(A free translati on of the original in Portuguese)
Jari Celulose, Papel e Embalagens S.A. Financial Statements in Accordance with Accounting Practices Adopted in Brazil at December 31, 2010 and Independent Auditor's Report
Jari Celul ose, Papel e Embalagens S.A. We beli ev e that th e au dit evi dence we hav e obtain ed i s suffici ent and appropriate to provi de a basis for our qualifi ed au dit opini on . Ba sis f or Qualified Opinion Scope Li mitation s 5
Th e financial statem ents of th e subsi diari es SA SI - Serviços Agrári os e Silviculturai s Ltda., Min eração Guanambi Ltda., Jari En ergéti ca S.A . an d Santa Andréa Agro-Pecuária Ltda., th e inv estm ents in which are recorded on th e equity meth od of accounting an d con solidated by th e Com pany in the paren t an d consoli dated financial statem ents, respectively , were n ot au dited by independen t au ditors. Th e am oun t of th e inv estm ents and th e provi si on for n et capi tal defici en cy at Decem ber 31, 2010 and 2009 an d th e l osses th erefrom in the y ears then ended total R$ 61,791 th ousan d (2009 - R$ zero), R$ 1,854 th ousan d (2009 R$ 8,255 th ousand) an d R$ 1,686 th ousan d (2009 - profit of R$ 20 th ousan d), respectiv ely . In the consoli dated financial statem ents at December 31, 2010an d 2009, total assets an d liabiliti es am oun t to R$ 99,662 th ou sand (2009 - R$ 90 th ousan d) an d R$ 39,538 th ousan d (2009 - R$ 8,344 th ousan d), respectiv ely. Consequen tly, we were unabl e to determine wheth er any adjustmen ts to th ese am oun ts were n ecessary .
6
Th e financial statem ents of th e in direct subsi diari es San ta Clara Agro Com ercial Ltda., Vale das Con chas In dústria e Com érci o de Madei ras Ltda. and San ta An dréa Agro-Pecuária Ltda. (in 2010, the Com pany started toh old direct control ov er th e latter), th e inv estmen ts in which are recorded on the equity meth od of accoun ting an d consolidated by th e Company in th e paren t an d consoli dated financial statemen ts, were n ot au dited by in depen den t au ditors, an d the results th erefrom in th e y ears en ded Decem ber 31, 2010 an d 2009 total R$181 th ousan d (l oss) and R$ 161 th ousan d (profit), respectiv ely. In th e con soli dated finan cial statem ents at Decem ber 31, 2010 and 2009, total assets and liabiliti es, in cluding goodwill pai d on th e acquisi ti on of Santa Andréa Agro-Pecuária Ltda. in 2009, total R$ 5,514 th ousan d (2009 R$ 65,390 th ou sand) and R$5,134 th ou sand (2009 - R$13,710 th ousan d), respectively . Consequ en tly, we were unabl e to determin e wh ether any adjustm ents to th ese am ounts were n ecessary .
7
As m enti on ed in N otes 10 an d 12 to th e finan cial statem ents, the Com pany has accoun ts receivabl e (parent an d consolidated) at December 31, 2010an d 2009 from the related parti es Com panhia do Jari , Orsa Produ tos e Materiais de Min eração Ltda., Saga Capital S.A ., Saga Investim entos e Parti cipações do Brasil S.A., Orsa Fl orestal S.A., Cristal Tower S.A. an d Santana Internati onal Ltd., totaling R$ 83,559 th ousan d (2009 - R$ 104,622 th ousan d) in th e parent com pany an d R$ 144,998 th ousan d (2009 - R$ 167,701 th ou sand) in consoli dated, th e financial statem ents of which were n ot audi ted by in depen den t au ditors. Under th e circumstances, we were unable to con clude on th e financial ability of th ese com pani es to settl e th eir outstan ding balances at that date. Ba sis f or Qualified Opinion Accounting Depa rtu res
8
Inv entori es of materials for use an d con sumpti on su ppli es, as m enti on ed in N otes 2.8 an d 7 to th e finan cial statem ents, are recorded at their historical cost of acquisiti on. Certain inven tory items hav e characteri sti cs similar to th ose of property, plan t an d equi pm ent an d, therefore, sh oul d be classifi ed as su ch, n et of depreciati on effects. The Com pany 's managemen t does n ot hav e speci fic analyses an d stu dies of curren t replacem ent costs of th ese inven tori es in order to determine any provisi on for adjustm ent of
3
Jari Celul ose, Papel e Embalagens S.A. thi s balance, as well as th e am oun t that sh ould be classi fied as property, plan t an d equi pm ent an d th e related depreciati on charges. Consequ ently , we were unable to quan tify the am ounts that sh oul d be reclassifi ed to property, plan t an d equi pm ent, or th e effects of n ot depreciating these items. 9
As m enti on ed in N ote 2.2 to th e financial statemen ts, the Com pany an d i ts subsi diari es are first-tim e adopters of the accounting stan dards CPCs 15 to 41, issu ed by th e Brazilian A ccoun ting Pron ouncem ents Commi ttee (CPC) (th e "n ew CPCs"). In sai d process for th e adopti on of these standards an d the preparati on of th e finan cial statem ents we observ ed th e foll owing accounting departures:
(a)
As m enti on ed in N ote 14 to the financial statemen ts, the Com pany an d i ts subsi diari es opted tou se th e dee med cost for certain property, plan t an d equi pm ent i tems, an d th e valuati on was carri ed ou t as at January 1, 2010instead of January 1, 2009, which i s th e transi ti on date. Con sidering that th ere are n o signifi cant effects arising from the adopti on of this procedure, inv estm ents, property , plant an d equi pmen t, n on -curren t liabili ties (deferred incom e tax an d social contri buti on ) and equity at December 31, 2009 are un derstated by R$ 19,955 th ou sand, R$707,414 th ou sand (con soli dated R$ 763,064 th ousan d), R$ 240,521 th ousand (consolidated - R$ 276,216 th ousan d) an d R$ 486,848 th ousan d, respectiv ely, n et of goodwill pai d on th e acquisi ti on of th e inv estm ents. Addi ti onally, we were unabl e to revi ew th e am oun t accoun ted for as realizati on of the carrying value adjustm ent, which , at Decem ber 31, 2010, total ed R$ 38,896 th ousand, n et of tax effects, consi dering that th e cal culati on of this am oun t was performed on an estimated basis.
(b)
As m enti on ed in N ote 19 to the financial statemen ts, at January 1, 2010 the Com pany accounted for the tax effects on n on -depreciabl e assets (lan d), arising from th e revaluati on of R$ 27,337 th ousand recorded in pri or y ears;h owev er, it did n ot consi der su ch effect at the tran siti on date. As a result, n on -curren t liabili ties (deferred incom e tax and social contri buti on ) and equity at Decem ber 31, 2009 are un derstated an d ov erstated, respectiv ely, by sai d am ount.
(c)
As m enti on ed in N ote 12 to th e financial statemen ts, the Com pany carri ed ou t a valuati on at fair value of its bi ol ogi cal assets for th e y ears en ded Decem ber 31, 2010 and 2009, an d accounted for the effects of th e adopti on of thi s procedure at December 31, 2009, but has n ot prepared a valuati on at fair value at January 1, 2009, whi ch is th e transiti on date for th e n ew CPCs.
(d)
Th e Com pany has n ot di scl osed th e balance sheet at January 1, 2009 ("opening balan ce sh eet") in cluding th e effects of th e matters m enti oned above, and h as n ot restated th e finan cial statem ents at Decem ber 31, 2009 consi dering th e effects of th e business com binati on , as requi red by th e accoun ting practices adopted in Brazil as regards th e first adopti on of th e n ew CPCs. A dditi onally , it is n ot presen ting in full th e explanatory n otes related to financial ri sk managem ent and capital managem ent, credit quality of financial assets, current in com e tax an d the discl osure of commitm ents assum ed in relati on to operating l ease agreem ents, as required by the accounting standards.
10
As m enti on ed in N ote 2.13 to th e finan cial statem ents, the Com pany valu es its nativ e forests with approv ed sustainabl e forest managem ent projects as bi ol ogical assets, an d such un derstan ding i s based on th e fact that the Com pany i s the own er of land, exercises con trol ov er the areas and provi des related security , performs infrastructure works and basically protects an exten ded area of native forest; as a result, it recorded for a carrying valu e adjustm ent at fair valu e of said forests, which totaled R$ 332,629 th ousan d (2009 - R$ 291,832 th ousan d), before tax effects. Howev er, according to th e defini ti on of the
4
Jari Celulose, Papel e Embalagens S.A. Balance Sheets at December 31 In thousands of reais
(A free translation of the original in Portuguese)
Parent compan y Assets Current ass ets Cash and c ash equi valents (Note 5) Trade rec eivabl es (Note 6) Inventories (Note 7) Taxes rec overable (Note 8) Dividends rec ei vable (Note 13) Advances to s uppliers Other rec ei vabl es Prepai d expenses
Non-current assets Long-term recei vables Taxes rec overable (Note 8) Receivabl es from special partnerships (Note 9) Loans to related parti es (Note 10) Judicial deposits (Note 21) Advances to s uppliers - development (Note 11) Other rec ei vabl es (Note 12)
Investments Subsidi aries (Note 13) Property, plant and equipment (Note 14) Biological assets (Note 15) Intangible ass ets (Note 13)
Consolidated
2010
2009
2010
2009
35,869 289,475 167,606 8,652 830 1,681 6,303 4,527
9,942 239,175 137,276 12,015
67,150 237,391 206,654 10,024
30,646 188,561 165,220 15,558
17,587 7,773 4,897
3,039 7,219 4,802
7,749 14,539 5,096
514,943
428,665
536,279
427,369
99,560
107,007
99,822
107,329
115,331 13,437
223,093 9,106
2,976 87,083 13,863
4,115 107,140 11,715
9,433 864,307
8,161 839,295
18,051 923,067
15,840 900,701
1,102,068
1,186,662
375,422 1,794,924 603,156
203,110 1,193,191 548,816
3,875,570
3,131,779
1,144,862
1,997,969 749,916 3,892,747
1,146,840
1,310,977 666,814 18,534 3,143,165
Parent compan y Liabilities and equit y Current liabilities Trade payables (Note 16) Borrowi ngs (Note 17) Amounts due to rel ated parties (Note 10) Salaries and social c harges Tax payabl es and i nstallments (Note 18) Provision for losses on inves tments (Note 13) Commitments for the purchase of assets (Note 20) Other payables
Non-current liabilities Borrowi ngs (Note 17) Payables to stoc kholders (Note 27) Agreements payable (Note 17) Deferred taxes (Note 19) Tax payabl es and i nstallments (Note 18) Commitments for the purchase of assets (Note 20) Provision for contingenci es (Note 21) Other payables
Equity attributable to the stoc kholders of the parent c ompany Capital (Note 22) Capital res erve Carrying value adjustments Revaluation r eser ve Revenue res erves Accumulated deficit
2010
2009
2010
2009
101,205 445,835 30,556 26,336 33,849
84,867 271,044 10,372 24,493 13,312
110,624 449,088
87,661 277,166
31,961 35,564
29,571 15,842
64,916
63,559
22,922 8,075
22,474 8,141
27,265 20,340
32,262 17,439
733,694
498,262
674,842
459,941
343,842 362,466 837,732 438,553 30,633
754,441
758,841
813,882 309,487 27,420
345,105 362,466 861,446 508,415 32,683
6,204 2,483
20,680 5,596 1,601
7,866 2,484
27,358 8,698 2,083
2,021,913
1,933,107
2,120,465
1,982,768
916,336 6,529 622,076
916,336 6,529
916,336 6,529 622,076
916,336 6,529
210,822 89,965 1,129,075
Non-contr olling interests
4,390,513
3,560,444
The acc ompanying notes are an integral part of these financial statements .
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4,429,026
3,570,534
Total liabilities and equity
836,841 319,994 28,953
210,822 89,965
(4,612) 1,634,906
Total ass ets
Consolidated
(4,612) 1,634,906 (1,187)
1,129,075 (1,250)
1,634,906
1,129,075
1,633,719
1,127,825
4,390,513
3,560,444
4,429,026
3,570,534
Jari Celulose, Papel e Embalagens S.A. Statements of Income Years Ended December 31 In thousands of reais, unless other wise st ated
(A free translation of the original in Portuguese)
Parent compan y 2010 Net sales (Note 24) Cost of sales (Note 26) Changes in the fair value of biol ogical assets
1,119,670 (958,271) 5,969
Gross profit (loss) Operating in come (expenses) Selling (Note 26) General and administrati ve (Note 26) Other inc ome, net (Note 25)
Operating profit (loss) b efore equit y results and financial in come Finance resu lt (Note 28) Finance income Finance costs Monetary and exchange variations , net
Results from investments (Note 13) Reducti on in negative goodwill Equity i n the res ults Provision for losses
Profit (loss) before taxation Income tax and soci al contributi on For the year - c urrent Deferred For the year Taxes in i nstall ments (Note 19)
Profit for the year
2009 535,462 (624,335)
The acc ompanying notes are an integral part of these financial statements .
