,017.9****  ** ** ****854.8****  ** ** ****765.2****  ** ** ****440.7****  **
**Adjustments to reconcile net income to EBITDA:**
     
Depreciation and amortization
   696.3    580.1    530.8    529.3  
Net financial expense (income)
   262.5    296.5    264.1    291.5  
Income and social contribution taxes
   428.8    300.9    295.2    188.0    
 

 
  
 

 
  
 

 
  
 

 
 
**EBITDA**
  ** ****2,405.4****  ** ** ****2,032.3****  ** ** ****1,855.3****  ** ** ****1,449.6****  **  
 

 
  
 

 
  
 

 
  
 

 
 
**Adjustments to reconcile EBITDA to cash provided by operating activities:**
     
Financial result that affected the cash flow from operating activities
   351.4    439.5    150.5    (180.8) 
Current income and social contribution taxes
   (365.0)   (243.2)   (191.2)   (182.2) 
Tax incentives (income and social contribution taxes)
   43.4    28.2    30.7    20.6  
PIS and COFINS credits on depreciation
   11.7    10.2    9.6    10.2  
Assets retirement expense
   (2.5)   (3.0)   (5.8)   (3.3) 
Others
   (1.5)   (19.0)   (78.1)   (17.6) 
**(Increase) decrease in current assets**
     
Trade receivables
   (245.1)   (303.1)   (94.7)   92.0  
Inventories
   46.0    (164.3)   (131.3)   380.9  
Recoverable taxes
   (5.8)   (115.1)   (34.3)   52.0  
Other receivables
   1.3    (1.6)   16.9    69.7  
Prepaid expenses
   (10.5)   (5.0)   (8.3)   8.4  
**Increase (decrease) in current liabilities**
     
Trade payables
   204.5    155.6    21.1    47.4  
Salaries and related charges
   (17.5)   38.6    54.4    (2.7) 
Taxes payable
   (2.8)   (48.3)   36.5    19.6  
Income and social contribution taxes
   205.8    93.3    94.8    42.6  
Post-employment benefits
   (1.7)   1.9    (0.6)   3.2  
Provision for tax, civil and labor risks
   8.7    1.7    16.6    (9.5) 
Other payables
   (10.8)   27.6    (19.9)   (7.3) 
Deferred revenue
   (1.7)   5.2    2.8    10.2  
**(Increase) decrease in non-current assets**
     
Trade receivables
   (19.6)   (21.0)   (11.2)   (23.4) 
Recoverable taxes
   32.3    (26.4)   (1.0)   (8.5) 
Escrow deposits
   (64.6)   (88.6)   (72.3)   (44.2) 
Other receivables
   (9.6)   (0.6)   0.8    1.8  
Prepaid expenses
   1.6    (28.6)   6.7    (10.9) 
**Increase (decrease) in non-current liabilities**
     
Provision for tax, civil and labor risks
   38.7    41.7    (107.3)   60.7  
Post-employment benefits
   23.9    3.6    3.1    (2.0) 
Other payables
   1.7    27.5    24.1    8.6  
Deferred revenue
   1.1    2.8    0.6    (1.6) 
Income and social contribution taxes paid
   (169.1)   (131.5)   (60.5)   (41.3)   
 

 
  
 

 
  
 

 
  
 

 
 
**Net cash provided by operating activities**
   2,449.9    1,710.1    1,508.2    1,742.1    
 

 
  
 

 
  
 

 
  
 

 
 
 
(7)
Net cash (debt) is included in this document in order to provide the reader with information relating to our overall indebtedness and financial

 
10 

Table of Contents position. Net cash (debt) is not a measure of financial performance or liquidity under IFRS. In managing our businesses we rely on net cash (debt) as a means of assessing our financial condition.We believe that this type of measurement is useful for comparing our financial condition from period to period and making related management decisions. Net cash (debt) is also used in connection with covenants related to some of our financings. Thetable below provides a reconciliation of our consolidated balance sheet data to the net cash (debt) positions shown in the table, as of December 31, 2012, 2011, 2010 and 2009: 
 