2 of 45
2010 1,228,629 (1,055,622) 11,552
2009 704,730 (790,916 )
167,368
(88,873)
184,559
(66,170) (108,047) 7,231
(31,090) (91,941) 21,996
(75,279) (127,364) (1,995)
(40,622 ) (108,310 ) 23,539
(166,986)
(101,035)
(204,638)
(125,393 )
(189,908)
(20,079)
(211,579 )
309,474 (148,724) 106,258
88,245 (192,179) 30,578
310,105 (155,957 ) 120,188
382
87,442 (187,923) 30,314 (70,167)
267,008
4,168 (8,116) (11,626)
(15,095) 4,632
(73,356)
(15,574)
(10,463)
4,168
(85,359)
66,637
(89,267)
(86,186 )
274,336
4,168
(726)
62,757
(588 )
126,574
41,520 303,039
131,271
46,076 303,039
126,574
344,559
130,545
348,527
41,215
411,196
41,278
411,284
41,215 63
411,196 88
41,278
411,284
2.58
25.70
Profit attributable to Stoc kholders of the Company Non-contr olling interests
Earnings p er share attributable to the shar eholder s of the Company (expr essed in R $ per shar e) - basic and diluted
Consolidated
2.58
25.70
Jari Celulose, Papel e Embalagens S.A. Statements of Changes in Equity In thousands of reais
(A free translation of the original in Portuguese)
Revenue reserves Share capital At December 31, 2008 Valuation of biological assets (Note 15) Own ass ets Tax effects Assets owned by subsidiaries, net of tax effects (Note 13) Comprehensi ve inc ome for the year Realization of revaluation res erve Profit for the year Contributi ons by and distributions to owners Merger of related c ompany (Note 1) Offset of accumul ated loss es agai nst credits held by stoc kholders (Note 12)
853,264
At December 31, 2009 Valuation of biological assets owned by subsidiar y, net of tax effec ts (Note 15) Carrying value adjustments (Note 14) Own ass ets, net of tax effects Assets owned by subsidiaries, net of realizati on and tax effec ts Tax effects on r evaluation reser ve and other (Note 19) Transfer between accounts Comprehensi ve inc ome for the year Realization of carryi ng value adjustment Profit for the year Contributi ons by and distributions to owners Appropriation of the res ults of operati ons - legal res er ve Appropriation of the res ults of operati ons - profit retention
916,336
At December 31, 2010
916,336
Carr ying value Revaluation adjustments reserve
Legal
Profit retention
Total
45,858
(8,258)
63,072
6,529
173,222
Retained earnings (accumulated deficit )
6,529
210,822
Total equit y
(815,285)
(815,285)
370,026 (125,808) 29,321
370,026 (125,808) 29,321
370,026 (125,808) 29,321
8,258 411,196
411,196
(58,452)
184,371
(4,612)
88 (1,338)
1,075,254 1,129,075
411,284 183,033 1,075,254
(1,250)
1,127,825
5,983
5,983
5,983
466,893
466,893
466,893
19,077 (27,337)
19,077 (27,337)
19,077 183,485
(27,337) (183,485)
(53,362)
53,362 41,215 2,061
6,529
Total
Noncontrolling interests
(1,714,407)
1,075,254
The acc ompanying notes are an integral part of these financial statements .
3 of 45
Capital reserve - tax incentives
622,076
2,061
87,904
2,061 87,904
87,904
89,965
41,215
63
41,278
(2,061) (87,904) 1,634,906
(1,187)
1,633,719
Jari Celulose, Papel e Embalagens S.A. Statements of Cash Flows Years Ended December 31 In thousands of reais
(A free translation of the original in Portuguese)
Parent company 2010 Profit (loss) before taxation Adj ustments Provision forimpairment of receivables Monetary variation and interest on long-term receivables Results from investments Reduction in negative goodwill Net book value of property, plant and equipment and biological assets disposals Adjustment of the fair value of biological assets Depreciation and depletion Monetary variation and interest on financing arrangements, installment payments, contracted amounts payable and other Provision forcontingencies Decrease in the special tax installment payment liability Other
Changes in assets and liabilities T rade accounts receivable Inventories T axes recoverable Advances to suppliers Other receivables Prepaid expenses Receivables from special partnerships Judicial deposits Advances to suppliers - development T rade payables Salaries and social charges T axes payables Other payables
2009
Consolidated 2010
2009
(85,359)
66,637
(89,267)
62,757
2,198 (24,524) 19,742 (4,168)
1,486
3,138 (21,878)
1,389
2,668 (5,969) 191,306 94,526 3,225
10,463 (4,168) 4,468 148,708
5,019 (11,552) 205,946
24,882 175,433
95,936 1,785
(154)
(65,087 ) (2,680 ) (265,766 ) 722
390
(64,206) (2,210) (265,995) 722
193,491
(101,049 )
185,349
(67,228)
(52,498) (30,330) 10,810 15,906 982 370
114,376 9,894 8,094
(51,968) (41,434) 13,041 4,710 6,127 294 1,139 (2,148) (2,211) 22,963 2,390 29,062 3,302
60,545 13,298 4,229
31,990 5,663 (12,453) (26,348)
9,954 (1,620 )
(4,331) (1,272) 16,338 1,843 29,271 816
38,790 585 (14,766 ) (27,616 )
Cash flows from operating activ ities Interest on financing arrangements Payment of laborcontingencies Income tax and social contribution paid
181,396 (72,013) (2,617)
34,395 (36,830 ) (479 )
170,616 (72,346) (2,617) (806)
(1,049) (37,482) (479) (588)
Net cash (used in) prov ided by operatin g activ ities
106,766
(2,914 )
94,847
(39,598)
(3,743) (35,564) (101,100)
(24,343 ) (32,249 ) (43,285 )
(36,556) (126,331)
(70,565) (64,099) 24,469
(21,269) (42,674)
(16,915 )
(33,392) 20,762
14,897
(204,350)
(116,792 )
(175,517)
(95,298)
423,691
423,994
(288,551) (11,629)
341,438 39,662 (253,996 ) (6,802 )
(295,191) (11,629)
354,735 42,571 (262,524) (6,961)
123,511
120,302
117,174
127,821
25,927
596
36,504
(7,075)
9,942
9,346
30,646
37,721
35,869
9,942
67,150
30,646
Cash flows from i nv esting activ ities Purchase of investments Acquisitions of property, plant and equipment Expenditures incurred in biological assets Payables for the purchase of shares Payments for the purchase of assets Related parties Net cash used in inv esting activ ities Cash flows from financin g activ ities New borrowings Cash and cash equivalents of merged company Repayment of borrowings - principal Installment payments Net cash prov ided by financi ng activ ities Increase/(decrease) in cash and cash equiv alents Cash and cash equiv alents at the beginni ng of the year Cash and cash equiv alents at the end of the year T he accompanying notes are an integral part of these financial statements.
4 of 45
(2,247 )
(4,115) (1,819) (4,811)
(A free translati on of the original in Portuguese)
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
1
General Inf ormation Jari Celul ose, Papel e Embalagens S.A. ("Com pany "), is a privately -hel d com pany h eadquartered in th e Ci ty of Almeirim , State of Pará. Its con trolling stockh older is Saga Inv estimen tos e Partici pações do Brasil S.A. which , togeth er with the subsidiary an d associated compani es, shares th e structure and corporate managerial an d operating costs. Th e Com pany an d its su bsi diari es (coll ectively , the "Grou p") fully operate in the Brazilian pulp and paper market, also exporting part of their producti on. Th eir main activiti es are the producti on an d sale of pulp obtain ed from plan ted forests, kraftliner and recy cled paper rolls, an d corrugated cardboard sh eets an d boxes. Th e Com pany 's plants are l ocated in Suzan o, Paulínia, Franco da Rocha and N ova Campina (State of São Paul o), Ri oV erde (State of Goi ás), Alm eirim (State of Pará) an d the plan ts of i ts subsidiari es Orsa Em balagens da Amazônia S.A. an d Jari da Amazônia S.A . are l ocated in Manaus (State of Amazonas) an d th ose of Marqu esa S.A. are l ocated in Itapevi (State of São Paul o) an d Alm eirim (State of Pará). Also, the Com pany and its subsidiary Marquesa S.A . hav e approximately 92,000h ectares of plan ted forests, of th eir own or h el d in dev el opmen t partn ershi ps, as well as an approved sustainabl e forest managemen t project of 545,000 h ectares in th e State of Pará. Th e sale of bl eached pulp, which i s the raw material for paper manufacturing, is mainly carri ed ou t in th e foreign market through the Com pany 's su bsi diaries. At th e Extraordinary Stockh ol ders' Gen eral Meeting hel d on August 16, 2009, the foll owing resoluti on s were approv ed:
(a)
Th e Com pany 's nam e (formerly Jari Celul ose S.A .) was changed to Jari Celul ose, Papel e Em balagens S.A.
(b)
Th e n et assets of Orsa Celul ose, Papel e Embalagen s S.A . at July 31, 2009, ev aluated at book value by three experts, were werged into th e Com pany as foll ows: Current assets Non-current assets Long-term receivables Investments In subsidiaries Other Property, plant and equipment Current liabilities Non-current liabilitie s
232,022 185,842 138,207 8,883 555,678 (346,136) (590,125)
Net assets merged
184,371
Represented by Share capital Capital reserve Revaluation reserve Accumulated deficit
63,072 6,529 173,222 (58,452) 184,371
5 of 45
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
Th e i ssue of th ese financial statem ents (Parent and Con soli dated) was auth orized by the Com pany 's Board of Directors on A pril 20, 2011. Th e purpose of th e m erger was to improve th e u tilizati on of th e corporate synergies an d respectiv e operating activiti es dev el oped by th e com pani es com prising th e sam e econ omi c group. Finan cial positi on Th e Com pany is still feeling th e impacts of the gl obal finan cial crisis of 2008/2009, which in cludes signifi cant factors, su ch as th e drastic redu cti on in observable prices for comm oditi es, l ong-term credit crunch an d si gnificant increase in related charges. This fact im pacted especially the equalizati on of th e Com pany 's cash fl ows, con sidering that material inv estmen ts in plan ting perennial crops wi th fiv e to sev en y ear cy cles (eucalyptus) an d eight to twelve year cycl es (pin e) were partially supported by th e Com pany 's working capital . With a vi ew to restoring the financial balance, restructuring studi es hav e been im pl emen ted, con sidering that the market has been m ore flexi bl e an d fav orable with respect to term s an d rates. In 2011, despi te th e fact that these m easures had been adopted, a plan was impl emen ted aiming at redu cing costs and maximizing existing resources in a search for improv ed effici en cy in produ cti on processes. Th e Com pany has also been consi dering the possibility to form partn ershi ps with dom estic an d foreign major busin ess grou ps at operating, finan cial an d corporate l ev els toim pl emen t pulp, paper an d packaging busin esses an d devel op th e Com pany 's forest an d min eral resources. Som e of th ese in ten ti ons, already in progress, are protected by a confi dentiality letter. Comm en ts on the li quidi ty risk are m en ti on ed in N ote 3.1(c). 2
Summa ry of Si gnifi cant Accounting Poli cies Th e princi pal accounting poli ci es applied in th e preparati on of th ese (parent an d consoli dated) financial statem ents are set ou t bel ow. Th ese polici es have been con sistently appli ed to all the y ears presen ted, unless oth erwi se stated.
2.1
Ba sis of prepa rati on an d presentation Th e financial statem ents hav e been prepared under th e histori cal cost conv enti on , as m odifi ed by the "deem ed cost" of certain classes of property, plan t an d equipm ent, the revaluati on of bi ol ogical assets at th eir fair valu e an d finan cial assets measured at th eir fair value through profit or l oss. Th e preparati on of finan cial statemen ts requires th e use of certain cri tical accounting estimates. It also requires managemen t to exercise its ju dgmen t in th e process of applying the Com pany 's accounting polici es. The areas inv olving a high er degree of ju dgmen t or com plexi ty, or areas where assum pti on s an d estimates are signifi cant to th e financial statem ents, are discl osed in N ote 2.25. Th ese are th e first financial statemen ts presen ted by th e Company in accordan ce wi th th e n ew CPCs.
2.2
Fi rst-time a dopti on of the n ew a ccountin g pron oun cement s (CPCs) Th e enactm ent of Laws 11638/07 and 11941/09 establish ed th e process of conv ergence with Internati onal Financial Reporting Standards, with th e issuance by the Brazilian Accounting 6 of 45
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
Pron ouncem ents Committee (CPC) an d approval by Brazilian stan dard-setters of sev eral accounting pron oun cemen ts, interpretati ons and guidelin es in two phases: th e first on e dev el oped and appli ed in 2008, wi th th e adopti on of CPCs 00 to 14 (rev oked in 2010) an d th e secon d on e with th e issuance in 2009 of CPC technical pron ouncem ents 15 to 43 (with th e excepti on of CPC 34), with man datory adopti on as from 2010, an d retroactiv e effect, when appli cabl e, on 2009 figures for com parison pu rposes. Except for th e adopti on of the deem ed cost for certain classes of property , plant an d equi pmen t an d the recogniti on of th e tax effects on th e revaluati on of n on -depreciable assets (lan d an d reforestati on lan d), as provi ded in CPC 27 an d ICPC 10, the valuati on of bi ol ogical assets, as provided in CPC 29 (in 2009, th e Com pany recorded in advance th e effects of th e valuati on of said assets - N ote 15) an d the appli cati on of CPC 15 - "Busin ess Combinati ons", the changes caused by the other CPCs hav e n ot affected the opening balances of th e Com pany 's financial statem ents. Despite th e fact that th e transi ti on date i s January 1, 2009, th e Company decided n ot to restate the financial statemen ts (Paren t an d Con soli dated) at December 31, 2009, n or present th e balance sheet (Parent and Con soli dated) at January 1, 2009, as required by said accounting pron ouncem ents. Pa rent an d con solidat ed finan cial stat ement s Th e parent and consoli dated financial statem ents hav e been prepared in accordance with accounting practices adopted in Brazil, in cluding th e pron oun cemen ts i ssued by th e Brazilian A ccoun ting Pron ouncem ents Committee (CPC), and are being presented join tly. 2.3
Con soli dation
(a )
Con soli dated finan cial stat ement s Th e foll owing accounting polici es are appli ed in th e preparati on of th e consolidated financial statemen ts.
(i )
Su bsidia ries Su bsi diari es are all enti ties over whi ch th e Com pany has th e power to determin e th e financial an d operating polici es, gen erally accompanying a shareh ol ding of m ore than on e half of th e capi tal of the su bsi diary. Su bsi diari es are fully consoli dated from the date on whi ch control is transferred to th e Com pany . Th ey are decon soli dated from th e date that control ceases. Inter-company transacti ons, balances and unreali zed gains on transacti ons between Group compani es are eliminated. Unrealized l osses are al so eliminated, unless the tran sacti on provi des evi dence of impai rmen t of th e asset tran sferred. A ccounting poli ci es of subsi diari es hav e been changed wh ere n ecessary to en sure con sisten cy wi th the polici es adopted by th e Com pany. Th e financial statem ents of su bsi diaries l ocated abroad for th e y ears en ded Decem ber 31, 2010 and 2009, prepared on th e same base dates as th e Company 's finan cial statem ents, were prepared in conformity wi th the accounting practi ces adopted in Brazil , wh en applicabl e, and recorded in reais, based on th e criteria establish ed in CPC 02.
(ii )
Non -cont rolling interest s and t ran sa cti on s Th e Com pany treats transacti ons with n on -con trolling interests as transacti on s with equi ty own ers of th e Com pany. For purchases from n on-con trolling in terests, th e difference between any consi derati on 7 of 45
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
paid an d th e acquired proporti on of th e carrying v alue of th e n et assets of the subsidiary is recorded in equi ty. Gains or l osses on di sposals to n on -controlling interests are also recorded in equity . When th e Com pany ceases tohav e con trol , any retain ed interest in the entity is rem easured toi ts fair value, with th e change in carrying am ount recognized in profit or l oss. Th e fair valu e is th e ini tial carrying am ount for th e purposes of su bsequ ently accounting for th e retained in terest as an associate, join t v enture or finan cial asset. In additi on , any am ounts previ ously recognized in oth er com preh ensiv e income in respect of that en tity are accounted for as i f th e Com pany had directly disposed of the related assets or liabiliti es. Thi s m eans that am ounts previ ou sly recognized in oth er com prehen sive incom e are reclassifi ed to profit or l oss. (iii )
Entities included in the con solidated finan cial stat ement s Th e consolidated financial statemen ts com prise th e finan cial statem ents of Jari Celul ose, Papel e Em balagens S.A. and its di rect or indirect subsidiari es, as m enti on ed bel ow. Percenta ge h olding of Ja ri Celulose, Papel e Embalagen s S.A.
Di rect subsidiari es Jari Ov erseas Ltd. Jari In ternati on al Inc. Jarcel Internati onal Ltd. Jari Pulp Ll c. SA SI Serviços Agrári os e Silvi culturais Ltda. Min eração Gu anambi Ltda. Pulp UK Limited Jari En ergéti ca S.A. Marqu esa S.A. Santa An dréa Agro-Pecuária Ltda. Orsa Embalagens da Amazônia S.A. Jari da Amazônia S.A. Orsa S.A. In direct subsidiaries (paren t com pany - Marqu esa S.A.) Santa Clara Agro Com ercial Ltda. Santa An dréa Agro-Pecuária Ltda. Vale das Con chas In dústria e Com érci o de Madeiras Ltda. (b)
201 0
2009
100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 99.89 100.00 100.00 100.00 100.00
100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 99.89
100.00
100.00 100.00 65.00
65.00
100.00 100.00 100.00
Pa rent finan cial stat ement s In the paren t finan cial statem ents, subsidiari es are recorded based on th e equi ty accoun ting m eth od. Th e same adjustm ents are made in the paren t an d consolidated financial statemen ts to reach the sam e profi t or l oss an d equity attri butabl e to the h ol ders of the paren t enti ty. Adjustm ents to th e book value of th e inv estm ent are also required by recogni zing th e proporti onal share of th e Com pany in th e changes in the balan ce of compon ents of th e carrying valu e adjustm ent of th e 8 of 45
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
inv estee, recognized directly in equity . Such changes are recogni zed di rectly in equity in carrying value adjustm ents. 2.4
Foreign cu rren cy t ran slati on
(a )
Fun cti onal and presentation cu rren cy Th e functi onal currency of th e Com pany an d its subsi diari es i s the Brazilian real, which is the sam e curren cy used in th e preparati on and presen tati on of th e paren t company and consoli dated financial statem ents.
(b)
Tran sa cti on s and balan ces Foreign currency tran sacti ons are translated into th e functi onal curren cy using th e exchange rates prevailing at th e dates of the transacti ons or valuati on wh ere i tems are rem easured. Foreign exchange gains and l osses resulting from th e settl em ent of such transacti ons an d from the tran slati on at year-en d exchange rates of m on etary assets an d liabiliti es den ominated in foreign currenci es are recogni zed in th e statem ent of in com e. Foreign exchange gains an d l osses that relate to borrowings an d cash an d cash equivalen ts are presented in the statem ent of in com e within "Finance incom e or cost".
2.5
Ca sh and ca sh equivalent s Cash an d cash equival ents in cludes cash in hand, deposi ts h el d at call wi th ban ks and oth er sh ort-term highly li qui d inv estm ents with original maturiti es of three m onths or l ess, wi th immaterial risk of change in valu e.
2.6
Finan cial a sset s
2.6.1
Cla ssificati on Th e Group classifi es its financial assets according to th e foll owing categories:m easured at fair value through profi t or l oss an d l oans an d receivabl es. Th e classificati on depends on th e purpose for which th e finan cial assets were acquired. Managem ent determin es th e classifi cati on of its finan cial assets at ini tial recogniti on .
(a )
Mea su red at fai r value th rou gh profit or l oss Financial assets at fair value through profit or l oss are financial assets h eld for trading. A financial asset is classifi ed in this category if acquired prin cipally for th e purpose of selling in th e sh ort-term . Assets in thi s category are classifi ed as curren t assets. Gains or l osses arising from changes in th e fai r value of finan cial assets m easured at fair value through profi t or l oss are recorded in th e statem ent of in com e as "Finance In com e" in th e peri od in which th ey occur, unl ess th e in strum ent has been con tracted in conn ecti on with an oth er instrumen t. In this case, th e variati ons are recognized in th e sam e lin e of th e result affected by that instrumen t. 9 of 45
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
(b)
Loan s and receivables Loan s an d receivabl es are n on -derivativ e finan cial assets with fixed or determinabl e paymen ts that are n ot qu oted in an activ e market. Th ey are in cluded in current assets, except for maturiti es greater than 12 m on ths after th e end of th e reporting peri od, which are classifi ed as n on-current assets.
(c)
Derivative financial inst ru ment s and h edging a ctivities At Decem ber 31, 2010 and 2009 th e Group has n ot carri ed ou t off-book transacti ons with financial instruments or transacti ons wi th financial derivativ es (swap contracts, index or currency swap con tracts, futures contracts, opti on an d forward markets, am ong oth ers).
2.6.2 Recognition and mea su rement Financial assets carri ed at fair value through profit or l oss are initially recogni zed at fair valu e, and transacti on costs are expensed in the statemen t of in com e. Financial assets are derecognized when th e rights toreceive cash fl ows from th e inv estm ents hav e expired or have been transferred and th e Group has transferred substan tially all risks an d rewards of own ershi p. Financial assets at fair value through profi t or l oss are su bsequ ently carri ed at fair value. Loans an d receivabl es are su bsequ en tly carri ed at am ortized cost using th e effectiv e in terest meth od. Gains or l osses ari sing from changes in the fair valu e of the "Financial assets at fair value through profit or l oss" category are presen ted in th e statem en t of income wi thin "Finance in com e" or "Finan ce costs"in th e peri od in whi ch th ey ari se. Th e Group assesses at each balance sheet date wh eth er there is objectiv e evi den ce that a financial asset or grou p of financial assets is impaired. Impairm ent testing of trade receivables is descri bed in N ote 2.7. 2.6.3 Off setting financial inst rument s Financial assets an d liabiliti es are offset and th e n et am ount reported in th e balance sheet wh en there is a l egally enforceabl e right to offset th e recogni zed am ounts and th ere i s an in ten ti on to settle on a n et basis, or realize th e asset and settle th e liability simultaneou sly. 2.6.4 Impai rment of finan cial a sset s Th e Group assesses at th e en d of each reporting peri od wh eth er there is objectiv e evi dence that a finan cial asset or grou p of financial assets is impaired. A finan cial asset or a grou p of finan cial assets is impai red and impairm ent l osses are in curred only if th ere is objective eviden ce of impairm ent as a result of on e or m ore ev ents that occurred after th e initial recogni ti on of the asset (a "l oss ev ent") an d that l oss ev ent (or ev ents) has an im pact on the estimated future cash fl ows of th e financial asset or group of finan cial assets that can be reliably estimated. Th e criteria that th e Group uses to determine that th ere i s objective eviden ce of an im pairmen t l oss inclu de: (a)
signifi cant financial difficulty of th e issuer or obligor;
(b)
a breach of contract, such as a default or delin qu en cy in interest or prin cipal paym ents; 10 of 45
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
(c)
th e Grou p, for econ omic or l egal reason s relating to th e borrower's finan cial diffi culty, granting to th e borrower a concessi on that th e l ender woul d n ot oth erwi se consi der;
(d)
it becom es probabl e that the borrower will en ter bankru ptcy or oth er financial reorganizati on ;
(e)
th e di sappearance of an activ e market for that financial asset because of finan cial diffi culties;
(f)
observabl e data indi cating that th ere is a m easurable decrease in th e estimated fu ture cash fl ows from a portfoli o of finan cial assets since th e initial recogni ti on of th ose assets, alth ough th e decrease cann ot y et be i den tifi ed wi th th e in dividual financial assets in the portfoli o, in cluding:
(i)
adv erse changes in th e paymen t status of borrowers in th e portfoli o;
(ii)
nati onal or l ocal econ omic condi ti ons that correlate with defaults on th e assets in the portfoli o. Th e Group first assesses wh ether objectiv e evi dence of impairm ent exi sts. The am ount of th e l oss i s m easured as th e differen ce between th e asset's carrying am oun t an d the present valu e of estimated future cash fl ows (exclu ding fu ture credit l osses that hav e n ot been in curred) discounted at the financial asset's original effective interest rate. The carrying am ount of th e asset is reduced an d the am ount of th e l oss i s recognized in th e consoli dated statemen t of incom e. If a l oan or h eld-to-maturity investm ent has a variabl e in terest rate, th e di scoun t rate for m easuring any im pairm ent l oss is the curren t effectiv e interest rate determin ed un der th e contract. As a practi cal expedi ent, the Grou p may measure impai rmen t on th e basis of an instrumen t's fair valu e using an observable market price. If, in a su bsequ ent peri od, th e am ount of th e im pairm ent l oss decreases and th e decrease can be related objectively to an ev ent occurring after th e im pairmen t was recognized (su ch as an im prov emen t in th e debtor's credi t rating), the rev ersal of th e previ ously recognized im pairm ent l oss is recognized in th e statem ent of in com e.
2.7
Tra de a ccount s receivable Trade receivabl es are am ounts due from custom ers for merchan dise sold in the ordinary course of th e Grou p's business. If collecti on is expected in on e year or l ess, they are classifi ed as curren t assets. If n ot, th ey are presented as n on -current assets. Trade receivabl es are recognized initially at fair valu e an d su bsequ ently m easured at am ortized cost using th e effectiv e in terest m eth od, l ess provisi on for impairm ent of trade receivabl es. Usually, in practice, they are recognized at the am ount bill ed, adjusted by th e provi si on for im pairmen t, wh en n ecessary . Th e provi si on for im pairm ent of trade receivabl es i s establish ed wh en th ere is objectiv e evi dence that th e Grou p will n ot be able to realize th e am ounts due in accordan ce with the original terms of the accounts receivabl e. The cal culati on of th e provi si on i s based on an estimate that is suffi ci ent to cover probabl e l osses on the realizati on of accoun ts receivabl e, consi dering the situati on of each custom er.
2.8
Inv ent ories Inv entori es are stated at th e l ower of cost an d n et realizable value. Cost i s determined u sing th e weighted m oving average meth od. Th e costs of finish ed products an d work in process compri se raw materials, direct labor, oth er direct costs and related gen eral producti on expendi tures (based on th e n ormal 11 of 45
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
operati onal capacity ). N et reali zabl e valu e i s th e estimated selling pri ce in the ordinary course of bu siness, l ess estimated conclusi on costs an d estimated selling expenses. 2.9
Judi cial deposit s Th ere are situati ons in which th e Group qu esti ons th e l egitimacy of certain liabiliti es or claims fil ed against i t. In connecti on wi th these di spu tes, pursuant to a ju dicial order or du e to managem ent's strategy , the related am ounts can be deposited in escrow, which does n ot ty pify th e settl em ent of this liabili ty, which i s recorded in l ong-term receivables at historical am ounts (N ote 21).
2.1 0
Inv estment sin su bsidia ries In the paren t com pany finan cial statemen ts, inv estmen ts in subsidiari es are recorded on th e equi ty accoun ting m eth od an d th e equi ty in the earnings (l oss) of inv estees is recognized in the statemen t of income as operating in com e (expen se). Wh en calculating equity in th e resul ts, unrealized gains or transacti ons between the Com pany an d i ts subsi diary com pani es are eliminated in proporti on to th e Com pany 's inv estmen t;unrealized l osses are also eliminated, unl ess th e transacti on provides eviden ce of impai rmen t of th e asset tran sferred. When th e Com pany 's in terest in th e accumulated l osses of subsidiary com pani es is equal to or exceeds th e inv estm ent valu e, th e Com pany does n ot recognize additi onal l osses, unless i t has assum ed obligati ons or made paymen ts on behalf of these com pani es. In th ese cases, the Com pany 's parti cipati on in these l osses i s recorded as "Provisi on for l osses on inv estmen ts" (N ote 13).
2.11
Intan gible a sset s Goodwill Goodwill represents th e excess of th e cost of an acquisi ti on over th e n et fair value of assets an d liabiliti es of th e acquired en tity . Goodwill on acquisi ti ons of subsidiari es is in cluded in "In tangibl e assets". If th e acquirer determin es n egativ e goodwill, it must record the am ount as a gain in profit for th e peri od at th e date of acqui siti on . Goodwill is tested annually for im pairmen t an d carri ed at cost l ess accumulated impai rmen t l osses , which are n ot rev ersed. Gains and l osses on th e disposal of an en tity in clude th e carrying am ount of goodwill relating to th e en tity sol d.