   **Ultrapar**    **Reconciliation of consolidated balance sheet to net cash (debt)**    **Year ended December 31**    **IFRS**    **2012**  **2011**  **2010**  **2009**    **(in millions of*****Reais*****)** 
Cash and cash equivalents
   2,050.1    1,791.0    2,642.4    1,887.5  
Current financial investments
   962.1    916.9    558.2    440.3  
Non-current financial investments
   149.5    74.4    19.8    7.2  
Current loans and finance leases
   (1,575.4)   (1,302.5)   (817.8)   (1,142.8) 
Current debentures
   (65.7)   (1,002.5)   (2.7)   (1.4) 
Non-current loans and finance leases
   (3,194.0)   (3,237.5)   (3,382.1)   (2,136.0) 
Non-current debentures
   (1,403.6)   (19.1)   (1,193.4)   (1,186.5)   
 

 
  
 

 
  
 

 
  
 

 
 
Net cash (debt) position
   (3,077.0)   (2,779.3)   (2,175.7)   (2,131.8)   
 

 
  
 

 
  
 

 
  
 

 
 
 
(8)The number of shares corresponds to the totality of shares issued by the company, including those held in treasury. The number of shares for all periods presented wasretroactively adjusted for the 1:4 stock split approved in the extraordinary general shareholders’ meeting held on February 10, 2011 described under “Item 4.A. Information on the Company — History and Development of theCompany.” 
 
   **Year Ended December 31,**    **IFRS**    **2012(1)**   **2012**   **2011**   **2010**   **2009** 
**Consolidated Balance Sheet Data:**
  ** ****US$****  **  ** ****R$****  **  ** ****R$****  **  ** ****R$****  **  ** ****R$****  **
**Current assets**
          
Cash and cash equivalents
   1,003.2     2,050.1     1,791.0     2,642.4     1,887.5  
Financial investments
   470.8     962.1     916.9     558.2     440.3  
Trade receivables
   1,128.8     2,306.8     2,026.4     1,715.7     1,618.3  
Inventories
   636.1     1,299.8     1,310.1     1,133.5     942.2  
Recoverable taxes
   236.5     483.2     470.5     354.3     320.2  
Other receivables
   10.1     20.5     20.3     18.1     35.3  
Prepaid expenses
   26.4     54.0     40.2     35.1     26.0    
 

 
   
 

 
   
 

 
   
 

 
   
 

 
 
**Total current assets**
  ** ****3,511.9****  **  ** ****7,176.6****  **  ** ****6,575.5****  **  ** ****6,457.4****  **  ** ****5,269.7****  **  
 

 
   
 

 
   
 

 
   
 

 
   
 

 
 
**Non-current assets**
          
Financial investments
   73.2     149.5     74.4     19.8     7.2  
Trade receivables
   67.2     137.4     117.7     96.7     86.4  
Related parties
   5.3     10.9     10.1     10.1     7.6  
Deferred income and social contribution taxes
   227.6     465.2     510.1     564.4     697.9  
Recoverable taxes
   24.0     49.1     81.4     54.8     53.2  
Escrow deposits
   261.3     534.0     469.4     380.7     308.5  
Other receivables
   5.4     10.9     1.3     0.7     1.5  
Prepaid expenses
   39.6     80.9     69.2     40.6     47.7    
 

 
   
 

 
   
 

 
   
 

 
   
 

 
    703.6     1,437.8     1,333.7     1,167.8     1,210.0    
 

 
   
 

 
   
 

 
   
 

 
   
 

 
 
Investments
          
In associates
   6.2     12.7     12.6     12.5     12.5  
Other
   1.4     2.8     2.8     2.8     2.3  
Property, plants and equipment
   2,300.7     4,701.4     4,278.9     4,003.7     3,784.5  
Intangible assets
   963.4     1,968.6     1,539.2     1,345.6     1,203.7    
 

 
   
 

 
   
 

 
   
 

 
   
 

 
    3,271.7     6,685.5     5,833.5     5,364.6     5,002.9    
 

 
   
 

 
   
 

 
   
 

 
   
 

 
 
**Total non-current assets**
  ** ****3,975.3****  **  ** ****8,123.4****  **  ** ****7,167.2****  **  ** ****6,532.4****  **  ** ****6,212.9****  **  
 

 
   
 

 
   
 

 
   
 

 
   
 

 
 
**TOTAL ASSETS**
  ** ****7,487.2****  **  ** ****15,299.9****  **  ** ****13,742.7****  **  ** ****12,989.8****  **  ** ****11,482.6****  **  
 

 
   
 

 
   
 

 
   
 

 
   
 

 
 
 
11 

Table of Contents  **Year Ended December 31,**   **IFRS**   **2012(1)**  **2012**  **2011**  **2010**  **2009** 
**Consolidated Balance Sheet Data:**
 ** ****US$****  ** ** ****R$****  ** ** ****R$****  ** ** ****R$****  ** ** ****R$****  **
**Current liabilities**
     
Loans
  770.0    1,573.5    1,300.3    813.5    1,132.1  
Debentures
  32.1    65.7    1,002.5    2.7    1.4  
Finance leases
  1.0    2.0    2.2    4.3    10.7  
Trade payables
  642.2    1,312.3    1,075.1    941.2    891.9  
Salaries and related charges
  124.6    254.6    268.3    228.2    176.5  
Taxes payable
  52.8    107.8    109.7    157.9    121.5  
Dividends payable
  108.8    222.4    163.8    192.5    113.9  
Income and social contribution taxes payable
  36.9    75.4    38.6    76.8    19.0  
Post-employment benefits
  5.7    11.6    13.3    11.3    12.0  
Provision for assets retirement obligation
  1.8    3.7    7.3    5.6    3.8  
Provision for tax, civil and labor risks
  24.5    50.1    41.3    39.6    23.0  
Other payables
  25.9    52.5    55.6    29.7    48.7  
Deferred revenues
  8.8    18.1    19.7    14.6    11.8   
 

 
  
 

 
  
 

 
  
 

 
  
 

 
 
**Total current liabilities**
 ** ****1,835.1****  ** ** ****3,749.5****  ** ** ****4,097.8****  ** ** ****2,517.9****  ** ** ****2,566.2****  ** 
 

 
  
 

 
  
 

 
  
 

 
  
 

 
 
**Non-current liabilities**
     
Loans
  1,543.0    3,153.1    3,196.1    3,380.9    2,131.4  
Debentures
  686.8    1,403.6    19.1    1,193.4    1,186.5  
Finance leases
  20.0    40.9    41.4    1.3    4.6  
Related companies
  1.9    3.9    4.0    4.0    4.1  
Deferred income and social contribution taxes
  41.6    84.9    38.0    26.7    13.5  
Provision for tax, civil and labor risks
  269.9    551.6    512.8    470.5    540.2  
Post-employment benefits
  59.0    120.6    96.8    93.2    90.1  
Provision for assets retirement obligation
  32.6    66.7    60.3    58.3    60.8  
Other payables
  48.7    99.6    90.6    62.2    34.7  
Deferred revenues
  4.8    9.9    8.7    5.9    5.3   
 

 
  
 

 
  
 

 
  
 

 
  
 

 
 
**Total non-current liabilities**
 ** ****2,708.3****  ** ** ****5,534.7****  ** ** ****4,067.7****  ** ** ****5,296.3****  ** ** ****4,071.2****  ** 
 

 
  
 

 
  
 

 
  
 

 
  
 

 
 
**TOTAL LIABILITIES**
 ** ****4,543.4****  ** ** ****9,284.2****  ** ** ****8,165.5****  ** ** ****7,814.3****  ** ** ****6,637.4****  ** 
 

 
  
 

 
  
 

 
  
 

 
  
 

 
 
**Shareholder’s equity**
     
Share capital
  1,809.0    3,696.8    3,696.8    3,696.8    3,696.8  
Capital reserve
  9.9    20.2    9.8    7.7    4.5  
Revaluation reserve
  3.3    6.7    7.1    7.6    8.2  
Profit reserves
  1,087.1    2,221.6    1,837.7    1,513.9    1,177.0  
Treasury shares
  (56.2)   (114.9)   (118.2)   (120.0)   (123.7) 
Additional dividends to the minimum mandatory dividends
  72.0    147.2    122.2    68.3    56.9  
Valuation adjustment
  0.0    0.0    0.2    (2.4)   (4.1) 
Cumulative translation adjustments
  6.2    12.6    (4.4)   (18.6)   (5.3)  
 

 
  
 

 
  
 

 
  
 

 
  
 

 
 
Shareholders’ equity attributable to:
     