2.1 2
Property , plant and equipment Property, plan t an d equi pm ent i s stated at histori cal cost l ess accumulated depreciati on . Hi storical cost also inclu des finance costs related to th e acquisiti on of qualifying assets. Th e Com pany an d its su bsi diari es hav e el ected to use deem ed cost for certain classes of assets. Th e effects of th e deem ed cost increased property, plan t an d equi pm ent, with a correspon ding entry to th e "Carrying value adjustm ent" account in equi ty, n et of the related tax effects (N ote 14). Based on appraisal reports issued by in depen dent appraisers u p to 2006, th e appreciati on of in dustrial machin ery an d equipm ent, buildings an d reforestati on lan d (su bsi diary - valuati on reports i ssu ed by in depen den t appraisers u p to 2005, for lan d for reforestati on ) was recorded. As permitted by Law 11638/07 an d CPC 13 - "First-time A dopti on of Law 11638/07", the Com pany an d i ts subsi diari es adopted the n et book value, revalu ed at Decem ber 31, 2008, as th e n ew cost of sai d assets. 12 of 45
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
Th e porti on of th e carrying valu e adjustm ent, in cluding th e revaluati on recorded in pri or y ears, i s transferred (realized) to retain ed earnings (accumulated defi cit) in proporti on to th e depreciati on of th e buil dings. Th e porti on of th e carrying valu e adjustm ent of lan d an d reforestati on lan d will only be transferred (realized) to retain ed earnings (accumulated defi cit) when sai d assets h ave been disposed of or wri tten off. Su bsequ en t costs are inclu ded in th e asset's carrying am oun t or recognized as a separate asset, as appropriate, only wh en it is probabl e that fu ture econ omic ben efits associated wi th th e i tem will be realized an d the cost of th e i tem can be m easured reliably. Th e carrying am ount of th e replaced part is derecognized. All oth er repairs and maintenance are charged to th e statem ent of incom e during th e finan cial peri od in which they are incurred. Lan d is n ot depreciated. Depreciati on i s calculated using th e straight-lin e m eth od to redu ce th e assets' cost to thei r resi dual values ov er th eir estimated useful liv es, sh own bel ow: Th e assets'residual valu es an d useful liv es are revi ewed, and adjusted if appropriate, at th e en d of each reporting peri od. Yea rs Machinery and equi pment Buil dings Furniture an d fixtures Faciliti es Heavy v ehicl es Improv emen ts Oth er
10 25 10 10 9 25 5
Gains an d l osses on sal es are determin ed by comparing th e sales am ounts with the book values an d are inclu ded in th e result of operati ons for th e y ear, in Oth er operating incom e (expenses). Th e Group does n ot have property , plant and equipm ent items expected to be disposed of or written off that would require setting u p a provisi on for asset retiremen t obligati ons. 2.1 3
Bi ol ogi cal a sset s Bi ol ogi cal assets are m easured at fair value, l ess estimated selling costs at the cu tting time. Depl eti on i s calculated based on forest cutting. Bi ol ogi cal assets com prise eu calyptus an d pin e forests, resulting exclusiv ely from ren ewable plan ting, design ed for th e produ cti on of bl eached pul p an d packaging paper, and to be sold to third parties. Th e harv esting an d planting process has a cycl e of approximately five to 14 y ears, which varies depen ding on th e culture an d gen eti c material. Th e valuati on of bi ol ogi cal assets is made annually by th e Com pany, and th e gain or l oss on th e fair value of th e bi ol ogical assets i s recognized in profit or l oss on an accrual basis, in a specific line in th e statem ent of in com e titl ed "Changes in the fair value of bi ol ogical assets". Th e in crease or decrease in th e fair value is determin ed as th e differen ce between th e fair valu es of th e bi ol ogi cal assets at th e beginning an d at th e en d of th e peri od, n et of planting costs in curred in th e dev el opmen t of bi ol ogi cal assets an d bi ol ogi cal assets depl eted during the peri od. 13 of 45
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
Native f orest s Th e Com pany has forest managem ent projects whi ch consist of the dev el opm ent of rain forests certifi ed by th e Forest Stewardshi p Council (FSC). This dev el opm ent i s based on th e possi bility of cutting a v olum e of timber that can be replaced naturally within a certain sustainabl e produ cti on cy cl e. A t December 31, 2010, th e Company had 545,000h ectares of forests in the State of Pará supported by an approv ed forest m anagem ent project. Th e Com pany defends an d adopts the procedure of valuing i ts n ativ e forests, for whi ch sustainabl e forest managem ent projects hav e already been approv ed by IBA MA , as bi ol ogi cal assets, becau se it understan ds that it exerts in fluence on said forests, since it cuts mature/dev el oped trees, thus enabling th eir ren ewal. In addi ti on , the Com pany, as th e own er of the land, dev el ops a tim ber selling busin ess, exerci ses control over th e areas an d provi des related security , performs infrastructure works, gen erates jobs and fundam entally protects a great area of nativ e forest. Su ch procedure was uniformly and consistently adopted for th e y ears ended December 31, 2010an d 2009. 2.1 4
Lea ses Leases in whi ch a significan t porti on of th e risks an d rewards of own ershi p are retain ed by th e l essor are classifi ed as operating l eases. Paym ents made under operating l eases (n et of any incentiv es receiv ed from th e l essor) are charged to th e statem ent of incom e on a straight-line basis over th e peri od of th e l ease. Th e Group l eases certain property , plant an d equipm ent. Leases of property, plan t an d equi pm ent where th e Grou p has substan tially all th e ri sks and rewards of own ership are classifi ed as finan ce leases. Finance l eases are capitali zed at th e l ease's comm en cem ent at th e l ower of the fair valu e of the l eased property and th e present value of th e minimum lease paymen ts. Each l ease paym ent is all ocated between the liability and finance charges so as to achiev e a constan t rate on th e finance balance ou tstan ding. Th e in terest el em ent of th e finan ce cost is charged to th e statem ent of incom e ov er the lease peri od so as to produ ce a constant peri odi c rate of interest on the remaining balan ce of th e liability for each peri od. Th e property , plant an d equipm ent acquired un der finance l eases is depreciated ov er th e sh orter of th e useful life of th e asset an d th e l ease term.
2.1 5
Bu sin ess combination s Th e Com pany uses th e acquisi ti on m eth od of accounting to accoun t for business com binati on s. Th e cost of an acqui siti on is m easured as th e fair valu e of the transferred assets an d th e liabili ties assumed on th e transacti on date. A cqui siti on expenses are recognized in th e statem ent of incom e, as incurred (N ote 29). Iden tifiable assets acquired an d liabiliti es assum ed are m easured at th eir fair valu es at the acquisiti on date. Th e excess of th e cost of acqui siti on ov er the fair value of th e i dentifiable assets acquired an d liabili ties assumed i s recorded as goodwill and, in th e ev ent th e cost is l ower, th e difference is recorded as gain from bargain purchase in th e statemen t of incom e at th e acqui siti on date.
2.1 6
Impai rment of n on -financial a sset s Assets that hav e an in definite useful life, for exam pl e goodwill, are n ot subject toam orti zati on and are tested annually for impairm ent. A ssets that are subject to am orti zati on are revi ewed for im pairm ent annually or wh enev er ev en ts or changes in circumstances in dicate that th e carrying am ount may n ot be recov erabl e. In this case, the recoverabl e valu e is cal culated to determin e if th ere is any l oss. In the ev en t of l oss, it is recogni zed at th e am oun t by whi ch th e book valu e of the asset exceeds its recov erabl e valu e, 14 of 45
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
whi ch is th e high er between the n et sal es pri ce and th e valu e in u se of an asset. For evaluati on purposes, th e assets are grou ped at th e l owest lev el for which th ere are separately i den tifiabl e cash fl ows. N on -financial assets that hav e hav e suffered an im pairm ent are subsequ ently revi ewed for possi ble rev ersal of th e impairmen t at each reporting date. 2.1 7
Tra de payabl es Trade payables are obligati ons to pay for goods or services that hav e been acquired in th e ordinary course of busin ess. A ccoun ts payabl e are classi fied as current liabiliti es i f paymen t is du e within on e y ear or l ess. If n ot, th ey are presen ted as n on-current liabiliti es. Trade payables are recogni zed initially at fair v alue an d subsequ ently m easured at am ortized cost using th e effective interest m eth od. Usually, in practice, consi dering av erage paym ent terms of 25 days, whi ch is considered n ormal an d inh eren t in th e Grou p's operati ons, they are recognized at the am ount of th e related inv oi ce.
2.1 8
Borrowi n gs Borrowings are recognized initially at fair value, n et of significan t transacti on costs incurred. Borrowings are subsequen tly carried at am orti zed cost. Any differen ce between the proceeds and th e settl em ent am ount is recogni zed in th e statemen t of income ov er th e peri od of the borrowings using th e effectiv e interest m eth od. Borrowing costs that are directly attri butabl e to th e acquisi ti on , constructi on or producti on of qualifying assets are capi talized as part of th e cost of such assets. Oth er borrowing costs are recognized as expenses on th e accrual basi s of accoun ting. Borrowings are classifi ed as curren t liabili ties unless th e Group has an un con diti onal right to defer settl emen t of the liability for at least 12 m on ths after the reporting peri od.
2.1 9
Provi si on s Provisi ons are recognized when : th e Grou p has a present l egal or con stru ctiv e obligati on as a result of past ev ents; it is probable that an ou tfl ow of resources will be required to settle th e obligati on ; and th e am ount can be reliably estimated. Provisi ons are n ot recognized for future operating l osses. Where th ere are a number of similar obligati on s, th e li kelih ood that an outfl ow will be required in settl emen t is determined by con sidering th e class of obligati ons as a wh ole. A provisi on is recogni zed ev en if th e likelih ood of an ou tfl ow wi th respect toany on e i tem included in th e sam e class of obligati ons may be small .
2.20
Cu rrent an d deferred in come tax and social cont ributi on Th e in com e tax an d social con tri buti on expenses for th e peri od com prise current and deferred taxes. Income taxes are recogni zed in th e statem ent of incom e, except to th e extent that they relate toi tems recognized in com preh ensive incom e or directly in equity . In this case, the taxes are also recognized in compreh ensiv e in com e or directly in equi ty. Th e current in com e tax an d social contri buti on are cal culated on th e basis of th e tax laws enacted or su bstan tiv ely enacted at th e balance sheet date in th e countri es wh ere the Com pany 's subsidiari es operate and gen erate taxable incom e. Managem ent peri odi cally evaluates positi ons taken in tax returns 15 of 45
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
wi th respect to situati ons in which th e appli cabl e tax regulati on i s su bject to interpretati on . It establish es provisi ons where appropriate on th e basi s of am ounts expected to be pai d to th e tax auth oriti es. Deferred incom e tax an d social contri buti on are recognized, using th e liabili ty m eth od, on tem porary differences arising between th e tax bases of assets and liabiliti es an d th eir carrying am ounts in th e finan cial statem ents. Howev er, the deferred in com e tax an d social contri buti on are n ot recognized i f th ey arise from initial recogni ti on of an asset or liability in a tran sacti on oth er than a busin ess combinati on that at the tim e of th e transacti on affects n ei ther accounting n or taxable profi t or l oss. Deferred incom e tax an d social contri buti on are determin ed u sing tax rates (an d laws) that hav e been enacted or substan tially enacted by the balan ce sh eet date an d are expected to apply wh en the related deferred incom e tax asset is realized or th e deferred incom e tax liability is settled. Deferred incom e tax an d social contri buti on assets are recognized only to th e exten t that i t is probabl e that fu ture taxabl e profi t will be availabl e against which the tem porary differen ces can be utili zed. Deferred incom e tax i s provi ded on temporary differen ces ari sing on investm ents in su bsi diari es, except for the case of a deferred in com e tax liabili ty wh ere the timing of the rev ersal of the tem porary di fference is controll ed by the Com pany an d i t is probabl e that th e tem porary di fference will n ot rev erse in th e foreseeabl e future. Deferred incom e tax assets an d liabiliti es are offset wh en th ere i s a l egally enforceabl e right to offset curren t tax assets against curren t tax liabili ties an d when th e deferred incom e tax assets an d liabiliti es relate to incom e taxes levi ed by the sam e taxati on auth ori ty on eith er the sam e taxabl e en tity or differen t taxabl e enti ti es where th ere is an inten ti on to settle th e balances on a n et basis. 2.21
Oth er cu rrent an d n on -cu rrent a sset s and liabilities Th e oth er current an d n on-current assets are stated at cost or realizable values inclu ding, wh en appli cabl e, accru ed in com e an d m on etary or foreign exchange variati ons. Th e oth er current an d n on-current liabiliti es are stated at kn own or estimated am oun ts in cluding, wh en appli cabl e, accru ed charges an d m onetary variati ons.
2.22
Empl oyee an d management ben efits Th e Com pany an d its su bsi diari es recogni ze a liability an d an expense for profi t-sharing. These provisi ons are based on qualitative and quan titativ e goals defin ed by the Com pany 's managemen t an d accoun ted for at th e en d of the year, wh en th e am ount can be accurately cal culated by th e Company , in salary expense accounts an d in the statem ent of in com e. Th e Com pany an d its su bsi diari es do n ot spon sor any pen si on sch emes, private pensi on or retirem ent plans or benefits for th eir em pl oy ees or managem ent after th ey l eave th e Com pany.
2.23
Det ermination of the results of operati on s Th e results of operati ons are determin ed on th e accrual basi s of accoun ting an d inclu de accru ed income, charges an d m on etary an d foreign exchange variati on s, at official in dices an d rates l evi ed on current and n on -curren t assets and liabiliti es an d, wh en applicable, the effects of adjustm ents of assets to market or realizabl e value. 16 of 45
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
Rev enue com prises th e fair valu e of the con siderati on receiv ed or receivabl e for th e sale of goods in the ordinary course of th e Grou p's activiti es. Rev enue is sh own n et of taxes, returns, rebates an d discounts. Th e Com pany recognizes revenu e when : (a) th e am oun t of rev enue can be reliably m easured; (b) i t i s probabl e that future econ omi c ben efi ts will fl ow to th e Group; an d (c) when risks an d rewards of own ership are transferred to th e purchaser. 2.24
Dividen d di st ributi on A dividen d distribu ti on to th e Company 's stockh ol ders is recogni zed as a liability in th e financial statem ents in the peri od in whi ch th e distribu ti on i s approv ed by th e stockh ol ders, or when th e mandatory minimum dividen d i s proposed as established by th e Company 's by-laws.
2.25
Criti cal a ccounting estimates and a ssumption s Estimates an d assumpti ons are continually evaluated an d are based on historical experi en ce and other factors, in cluding expectati on s of fu ture even ts that are beli ev ed to be reasonabl e un der the ci rcumstan ces. Th e resulting accoun ting estimates will seldom equal th e related actual results. Th e estimates an d assumpti ons that hav e a signi ficant risk of causing a material adjustm ent to th e carrying am oun ts of assets and liabiliti es wi thin th e n ext y ear in clude: (a) deferred taxes (N ote 19); (b) valuati on of bi ol ogical assets (N ote 15); (c) revi ew of useful life and recov erability of property, pl ant an d equipm ent (N ote 14); (d) con tingent liabiliti es (N ote 21);an d (e) im pairmen t of accoun ts receivabl e an d oth er assets (N ote 6).
3
Finan cial Risk Mana gement Poli cy
3.1
Finan cial ri sk fa ct ors Th e Group's ri sk managem ent policy was defin ed by the Board. In accordan ce wi th this policy , market risks are protected when it i s deemed n ecessary to su pport th e corporate strategy or main tain the l ev el of finan cial fl exibili ty.
(a )
Ma rket ri sk
(i )
Int erest rate ri sk This risk arises from th e possibili ty that the Grou p may in cur l osses du e to fluctuati ons in interest rates that l ead toan increase in th e financial expenses on l oan s an d finan cing obtained in th e market. Th e Grou p con tinu ously m oni tors market interest rates in order toassess th e possi ble n eed to renegotiate or pay/receive in advance th e am ounts related to th e transacti on s, or ev en to contract transacti ons in th e finan cial market to h edge against th e v olatility risk of th ese rates. A t December 31, 2010, borrowings total ed R$ 789,677 (N ote 17).
(ii )
Ex chan ge rat e ri sk This risk arises from th e possibili ty that the Grou p may in cur l osses du e to fluctuati ons in th e exchange rates, whi ch may reduce the n ominal am ounts billed or in crease the am ounts of l oans obtain ed in the market. 17 of 45
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
At Decem ber 31, 2010, the Grou p had assets an d liabiliti es den ominated in foreign currency in the am ounts equival ent to US$ 580,550 th ousan d (2009 - US$ 520,508 th ousan d) an d US$ 799,246 th ou sand (2009 - US$ 868,120 th ousan d), respectiv ely (parent com pany - assets an d liabilities den ominated in foreign currency in th e am oun ts equivalent to US$ 623,863 th ou sand (2009 - US$ 553,723 th ou sand) an d US$795,525 th ousan d (2009 - US$ 852,501 th ousan d), respectiv ely). As a porti on of the Grou p's sal es (approximately 30%) is in foreign currency , the main strategy i s that th ese receivables act as a "natural h edge"for the foreign currency liabiliti es. (b)
Credit ri sk Credit risk is m anaged by th e Grou p's execu tive board m embers. Credi t ri sk arises from cash an d cash equival ents, credit exposures to accounts receivable an d transacti ons wi th related parti es. The Com pany 's credi t analysis departmen t assesses th e credit quality of th e cu stom er, taking in to account i ts finan cial posi ti on , past experi en ce an d other factors. In dividual ri sk limits are set based on in ternal ratings set by managem ent. Th e utili zati on of credit limits i s regularly m oni tored. Sales to cu stom ers are usually interru pted when th ere is evi dence of default. For th e oth er custom ers wi th history of default, in some situati ons m anagem ent requires that paymen t be made in advance. Th e Grou p's poli cy is to contract wi th prime financial in stitu ti ons with at l east an "A " credi t rating, and regi onal banks. N o credit limits were exceeded during th e reporting peri od, and managemen t does n ot expect any l osses from n on -performan ce by th ese counterparties, except for th e provisi on for impairm ent of trade receivabl es presented in N ote 6.
(c)
Li quidity risk This is the risk of th e Grou p n ot having suffi cien t li qui d funds to m eet i ts financial commitm ents, du e to th e mi smatch of terms or v olume in expected receipts an d paym ents. To m anage li qui dity of cash in l ocal an d foreign currency , assumpti ons for future disbursemen ts an d recei pts are determin ed, and th ese are m onitored daily by th e treasury area. At Decem ber 31, 2010, borrowings, by ty pe, are as foll ows: Consolidated Short-term Advance on export contract (ACC) Export prepayment contract (PPE) Export credit note (CCE) Special working capital line of credit - BNDES (PEC) Working capital - rural credit - sales
Finance leases Financing of equipment Government Agency for Machinery and Equipment Financing (FINAME)
18 of 45
234,650 36,958 17,447 53,799 72,809
Long-term 177,703 26,651
Total 234,650 214,661 17,447 80,450 72,809
415,663
204,354
620,017
5,968 1,869
3,966 4,409
9,934 6,278
25,588
132, 376
157,964
33,425
140,751
174,176
449,088
345,105
794,193
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
Th e Com pany understan ds that th ere is n o significan t li qui dity risks, since: (i) a su bstantial porti on of sh ort-term borrowings comprises l oans that are ren ewable automatically, especially A CC an d rural credi ts an d (ii ) discussi on s of replacem ent of sh ort-term debts for l ong-term debts hav e already been h eld with som e financial instituti ons. A ddi ti onally, th e stockh ol ders have already deci ded to sell or dispose of assets (lan d an d forests) totaling at l east R$ 200,000. 3.2
Ca pital ri sk mana gement Th e Group's objectiv es wh en managing capi tal are to safeguard the Grou p's ability to con tinue as a going concern in order to provi de returns for stockh ol ders an d ben efits for oth er stakeh ol ders and to maintain an optimal capi tal structure to reduce the cost of capital. In order to maintain or adjust th e capital stru cture, th e Grou p may adjust th e am oun t of divi den ds pai d to stockh ol ders, return capi tal to stockh ol ders or, al so, issue new shares or sell assets to reduce, for exampl e, debt.
4
Finan cial In st rument s by Cat egory Pl ease find bel ow the classificati on of th e Company 's finan cial instruments by category at each of th e dates presented. Parent
Financial assets measured at fair value through profit or loss Financial investments Loans and receivables Cash and cash equivalents Trade accounts receivable Dividends receivable Other receivables Related parties Other receivables
2010
2009
22,796
699
13,073 289,475 830 864,307 115, 331 6,303
9,243 239,175
1,289,319 Other financial liabilitie s Trade payables Borrow ings Commitments for the purchase of assets Related parties Contracted amountspayable Payables to stockholders Other payables
839,295 223,093 7,773 1,318, 579
101,20 5 789,677 22,922 30,556 837,732 362,466 10,558
84,867 1,025,485 43,154 10,372 813,882
2,155,116
1,987,502
9,742
Consolidated
Financial assets measured at fair value through profit or loss Financial investments
19 of 45
2010
2009
26,833
5,096
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
Consolidated
Loans and receivables Cash and cash equivalents Trade accounts receivable Other receivables Related parties Other receivables
Other financial liabilitie s Trade payables Borrow ings Commitments for the purchase of assets Contracted amountspayable Payables to stockholders Other payables
5
2010
2009
40,317 237,391 923,067 87,083 7,219
25,550 188,561 900,701 107,140 14,539
1,295,077
1,236,491
110,624 794,193 27,265 861,446 362,466 22,824
87,661 1,036,007 59,620 836,841
2,178,818
2,039,651
19,522
Ca sh and Ca sh Equivalent s Parent
Cash and bank accounts Financial investments Bank Deposit Certificates (CDBs) ( i) Interest accrued on balance abroad (ii) Impairment (iii)
Consolidated
2010
2009
2010
2009
13,073
9,243
40,317
25,550
4,182 18,614
699
4,363 22,651 (181)
884 4,212
35,869
9,942
67,150
30,646
Financial investments have high liquidity, are readily convertible into known amounts of cash and are subject to immaterial risk of change in value. (i)
Remuneration equivalent to 100.5% of the CDI rate.
(ii) Balance abroad in US$ remunerated at 0.15% p.a. over the LIBOR rate. (iii) Represented by losse s on an investment in a fixed-income investment fund with Banco da Amazônia, which was backed by securities issued by Banco Santos S. A. that stopped operating, with only a partial return of the amount invested. The Company has been claiming in court the receipt of the remaining balance of such investment, and the likelihood of an unfavorable outcome in this case is asse ssed by the Company's legal advisors as probable.
6
Tra de Account s Receivable Parent
Customers Domestic Foreign Related parties
Provision for impairment of trade receivables
2010
2009
2010
2009
152, 255 422 142,356
116,933 775 124,827
168,777 76,738
133,617 59,930
295,033
242,535
245,515
193,547
(5,558 ) 289,475
20 of 45
Consolidated
(3,360) 239,175
(8,124) 237,391
(4,986) 188,561
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
Th e ageing analysis of these trade receivabl es is as foll ows: Pa rent
Falling due Ov erdu e Du e from 1 to 30 day s Du e from 31 to 60 days Du e from 61 to 90 days Du e from 91 to 180 days Abov e 180 days
Con soli dated
201 0
2009
201 0
2009
269,038
209,483
205,156
161,170
3,627 1,675 7,371 4,527 8,795
10,681 2,826 2,476 6,486 10,583
19,555 6,404 4,811 3,788 5,801
14,372 1,832 5,069 3,951 7,153
295,033
242,535
245,515
193,547
Trade receivabl es are maintain ed in the foll owing currenci es: Pa rent
Brazilian reais U.S. dollars
Con soli dated
201 0
2009
201 0
2009
152,388 142,645
119,052 123,483
168,777 76,738
133,617 59,930
295,033
242,535
245,515
193,547
Av erage receiving terms are 48 days, whi ch is con sidered n ormal an d inheren t to the Grou p's operati ons. Th e Com pany has con tracted export credit insurance, cov ering th e recei pt of receivables from exports at an am oun t equival ent to US$ 225 milli on . Th e provi si on for im pairm ent of trade receivabl es i s based on receivabl es ov erdu e for m ore than 60 days, consi dering the situati on of each custom er. Th e addi ti on to th e provisi on of R$ 2,198 (Parent) and R$ 3,138 (Con soli dated) was recorded in th e statemen t of income as "Selling expenses". 7
Inv ent ories Pa rent
Finish ed goods Work in process Raw materials Materials for use and consumpti on Oth er
21 of 45
Con soli dated
201 0
2009
201 0
2009
14,005 1,913 68,819 81,958 911
13,380 1,255 47,892 73,865 884
44,768 2,139 74,816 84,020 911
28,909 3,020 54,532 77,875 884
167,606
137,276
206,654
165,220
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
8
Taxes Recov erabl e Pa rent
Value-added Tax on Sal es Services (ICMS) Excise Tax (IPI) Soci al Integrati on Program (PIS) Soci al Contri buti on on Revenu es (COFINS) Withh ol ding Income Tax (IRRF) Corporate Incom e Tax (IRPJ) Oth er
Con soli dated
201 0
2009
201 0
2009
30,695 6,770 13,345
23,809 6,591 15,773
31,123 6,770 13,397
24,525 6,591 17,543
56,653 351 398
68,446 1,733 2,670
56,892 604 759 301
68,576 1,985 3,107 560
108,212
119,022
109,846
122,887
Curren t assets
(8,652)
(12,015)
(10,024)
(15,558)
N on -current assets
99,560
107,007
99,822
107,329
Because the Com pany 's rev enues arise substantially from exports, i t has tax credits related to PIS and COFIN S. Th erefore, in pri or y ears it fil ed sev eral proceedings at an administrativ e l ev el wi th th e Administrativ e Coun cil of Tax A ppeal s (CARF), claiming the right to offset sai d credits, which totaled R$ 102,838. Th e curren t status of su ch proceedings is as foll ows: (a) credi ts already auth orized totaling R$ 42,398 hav e already been offset, (b) credits already approv ed (nine proceedings), pen ding pu blicati on of th e CARF ju dgm ent, total R$ 14,215 and (c) 45 administrativ e proceedings totaling R$ 45,685 are foll owing the ordinary routin e to be ju dged by CARF. In 2010, th e Company offset R$13,319 (2009 - R$ 14,670) of PIS and COFIN S (accumulated - R$ 2010 R$ 31,938 and 2009 - R$ 18,619), related to credi ts on current an d pri or-y ear tran sacti ons, in cluding th ose m enti on ed abov e. Th e Com pany has been awaiting approval by the Pará State Finan ce Office for th e tax credi ts related to ICMS totaling R$ 14,380 to be offset against paym ents related to th e ICMS installm ent paym ent program (N ote 18). PIS an d COFINS credits, according to CARF, are n ot subject tom onetary restatem ent. Wi th respect to ICMS and IPI credi ts, th e correspon ding m on etary restatemen t is recognized only after an applicati on at a ju dicial l ev el , sin ce tax auth ori ti es do n ot permit such credi ts to be restated at an administrative l evel . 9
Receivables f rom Special Pa rtn erships Th ese refer to receivabl es from special partn erships and projects managed by the su bsi diary Marquesa S.A ., regulated by Law 5106, substantially represented by : (a) expendi tures for forest maintenance; (b) th e m on etary restatem ent u p to Decem ber 31, 1996, relating to th e funds raised from third-parti es respon sibl e for financing this asset; (c) direct an d in direct costs all ocated to th e projects;an d (d) m anagem ent fees charged for the administrati on of each project. 22 of 45
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
According to th e recov ery analysi s con ducted by managem ent, these assets will be realized in the l ongterm and with positiv e profitability , which sh ould occur eith er through th e reimbursem ent, by the qu otah ol ders of th e partnerships an d projects, of th e costs in curred, th e thinning of the forests or th e acquisi ti on of these forests by Marqu esa S.A. i tself, in case of th e formal wi thdrawal of these parti cipan ts. Th e balances of th e projects managed by th e Com pany are as foll ows:
At December 31, 2008 Expenditures for forest maintenance Proceeds from sale Selling expenses At December 31, 2009 Expenditures for forest maintenance Proceeds from sale Selling expenses At December 31, 20 10
10
Guapiara 7
Guapiara 8
652
647
784
244
292 (269) 258
896
928
60 (3,012) 2,323 267
Guapiara 9A Guapiara 9B
55 (2,944) 2,337
Pinhalzinho 6
Total
671
630
3,384
119 (144) 117
272
14 (172)
941 (585) 375
876
943
472
4,115
3
219 (6,216) 4,858
30
376
71 (260) 198
906
952
475
2,976
Relat ed Pa rties Parent company
Assets Current assets Trade accounts receivable Advances to suppliers Dividends receivable
Non-current - Long-term receivables Receivables from the parent company, subsidia ries, related companies and stockholders SASI Serviços Agrá rios e Silviculturais Ltda. Mineração Guanambi Ltda. Companhia do Jari Jari Oversea s Ltd. Marquesa S.A. Orsa Produtos e Materia is de Mineração Ltda. Saga Capital S. A. Saga Investimentos e Participações do Bra sil S.A. Orsa Emba lagens da Amazônia S. A. Jari da Amazônia S. A. Orsa S. A. Jari Pulp Llc. Jari Energética S.A. Crystal Tower S.A. Advances to stockholders
Total assets
23 of 45
2010
2009
142,356
124,827 10,571
Consolidated 2010
2009
205
200
5,435 61,553
1,974 5,700 76,777
1,673 5,435 61,553
36,557
705
36,557
25 877 845
877 845
877 845
115, 331
223,093
87,083
107,140
258,517
358,491
87,083
107,140
830 143,186
135, 398
104 205 397
6,350 98 200 250 110,903
5,700 76,777 1,642 298 28,403 83 877 845
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
Parent company
Liabilities Current assets Trade payables Payables to subsidiaries Jarcel International Ltd. Jari da Amazônia S. A. Marquesa S.A. Orsa Emba lagens da Amazônia S. A.