Shareholders of the Company
  2,931.3    5,990.2    5,551.1    5,153.3    4,810.1  
Non-controlling interest in subsidiaries
  12.5    25.5    26.2    22.3    35.1   
 

 
  
 

 
  
 

 
  
 

 
  
 

 
 
**TOTAL SHAREHOLDER’S EQUITY**
 ** ****2,943.8****  ** ** ****6,015.7****  ** ** ****5,577.2****  ** ** ****5,175.5****  ** ** ****4,845.3****  ** 
 

 
  
 

 
  
 

 
  
 

 
  
 

 
 
**TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY**
 ** ****7,487.2****  ** ** ****15,299.9****  ** ** ****13,742.7****  ** ** ****12,989.8****  ** ** ****11,482.6****  ** 
 

 
  
 

 
  
 

 
  
 

 
  
 

 
 
 
12 

Table of Contents
 
(1)The figures in *Reais* for December 31, 2012 have been converted into dollars using the exchange rate of US$1.00 = R$2.044, 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.” 
***Exchange Rates***

Before March 14, 2005, there were two principalforeign exchange markets in Brazil, in which notes were freely negotiated but could be strongly influenced by Central Bank intervention: 

 
 • 
the commercial rate exchange market dedicated principally to trade and financial foreign exchange transactions such as the buying and selling ofregistered investments by foreign entities, the purchase or sale of shares, or the payment of dividends or interest with respect to shares; and 

 
 • 
the floating rate exchange market that was generally used for transactions not conducted through the commercial foreign exchange market.

On March 4, 2005, the National Monetary Council enacted Resolution No. 3,265, pursuant to whichthe commercial rate exchange market and the floating rate exchange market were unified in a sole exchange market, effective as of March 14, 2005. This resolution allowed, subject to certain procedures and specific regulatory provisions, thepurchase and sale of foreign currency and the international transfer of *Reais* by a person or legal entity, without limitation of the amount involved; provided, however, the transaction is legal. Foreign currencies may only be purchasedthrough financial institutions domiciled in Brazil authorized to operate in the exchange market. Resolution No. 3,265 was revoked by Resolution No. 3,568, effective as of July 1, 2008; however, the main directives provided byResolution No. 3,265 were maintained. 

From 2003 to 2007, the *Real* appreciated 39% against the U.S. dollar. In2008, the worsening of the global financial crisis from mid-September onwards led to a sharp reduction in the flow of capital to Brazil that resulted in a 32% *Real* devaluation, reversing the *Real* appreciation trend in place since 2003.However, in 2009, the quick rebound of the Brazilian economy has driven the inflow of foreign investments in the country, thus contributing to a 25% appreciation of the *Real* against the U.S. dollar in 2009 – the highest appreciation inthe decade. In 2010, the effects of the strong economic growth in Brazil, together with the public offering of shares of Petrobras in the third quarter, resulted in a record of foreign investments inflow to Brazil, contributing to a 4% appreciationof the *Real* against the U.S. dollar. In 2011, the unstable international economic environment, especially in the second half of the year as a result of the effects of the European crisis, contributed to a 13% depreciation of the *Real*against the U.S. dollar for the year, reversing the appreciation trend in the first half of the year. In 2012, the Brazilian government adopted counter-cyclical measures to foster economic growth. Such measures included the reduction of the baseinterest rate (SELIC) and the reduction of federal taxes on the automotive sector. The effects of the lower economic growth, the lower interest rate and the unstable international environment contributed to a 9% depreciation of the *Real*against the U.S. dollar. From January 1, 2013 to April 19, 2013 the *Real*depreciated 1.7% against the U.S. dollar in the period. 

It is not possible to predict whether the *Real* will remain at its present level and what impact the Brazilian government’s exchange rate policies may have on us. 

 
13 

Table of Contents
On April 19, 2013, the exchange rate for *Reais* into U.S. dollars was R$2.009 to US$1.00, basedon the commercial selling rate as reported by the Central Bank. The following table sets forth information on prevailing commercial foreign exchange selling rates for the periods indicated, as published by the Central Bank on its electronicinformation system, SISBACEN, using PTAX 800, Option 5. 

 
   **Exchange rates of nominal Reais per US$1.00**    **High**   **Low**   **Average**  **Period-**