Non-current liabilitie s Payables to stockholders (Note 17) Total liabilit ies Transactions Sales Jari Pulp Llc. Jarcel International Ltd. Orsa Celulose, Papel e Embalagens S.A. Orsa Emba lagens da Amazônia S. A. Jari da Amazônia S. A. Marquesa S.A.
Purchases Marquesa S.A. Jari da Amazônia S. A. Orsa Emba lagens da Amazônia S. A.
2010
2009
4,597
1,945
1,186 3,972 6,762 18,636
1,106 9,266
30,556
10,372
362,466
2010
2009
362,466
397,619
12,317
335,513 49,486
185,109 34,588 21,7 11 12,352
10,483 12,898
Consolidated
362,466
41,420
408,380
295,180
47,881 36 32
50,282
47,949
50,282
Tran sacti ons related to th e purchase an d sale of goods are carri ed ou t un der n ormal market pri ces an d term s. Receivabl es from related parti es are n ot subject to financial charges an d do n ot hav e guaran tees or maturity dates. Th e main transacti on s with foreign related parties were carri ed out at the av erage price of th e internati onal pulp market, in U.S. dollars, an d conv erted in toreai s at th e time of th e transacti on for consoli dati on purposes, n et of the estimated costs of cu stom s clearan ce an d freigh t, which will be incurred by the related parti es to make th e pulp availabl e toi ts cli ents abroad, consi dering an av erage term of 180 days for paymen t. (a )
Sal e of investment On N ov ember 18, 2010, th e subsidiary Marqu esa S.A ., wi th a vi ew to reducing i ts debit balance related toin tercom pany l oan agreem ents, sol d to th e Company i ts investm ent in San ta An dréa Agro-Pecuária Ltda. at book valu e, including goodwill, of R$ 48,505, based on th e appreciati on of th e lan d (N ote 13).
24 of 45
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
(b)
Ca pitalizati on of int ercompany l oan s On Decem ber 30, 2010, the Com pany in creased its shareh ol ding in th e subsi diari es Marqu esa S.A. an d SA SI - Serviços Agrári os e Silvi culturais Ltda. by R$108,848 an d R$ 6,526, respectively , through the capi talizati on of balances receivable from intercompany l oan agreem ents (N ote 13).
(c)
Key mana gement compen sati on Mana gement compen sati on Total com pensati on paid to managemen t in 2010 was R$ 4,791 (2009 - R$ 4,890), consisting entirely of sh ort-term ben efits. In 2010, there are n o l ong-term benefits, em pl oym ent con tract terminati on ben efits n or share-based remunerati on.
11
Advan cest o Suppliers - Devel opment Th ese are mainly investm ents in lan d of third parti es, to whi ch the Grou p makes advances for planting cul tivati on , to be discounted in th e fu ture from th e purchased timber am ount; such advan ces are n ot su bject to valuati on at fair valu e. Changes in the year inclu de advances granted totaling R$ 2,211 (2009 - R$ 3,992) in consolidated and R$ 1,272 (2009 - R$ 296) in th e parent.
12
Oth er Receivables Pa rent company
Georgetown Partici pações S.A. (i ) Santana In ternati onal Ltd. (ii) Oth er
Con soli dated
201 0
2009
201 0
2009
861,445
836,921
2,862
2,374
861,445 58,760 2,862
836,921 61,406 2,374
864,307
839,295
923,067
900,701
(i) During 2009, through a Private Credit Assignmen t an d Tran sfer Agreemen t, th e Com pany receiv ed from its parent com pany , Saga Inv estimento e Parti cipações do Brasil S.A., receivabl es from Georgetown Partici pações S.A. that are being m on etarily restated based on the U.S. dollar variati on wi th interest of 8% p.a. A t that date, the balan ce payabl e relating to this credit totaled R$1,075, 254 an d was used by the stockh ol ders to absorb th e accumulated defi cit. (ii) On February 20, 2009, throu gh th e subsi diary Orsa S.A., th e Company sign ed a l oan agreemen t of US$ 33,860 with San tana Internati onal Ltd. Th e l oan matures in Jun e 2011 an d bears in terest of 5% p.a.
25 of 45
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0 In thousands of reais, unless otherwise stated
13
Inv estment s
(a )
Su bsidia ries
Investment percentage Direct Jari Overseas Ltd. (i) Jari International Inc. (ii) Jarcel International Ltd. (iii) Jari Pulp LLC. (ii) SASI - Serviços Agrários e Silviculturais Ltda. (iv) Mineração Guanambi Ltda. Pulp UK Limited (v) Jari Energética S.A. - JESA (vi) Marquesa S.A. (vii) Orsa Embalagens da Amazônia S.A. (viii) Orsa S.A. (ix) Jari da Amazônia S.A. (x) Jari da Amazônia S.A. - goodwill (x) Santa Andréa Agro-Pecuária Ltda. Indirect (subsidiaries of Marquesa S.A.) Santa Clara Agro Comercial Ltda. Vale das Conchas Indústria eComércio de Madeiras Ltda.
100 100 100 100 100 100 100 100 99.89 100 100 100
Number of shares or quotas Type 1,912,000 1,000 50,000 1,000 2,562,866 160,070 1,000 50,384,300 35,165,257 5,000 392,576 24,462,539
Quota Quota Quota Quota Quota Quota Quota Common share Common share Common share Common share Common share
Year ended December 31, 2010 Equity
Profit (loss)
(16,974) 3,201 (11,092) (34,996) (1,701) (70) 306 (83) 186,758 33,910 45,550 44,112
(1,181) (205) (7,010) (3,310) (57) (12) 18 (57) (2,437) 4,470 (2,069) (6,043)
100
61,791
(1,726)
100 65
3,588 (3,981)
(4) (20)
Provision for losses on investments 2010
2009
(16,974)
(15,793)
(11,092 ) (34,996) (1,701) (70)
(7,825) (31,686) (8,171) (58)
(83 )
(26)
The business purpose of Jari Overseas Ltd. is the marketing of pulp in the international market.
(ii)
The business purpose of Jari International Inc. and Jarí Pulp LLC is the marketing of pulp in North America.
2010
2009
3,201
3,406
306
302
186,552 33,910 45,550 44,112
83,700 22,236 47,619 27,313 18,534
61,791
(64,916 ) (i)
Investments
(63,559)
375,422
203,110
(iii) The business purpose of Jarcel International Ltd. is the marketing of pulp in Europe and Asia. (iv) Sasi Serviços Agrários e Silviculturais Ltda. and Mineração Guanambi Ltda. are currently inactive. (v)
The business purpose of Pulp UK is serving as an agent for pulp sales abroad.
(vi) Jari Energética S.A. is in the pre-operational phase, awaiting the required licenses to proceed with th e project. (vii) The business purpose of Marquesa S.A. is forest sustainability and maintenance, implementation and management of reforestation projects, manufacture and sale of timber and its by-products and investment in other companies, including Special Purpose Partnerships (SCPs). (viii) Orsa Embalagens da Amazônia S.A. manufactures corrugated cardboard sheets and boxes. (ix) The business purpose of Orsa S.A. is raising international funds and investmen ts. (x)
On Novemb er 30, 2010, the Company acquired 100% of the share capital of Rigesa da Amazônia S.A. (currently Jari da Amazônia S.A.) for R$ 50,000 which, adjusted to present value, totaled R$ 45,654, and initially a goodwill balance of R$ 18,534 was determined on the acquisition (Note 29). Said company is located in the Industrial Hub of Manaus, State of Amazonas, and it manufactures corrugated cardboard sheets and boxes.
26 of 45
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0 In thousands of reais, unless otherwise stated
(b)
Chan ges in investment s December 31, 2008 Jari International Inc. Pulp UK Limited Jari Energética S.A. Marquesa S.A. Orsa Embalagens Jari da Amazônia S.A. Jari da Amazônia S.A. Cost Goodwill Negative goodwill Orsa S.A. Santa Andréa Agro-Pecuária Ltda. Cost Goodwill
4,658 343 22 51,905
29,321
22,733 27,120 18,534 63,569
(1,252) (41) (22) 2,474
83,700
(497)
22,236
193
27,313 18,534
(15,950)
Carrying Capital value increase adjustment
138,207
45,654
29,321
(15,095)
Biolog ical Taxes on Equity in assets revaluation the results
3,406 302 108,848
9,832
(12,204)
7,989
54,519
Dividends
December 31, 2010
(205) 4
3,201 306
(3,624)
186,552 (830)
(5,176)
33,910 44,112
4,168
47,619
203,110
Goodwill write-off
4,515
21,975 (18,534) (4,168)
6,741 48,505 5,023
(c)
Valuation Acquisition of biolog ical Equity in December 31, or business Merger Acquisition assets the results 2009 combination
50,627 (48,505)
5,984
19,943
5,984
108,848
(12,204)
(2,069)
45,550
(1,561)
61,791
(8,116)
4,168
(830)
375,422
Changes in the provision for l osses on investment s December 31, 2008 Jari Overseas Ltd. Jarcel International Ltd. Jari Pulp LLC. SASI - Serviços Agrários e Silviculturais Ltda. Mineração Guanambi Ltda. Jari Energética S.A.
(18,794) (32,145) (30,669) (8,221) (54) (89,883)
Capital increase 21,692
21,692
Reversal (recording ) December 31, of provision 2009 3,001 2,628 (1,017) 50 (4 ) (26)
(15,793) (7,825) (31,686) (8,171) (58) (26)
4,632
(63,559)
Capital increase
Reversal (recording) December 31, of provision 2010
6,526
(1,181) (7,010) (3,310) (56) (12) (57)
(16,974) (11,092) (34,996) (1,701) (70) (83)
10,269
(11,626)
(64,916)
3,743
Th e acquisi ti on of inv estm ents in Santa An dréa Agro-Pecuária Ltda. an d capital in creases of Marqu esa S.A . an d SASI - Serviços Agrári os e Silvi culturais Ltda. are commen ted in N otes 10(a) and (b). Al so, on Jun e 7, 2010, a capital contri buti on was made in Jarcel Internati onal, Ltd., of R$ 3,743, whi ch is equivalen t to US$ 2 milli on (2009 - capi tal contri buti on s were made totaling an am oun t equival ent to US$ 12.9 milli on ).
27 of 45
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0 In thousands of reais, unless otherwise stated
14
Property , Plant an d Equipment
(a )
Pa rent company Machinery and equipment
Furniture Buildings and fixtures
Forests
2,385
48,545 46,085
At December 31, 2009
693,774
133,629
1,390
9,667
4,434
1,397,649 (703,875)
206,714 (73,085)
4,754 (3,364)
20,534 (10,867)
14,999 (10,565)
Net book amount
693,774
133,629
1,390
9,667
4,434
At December 31, 2009 Deem ed cost Acquisitions Disposals Transfers Depreciation
693,774 518,505 1,433 (175) 15,034 (116,302)
133,629 153,890 28
1,390
4,434
279 (67) (8) (202)
9,667 3,379 567 (3,126)
(725)
At December 31, 2010
1,112,269
280,419
1,392
10,487
3,709
130,270
48,421
21,189
Total cost Accumulated depreciation
1,932,446 (820,177)
363,640 (83,221)
4,957 (3,565)
24,480 (13,993)
14,999 (11,290)
163,936 (33,666)
48,421
Net book amount
1,112,269
280,419
1,392
10,487
3,709
130,270
48,421
28 of 45
141,543
Land
49,362 90,033 79
3,009 (10,137)
4,709
Railway
371,593 361,213 2,176 (1,468) (84,694) 44,954
Total cost Accumulated depreciation
10,762 447 1,588 (143) (2,987)
Facilities Improvements
At December 31, 2008 Merger (Note 1) Acquisitions Disposals Depreciation Transfers
(5,845)
535 983 151 (132) (147)
Vehicles
48,421
Total in Construction Property, plant Other operation in progress and equipment 22,248 4,665
462 (737)
(55) (3,425)
(6,959) 134,584
61,743 2,406 27,793 (144)
759,461 508,217 32,249 (1,942) (104,794)
(44,954)
1,146,347
46,844
1,193,191
46,844
2,052,386 (859,195)
48,421
2,385
94,630
48,421
2,385
94,630
134,584
48,421
2,385
94,630
23,433
1,146,347
46,844
1,193,191
134,584
48,421
2,385 18,804
94,630 12,416 1,774
23,433 420 564 (673)
46,844
1,193,191 707,414 35,564 (1,734)
(2,520)
1,146,347 707,414 4,645 (915) 20,220 (139,511)
108,820
21,224
1,738,200
56,724
1,794,924
21,189
108,820
54,016 (32,792)
2,736,904 (998,704)
56,724
2,793,628 (998,704)
21,189
108,820
21,224
1,738,200
56,724
1,794,924
161,751 (27,167)
2,185 (6,499)
23,433
697,718 505,811 4,456 (1,798) (104,794) 44,954
53,705 2,005,542 (30,272) (859,195)
30,919 (819) (20,220)
(139,511)
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0 In thousands of reais, unless otherwise stated
(b)
Con soli dated Machinery and equipment
Buildings
Furniture and fixtures
Vehicles
Facilities Improvements
Land
Forests
Other
2,385 279 49
48,545 46,085 90,687 5,921
22,248 4,665 157 644 (68)
At December 31, 2008 Merger (Note 1) Subsidiaries by merger (Note 1) Acquisitions Disposals Transfers Depreciation
371,593 361,213 3,636 23,759 (1,498) 44,954 (98,092)
49,362 90,033 104 7,050
540 983 148 466 (142)
10,762 447 4,891 2,777 (183)
4,708 463
279 1,597
(9,524)
(406)
(4,493)
(737)
(8,496)
At December 31, 2009
705,565
137,025
1,589
14,201
4,434
134,923
48,421
2,713
1,429,787 (724,222)
214,532 (77,507)
5,361 (3,772)
28,566 (14,365)
15,531 (11,097)
164,462 (29,539)
48,421
705,565
137,025
1,589
14,201
4,434
134,923
705,565 530,315 10,949 2,224 (361) 15,033 (120,297)
137,025 153,890 6,471 28
1,589
14,201 5,301 502 567
4,434
134,923
Total cost Accumulated depreciation Net book amount At December 31, 2009 Deem ed cost Business combinations (Note 29) Acquisitions Disposals Transfers Depreciation
141,543
Railway 48,421
Total in Construction Property, plant operation in progress and equipment
(3,754)
697,722 505,811 100,181 42,726 (1,891) 44,954 (125,502)
61,743 2,406 230 27,839 (288 ) (44,954)
759,465 508,217 100,411 70,565 (2,179)
191,238
23,892
1,264,001
46,976
1,310,977
2,713
191,238
58,717 (34,825)
2,159,328 (895,327)
46,976
2,206,304 (895,327)
48,421
2,713
191,238
23,892
1,264,001
46,976
1,310,977
48,421
2,713 29,504 16,420
191,238 43,340
23,892 714
46,976
1,774
615 (763)
1,310,977 763,064 34,490 36,556 (2,010)
(2,723)
1,264,001 763,064 34,490 5,515 (1,191) 20,349 (145,108)
(125,502)
3,007 (10,447)
148 307 (67) (8) (259)
132 (4,029)
(726)
1,143,428
289,974
1,710
16,674
3,708
130,481
48,421
48,637
236,352
21,735
1,941,120
56,849
1,997,969
Total cost Accumulated depreciation
1,988,478 (845,050)
377,927 (87,953)
5,741 (4,031)
35,068 (18,394)
15,531 (11,823)
166,647 (36,166)
48,421
48,637
236,352
59,283 (37,548)
2,982,085 (1,040,965)
56,849
3,038,934 (1,040,965)
Net book amount
1,143,428
289,974
1,710
16,674
3,708
130,481
48,421
48,637
236,352
21,735
1,941,120
56,849
1,997,969
At December 31, 2010
29 of 45
2,185 (6,627)
31,041 (819 ) (20,349)
(145,108)
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
(c)
Use of deemed cost Th e Com pany an d its su bsi diari es Marqu esa S.A., Orsa Em balagens da Amazônia S.A . an d Jari da Amazônia S.A. used th e fair valu e as deem ed cost for certain classes of property , plant an d equi pmen t items (paren t company : machin ery an d equi pm ent, buildings, v ehi cles, l and and forests - su bsi diaries: lan d, buil dings, machin ery an d in dustrial equi pmen t, furniture an d fixtures, com puter equi pm ent, v ehicl es, h eavy v ehicl es, reforestati on land), which had book valu es significan tly l ower than th eir fair values. Th e fair value valuati on , except for reforestati on land, was con ducted by an in depen dent appraiser (F. Tral di Engenharia de Avaliações Ltda.), which issu ed an appraisal report dated N ov ember 8, 2010 (valuati on date: December 31, 2009); that i s, costs to be attri buted to property, plan t an d equi pm ent items for th em to reflect fair v alues at Decem ber 31, 2009 were determin ed based on th e foll owing valuati on cri teria:
(i )
Ma chinery , equipment , fa cilities and indu st rial items in gen eral Th e valuati on was based on standards an d procedures establish ed by th e Brazilian A ssociati on of Techni cal Stan dards (ABN T), NBR-14653-5 - "Machin ery, Equipm ent, Faciliti es and In dustrial Items in Gen eral ", an d the Fun dam ental Points an d Precisi on Lev el I rating was achi ev ed. A ssets were valued on th e replacem ent cost m eth od an d th e depreciati on criteri on adopted was that establish ed by A . Marston & T.R. Agg. To defin e th e replacem ent cost, the foll owing procedures were adopted: (i ) reprodu cti on values hav e been obtain ed in a direct surv ey of manufacturers or through u pdating histori cal figures by using specific econ omic indi ces; (ii ) gen eral expendi tures in projects, en gineering, m oni toring, labor and other speci fic costs were added to the reprodu cti on values;an d (iii ) coeffi ci ents of depreciati on hav e been obtain ed by consi dering age, conservati on an d the technical an d operating characteristi cs of th e assets, based on the physi cal checking made in loco when th e valuati on was con ducted; th e appli cati on of su ch coeffi cien ts to th e reproducti on v alues led to th e restaded current values.
(ii )
Heavy vehi cles Th e gen eral criteri on adopted was the valuati on based on probable av erage liv es. Based on an analysi s of th e main tenan ce records, the Iowa surviv or curv es have been established, which furnish ed us with expected liv es at th e study date. Th e remaining technical liv es are obtained by subtracting th e u seful liv es from the related ages.
(iii )
Forestati on land Th e fair value valuati on was condu cted by an in depen dent appraiser (Holtz Consultoria Ltda.), whi ch issued an apprai sal report dated December 27, 2010 (valuati on date: Decem ber 31, 2009), by applying th e direct market data m eth od. Said apprai sal reports hav e been approv ed by th e Com pany 's managem ent.
30 of 45
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0 In thousands of reais, unless otherwise stated
Th e adjustm ent of th e deem ed cost was recorded against th e "Carrying valu e adjustm ent" accoun t in equi ty, n et of th e correspon ding tax effects (deferred incom e tax and social contri buti on ), an d was recorded on January 1, 2010, as presen ted bel ow: Property , plant and equipment
Deferred taxes
707 ,41 4
707 ,41 4
(240,521)
1 2,1 05 11 ,081 5,092
(831)
1 2,1 05 11 ,081 4,261
(4,1 1 6) (3,7 67) (1 ,7 31)
7 6,708
(48,505)
28,203
(26,081)
104,986
(49,336)
55,650
(35,695)
7 63,064
(27 6,21 6)
Deemed cost Parent c ompany Jari Celulose, Papel e Emb alagens S.A . Direct sub si diaries Or sa Embalagens da A mazônia S.A . Mar quesa S.A . Santa Cl ara A gro Comercial Ltda. Indirect sub si diary Santa Andréa A gro-Pec uária Ltda.
Consolidated
31 of 45
Goodwill
Minority interests
I nvestments
Realization
Equity 466,893
(8) (4)
7 ,989 7 ,306 2,526
(696 ) (170)
2,1 22 (1 2)
1 9,943
7 ,293 7 ,1 36 2,526 2,1 22
(866 )
1 9,077
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
(iv )
Impai rment of property , plant and equipment During th e y ear en ded December 31, 2010, th e Company di d n ot iden tify the existen ce of indi cators that certain assets could be im paired in relati on to th eir recov erabl e valu e an d, therefore, n o provisi on was recognized in th e finan cial statem ents.
15
Bi ol ogi cal Asset s Parent company
At December 31, 2008 Merger (Note 1) Subsidiaries by merger Valuation of biological assets Acquisitions Planting expenditures Disposals Forest depletion
Consolidated
Forests
Forests
175,904 47,461
175,904 47,461 17,774 404,529 2,638 33,050 (22,703) (49,766)
370,026 1,186 42,099 (43,945) (43,915)
At December 31, 2009 Valuation of biological assets Changes in fairvalue Acquisitions Planting expenditures Sale Forest depletion
548,816
At December 31, 2010
Forest leases
19,710 9,971 28,411 (165)
Total 175,904 47,461 37,484 414,500 2,638 61,461 (22,703) (49,931)
57,927
5,969 1,993 99,107 (934) (51,795)
608,887 9,066 (6,839) 4,068 114,112 (3,009) (58,324)
(2,514)
666,814 9,066 11,552 4,068 122,263 (3,009) (60,838)
603,156
667,961
81,955
749,916
18,391 8,151
Th e Group's bi ol ogical assets com prise cultivati on and plan ting of pin e an d eucaly ptus forests used as raw material tomanufacture pul p an d paper, and to sell wood l ogs to third parties. At Decem ber 31, 2010, the Grou p own ed 92,000 hectares of planted forests, n ot in cluding protected areas an d reserv es that must be kept as established in th e Brazilian environm ental legislati on . Also, the Com pany has forest managemen t projects which con sist of th e dev el opmen t of rain forests certifi ed by th e FSC. This dev el opmen t is based on the possibility of cutting a v olume of tim ber that can be replaced naturally within a certain sustainabl e producti on cy cle. Th e balance of th e Group's bi ol ogi cal assets is made u p of the cost of formati on of forests an d th e difference between th e fair valu e an d the formati on cost, su ch that the balan ce of bi ol ogi cal assets as a wh ol e is recogni zed at fair valu e. Th e Group engaged th e specialized company Hol tz Consultoria Ltda., which con ducted a valuati on of its forests for 2010 and 2009, and issu ed a technical apprai sal report by foll owing the procedures establish ed in CPC 29 - "Bi ol ogical A ssets an d Agri cultural Produce" and in conformity with the standards issued by the Brazilian Associati on of Technical Standards (A BN T), to evaluate th e rural property , which consi sts of determining th e econ omi c valu e of planted forests, thus sh owing th e Group's si tuati on on N ov em ber 30, 2010an d October 31, 2009, with respect to existing plantings. Th e cash-fl ow peri od was projected in accordance with th e producti on cycl e of th e valu ed areas. 32 of 45
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
Projected produ cti on v olumes of forests are based on stratificati on , whi ch takes in to con siderati on forest speci es, genetic material, producti on poten tial, rotati on an d age. Th ese characteristics compose an index nam ed Annual Av erage In cremen t (IMA), expressed in cu bic m eters per h ectare/y ear, used as a basis in producti on projecti ons. Th e cutting plan for cultures maintain ed by th e Com pany vari es between six and sev en y ears for eucaly ptus and between 14 an d 15 y ears for pin e. Th e pri ces of bi ol ogi cal assets, den ominated in R$/cu bic m eter, are obtain ed through market research, based on informati on discl osed by specialized compani es, an d also on pri ces practiced by the Grou p in sal es to third parti es. Pri ces obtained are adjusted by dedu cting capital costs related tolan d, sin ce th ese assets contri bute to forest planting, an d oth er costs incurred as required to hav e the assets prepared for sal e or con sumpti on . Th e determinati on of depl eti on of the bi ol ogical assets i s based on th e fair value of bi ol ogi cal assets depl eted in th e peri od, an d its depleti on was appropriated to producti on cost. 16
Tra de Payables Parent company
Foreign Domestic
17
Consolidated
2010
2009
2010
2009
13,536 87,669
8,215 76,652
14,844 95,780
8,215 79,446
101,205
84,867
110,624
87,661
Borrowi n gs Parent company
In foreign currency ACC (Advance on Export Contract) PPE (Export Prepayment Agreement) Financing of equipment Debt novation In localcurrency Finance leases Working capital (ruralcredit/sale) Export credit note (CCE) Specialworking capital line of credit - BNDES(PEC) Financing for the Acquisition of Industrial Machinery and Equipment (FINAME) and Enterprise Financing (FINEM) - BNDES Current liabilities Non-current liabilities
Consolidated
2010
2009
2010
2009
234,650 214,661 6,206
103,975 91,035 8,334 454,506
234,650 214,661 6,278
103,975 91,035 8,334 454,506
7,395 72,809 17,447 80,450
11,995 55,241 19,270 99,949
9,934 72,809 17,447 80,450
19,106 55,241 19,270 99,949
156,059
181,180
157,964
184,591
789,677 (445,835)
1,025,485 (271,044)
794,193 (449,088)
1,036,007 (277,166)
343,842
754,441
345,105
758,841
Borrowings in foreign currency (prin cipal and interest in U.S. dollars) total US$ 273,387 th ou sand (2009 - US$ 845,240 th ou sand) in th e parent com pany an d US$ 273,340 th ou sand (2009 US$ 858,426 th ou sand) in Con soli dated. Said borrowings are divi ded between l oan s restated based on th e variati on of th e LIBOR rate + 3.5% p.a. and l oans accruing fixed interest rates between 6% an d 9% p.a. 33 of 45
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
Borrowings in l ocal curren cy accru e finan cial charges equival ent to: .
TJLP + 0.5% to 4.5% p.a. or currency basket + 11.0% p.a. for transacti ons wi th th e BN DES; av erage interest rates of 11.5% p.a. for the oth er tran sacti ons.
Th e balance payable related to debt n ovati on is as foll ows: Parent company 2010 Financial institutions
2009
Consolidated 2010
454,506
Contracted amountspayable Igaporã Participações S.A.
837,732
Payables to stockholders
362,466 1,200,198
813,882
2009 454,506
861,446
836,841
362,466 1,268,388
1,223,912
1,291, 347
In N ov ember 1996, the Com pany suspen ded th e paym ent of debts to th e financial in sti tuti ons. Howev er, on February 22, 2000, a debt n ovati on agreemen t was signed, limiting th e debt repaymen t to the estimated cash gen erati on of th e Com pany ov er th e foll owing 11 years. Under this ren egotiati on , a minimum repaym ent of 27% of th e debt am oun t was agreed, an d any am oun ts which coul d n ot be paid in this peri od using th e cash gen erated woul d be automatically waiv ed. During th e current y ear, R$ 16,230 (2009 - R$ 4,754) was pai d. A s from 2006, all th e creditors approv ed thi s agreemen t. As a result of this agreem ent, all lawsuits for the collecti on of debts filed by banks that took part in th e agreem ent were waived. As a guaran tee for th e transacti on , wh en th e private instrument to ren ew th e debt was sign ed, the controlling stockh ol der togeth er with the majority stockh ol der of the parent com pany gran ted a surety bon d in the am ount guaranteed by this instrum ent. By m eans of an agreemen t wi th th e creditor Igaporã Parti cipações S.A ., which h olds 64.43% of th e am ounts inclu ded in the debt renewal agreem ent of February 2000, on Decem ber 27, 2010, the "2n d Amen dm ent to th e Debt Ren ewal Agreemen t" was sign ed, with th e main objectiv e of postponing the agreem ent terminati on date to December 28, 2020, wi th all th e oth er con di ti ons remaining unaltered, an d the related existing balan ces were reclassifi ed to "Con tracted am ounts payabl e"un der n on -curren t liabili ties. On Decem ber 15, 2010, the indivi dual stockh ol der made th e paym ent of th e balance corresponding to su b-credits "A "an d "C" appearing in the deeds of financing agreemen ts through the opening of a lin e of credi t N o 89.2.363.2.1 dated October 10, 1989, as amen ded, and N o 91.2.459.2.1, dated Decem ber 13, 1991, as amen ded, sign ed wi th th e Nati onal Bank for Econ omi c an d Social Dev el opm ent (BN DES), as well as the balan ce related to sub-credits "A " and "C" appearing in th e deeds of finan cing agreem ents N o 89/00137-0 dated Decem ber 6, 1989, as am en ded, an d the Agreem ent for Ackn owl edgmen t, Con soli dati on an d Assumpti on of Debts dated December 21, 2000, as amen ded, sign ed wi th Ban co do Brasil S.A., thus subrogating to him all righ ts an d obligati ons as creditor, related to the am ounts described in th ose deeds. On Decem ber 27, 2010 a "Private Instrument for th e A ckn owledgm ent of Debt, Tran sacti on an d oth er Cov enants" was sign ed, wi th th e objectiv e of postponing th e final maturity of the rights an d obligati ons ori ginated in the deeds m enti on ed abov e to December 31, 2020, wi th all oth er con diti on s of the agreem ents remaining unaltered, an d the correspon ding am oun t was transferred to "Payabl es to stockh ol ders" in n on -curren t liabili ties. 34 of 45
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
Balances payabl e to Igaporã S.A . an d to the stockh ol der are subject tom onetary restatem ent based on th e v ariati on of th e U.S. dollar exchange rate plus interest of 8% p.a. an d, in th e parti cular case of Igaporã S.A., a continuity premium for the postpon em ent of th e maturity date of th e debt of R$ 9,104, whi ch will be appropriated to results for th e debt maturity term. Total financing i s guaranteed by the Com pany 's land, buildings an d machin ery an d equipm ent, an d al so by promissory n otes and sureti es by th e controlling stockh ol ders. Lon g-term matu rities Parent company Year 2011 2012 2013 2014 2015 After 2016
2010 87,315 51,565 69,776 98,361 36,825 343,842
18
2009 576,091 61,982 3,511 22,016 90,841 754,441
Consolidated 2010 88,167 51,733 69,939 98,441 36,825 345,105
2009 579,472 62,510 3,511 22,016 91,332 758,841
Tax Payables an d In stallment s Parent company
Current withholding taxes With - holding tax (IRRF) on payroll National Institute of Social Security (INSS) on services PIS/COFINS/CSLL on serv ices Services Tax (ISSQN) PIS proceedings relating to Law 9718/08 Other taxes
Taxes on sales Excise Tax (IPI) Value-added Tax on Sales and Services (ICMS) Social Integration Program (PIS) Social Contribution on Revenues (COFINS)
Tax installment Installment tax program - ICMS - Pará ( i) Installment tax program - ICMS São Paulo (iii) Installment tax program - ICMS - Goiás Installment tax program - IPI (iii) Special Tax Installment Payment Scheme - SRFB/INSS - REFIS (ii)
35 of 45
Consolidated
2010
2009
2010
2009
1,520
1,016
1,678
1,123
590 510 445
655 552 484
179
508 436 371 3,800 113
1,534
579 476 400 3,800 1,101
3,244
6,244
4,903
7,479
4,471
3,066
4,471
3,066
7,407
1,544
7,479 52
2,329 52
241
241
11,878
4,610
12, 243
5,688
18,296
19,371
18,296
19,371
8,475 307 16,528
771
8,475 307 16,528
771
5,754
9,736
7,495
11,486
49,360
29,878
51,10 1
31,628
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
Parent company
Current liabilities Non-current liabilitie s (i)
Consolidated
2010
2009
2010
2009
64,482 (33,849)
40,732 (13,312)
68,247 (35,564)
44,795 (15,842)
30,633
27,420
32,683
28,953
In December 2008, the Company's ICMS tax credits were approved by the Pará State Finance Office, in the amount of R$ 20,087, and it used these credits to offset ICMS tax due, in the restated amount of R$ 40,133. Part of this amount had been recorded as "Tax contingencies". The remaining balance was divided into 120 installments with final maturity in November 20 18. The Company awaits the approval of its tax credits to offset the remaining amount of the ICMS taxes payable in installments (Note 8).
(ii) REFIS - Tax Special Installment Payment Scheme: in November 2009, the Company benefited from the provisions of Law 11941/09 and Provisional Measure ( MP) 470/2009, and enrolled in the new program to pay its debts with the Brazilian Federal Revenue Secretariat (RFB) in 28 monthly installments, with final maturity in August 2012. (iii) In 2010, the Company applied for the payment in installments of ICMS debts (36 months) and IPI (60 months), with the last installment maturing in July 2013 and May 2015, respectively.
Changes in the Special Tax Installmen t Paym ent Schem e are as foll ows: 2010 Parent company
Consolidated
At December 31, 2008 Installments related to the merger of a related company Monetary restatement Payments made
34,728 529,873 18,520 (4,431)
36,797 529,873 18,520 (4,558)
At October 31, 2009 Adjustment of the debit balance for enrollment in the program Decrease in interest and fine - Law 11941/09 Decrease in interest and fine - MP 470/09 Amortization of principal using income tax and social contribution losses - MP 470/09 (Note 19) Monetary restatement Payments made
578,690 (17,309) (15,246) (233, 211)
580,632 (17,309) (15,475) (233, 211)
(303,039 ) 239 (388)
(303,039 ) 308 (420)
9,736 695 (4,677)
11,486 820 (4,811)
5,754
7,495
At December 31, 2009 Monetary restatement Payments made At December 31, 20 10 (i)
The reduction in interest and fine, as established in Law 11941/09 and MP 470/2009, was accounted for in "Finance income".
(ii) The amortization of the principal using income tax and social contribution losse s was accounted for in "Deferred income tax and social contribution".
36 of 45
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
19
Def erred In come Tax and Social Cont ributi on Th e Com pany an d its su bsi diari es hav e in com e tax an d social contri buti on l osses an d tem porary differences that are n ot deductibl e or n on -taxabl e in th e determinati on of taxabl e in com e, as sh own bel ow: Parent company
Tax losses Social c ontribution losses Temporarily non-deductible expenses Deferredf oreign exchange variati on Revaluati ons of pr operty ,plant andequipment Depreci able assets N on-depreciable assets Deemedc ost V aluation of biol ogic al assets A djustments introduced by Law 8200/91 - IPC/90 Depreci able assets N on-depreciable assets
Consolidated
2010
2009
2010
2009
1 ,065,1 43 1 ,069,204 11 ,1 30
1 ,052,91 2 1 ,069,009 1 2,384
1 ,085,7 46 1 ,089,837 1 3,447
1 ,069,7 29 1 ,085,855 1 3,1 44
571 ,7 59
599,17 3
571 ,7 59
599,17 3
1 80,328 33,61 2 648,47 8 37 0,61 5
201 ,626 33,61 2
201 ,626 69,548
37 0,026
1 80,328 69,548 7 94,11 6 417 ,442
41 4,500
102,031 41 ,006
11 4,065 41 ,006
102,031 41 ,006
11 4,065 41 ,006
Deferred incom e tax an d social contri buti on assets an d liabiliti es are as foll ows: Parent company
N on-current assets Tax losses Social c ontribution losses Temporarily non-deductible expenses
N on-current liabilities Deferredf oreign exchange variati on Revaluati ons of pr operty ,plant andequipment Depreci able assets N on-depreciable assets Deemedc ost V aluation of biol ogic al assets A djustments introduced by Law 8200/91 - IPC/90 Depreci able assets N on-depreciable assets
37 of 45
Consolidated
2010
2009
2010
2009
1 35,359 52,592
7 2,690 26,1 68
1 40,488 54,470 7 86
7 6,033 27 ,439
1 87 ,951
98,858
1 95,7 44
103,47 2
(1 94,398)
(203,71 8)
(1 94,398)
(203,71 8)
(61 ,31 2) (11 ,428) (220,483 ) (1 26,009)
(68,553 )
(61 ,31 2) (23,646 ) (269,999 ) (1 41 ,930)
(68,553 )
(1 25,808)
(1 40,929)
(9,1 83) (3,691 )
(1 0,266)
(9,1 83) (3,691 )
(1 0,266)
(626,504)
(408,345 )
(704,1 59)
(423,466 )
(438,553 )
(309,487)
(508,41 5)
(31 9,994)
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
Changes in the deferred taxes are as foll ows: Pa rent company 201 0 At th e beginning of th e y ear
(309,487)
With a correspon ding entry in the statemen t of income Su pplem entary deferred tax assets Su pplem entary deferred tax liabiliti es Realizati on of the deferred tax liabiliti es
2009
(319,994)
(190,407)
(34,792)
(13,056)
(34,792)
(125,808)
(276,216) (3,083) (27,337)
(140,871)
(255,640)
(125,808)
(306,636)
(140,871)
89,093
98,858 (57,338)
(240,521) (15,119)
37,481 126,574
At th e en d of th e y ear
201 0
(190,407)
Resulting from m erger (N ote 1) and oth er With a correspon ding entry in equi ty Tax effect on th e deem ed cost Tax effect on th e valuati on of bi ol ogical assets Tax effect on n on -depreciabl e assets
2009
Con soli dated
(438,553)
92,272
103,472 (57,396)
38,999 41,520 (309,487)
131,271
46,076
(508,415)
(319,994)
Income tax and social con tributi on l osses do n ot hav e an expiry peri od, but th eir fu ture offset is limited to 30% of annual taxable incom e. In 2009, du e to th e enrollm ent in th e Special Tax Installment Paym ent Schem e (N ote 18), th e Com pany used a porti on of its income tax l osses am oun ting to R$ 978,259 (incom e tax credit of R$ 244,563) an d social con tribu ti on l osses am ounting to R$ 649,737 (social contri buti on credit of R$ 58,476) to pay the debi t balance un der this tax installm ent paym ent program . At Decem ber 31, 2010, deferred income tax an d social con tribu ti on credi ts total R$ 362,514 (2009 R$ 359,439). Howev er, because certain cri teria in the accounting standards have n ot been m et, th e recorded deferred tax asset was limited to the deferred tax liability . Th ese am ounts were calculated observing th e limitati on of 30% for th e offset of incom e tax an d social con tribu ti on l osses. As provided for by N BC T 19.6 issu ed by th e Federal A ccoun ting Coun cil (CFC), "A sset Revaluati on ", the recogniti on of deferred incom e tax and social contributi on liabili ties on th e revaluati on an d th e effects of th e differen ce in th e consumer price in dexes in 1990 (IPC 90), for purposes of th e social contri buti on only , on assets n ot subject to depreciati on , was n ot required. A t December 31, 2009, the related deferred tax liabili ty total ed R$ 27,337. As from 2010, as establish ed in ICPC 10, such deferred tax liabiliti es sh oul d be recognized, wi th a correspon ding entry to th e revaluati on reserv e in equity .
38 of 45
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
20
Commitment s f or the Pu rcha se of Asset s Parent company 2010 For purchases of quotas of c apital Santa Andréa A gro-Pec uária Ltda. In f oreign currency (ii ) In local currency (iv ) Jari da A mazônia S.A . (i ) For purchases of land andf orests (iii ) N on-current liabilities Current liabilities
2009
Consolidated 2010
2009
1 ,91 9 624 22,922 1 ,800
1 3,494 2,949 43,1 54 23
22,922
43,1 54
22,922
43,1 54 (20,680)
27 ,265
59,620 (27 ,358)
22,922
22,47 4
27 ,265
32,262
(i ) Refer s to the remaining bal ance payable f or the purchase of shares of Rigesa da A mazônia S.A . (currently Jarí da A mazônia S.A .), net of the adjustment to present value of R$ 3,309, to be pai din monthly and semi -annual install ments up to N ovember 2011 . (ii ) Refer s to the remaining bal ance payable f or the purchase of quotas of Santa A ndréa Agr o-Pecuária Ltda., equivalent to U S$ 1 ,151 thousand at December 31 , 201 0 (2009 - U S$ 7 ,7 50 thousand). The debit balance i s sub ject to forei gn exchange variati on and the last i nstallment matures in September 2011 . (iii )On N ovember 5, 2010, the Company ac quiredFazenda Roveda f or R$ 3,849; the remaining balance of R$ 1 ,800 will be settledin ei ght equal c onsecutive monthly installments, the first one maturing on January 23, 2011 . (iv ) Refer s to the remaining bal ance payable f or the ac quisition of quotas of the c apital of Santa Andréa A groPecuária Ltda. The debit b alanc e is not sub ject to i nterest and monetary restatement and matures in September 2011 .
21
Provi si on f or Contingen cies At th e date of th e finan cial statem ents, th e Company and its su bsi diaries presented the foll owing liabili ties an d correspon ding ju dicial deposits related to the contingenci es. Parent company Judicial deposits
Tax c ontingencies Lab or c ontingencies Civil clai ms
39 of 45
Provision for contingencies
2010
2009
2010
2009
61 3 1 2,640 1 84
634 8,200 27 2
3,634 2,570
4,342 1 ,254
1 3,437
9,1 06
6,204
5,596
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
Consolidated Judicial deposits
Tax c ontingencies Lab or c ontingencies Civil clai ms
Provision for contingencies
2010
2009
2010
2009
61 3 1 2,807 443
634 10,809 27 2
5,296 2,570
2,299 5,1 45 1 ,254
1 3,863
11 ,715
7 ,866
8,698
Changes in the provisi on are as foll ows: Parent company At Dec ember 31 , 2008 Mer ger of sub si diaries Payments Reducti ons
Consolidated
7 ,603 1 ,1 52 (47 9) (2,680 )
7 ,696 3,691 (47 9) (2,21 0)
At Dec ember 31 , 2009 A dditi ons Payments
5,596 3,225 (2,617)
8,698 1 ,7 85 (2,617 )
At Dec ember 31 , 2010
6,204
7 ,866
Th e Com pany an d its su bsi diari es are parti es to labor, civil and tax lawsuits in progress, an d are discussing such matters at th e administrative an d judi cial l ev els, which , when appli cabl e, are supported by judi cial deposits. Th e provi si ons for probabl e l osses arising from these lawsuits are estimated and peri odically u pdated by managemen t, su pported by the opini on of i ts external l egal advisors. Th e Com pany is also a party to tax, civil an d labor proceedings am ounting toR$ 36,669 (2009 R$ 32,729), inv olving th e ri sk of l oss classifi ed by managemen t as possibl e based on th e assessmen t of external l egal advi sors, for which a provisi on has n ot been recorded. 22
Equity
(a )
Ca pital Capi tal compri ses 16,000,000 registered comm on shares, with n o par valu e.
(b)
Legal reserv e an d profit ret enti on reserve Th e l egal reserve is credited annually with 5% of profit for th e y ear, excluding tax incentiv e funds, an d cann ot exceed 20% of the capital . Th e purpose of th e l egal reserv e is to ensure the integrity of capital , an d it can be u sed only to offset l osses or increase capital . Th e profit retenti on reserv e refers to th e remaining balan ce of retain ed earnings, main tained to fund projected business growth as establish ed in the Com pany 's investm ent plan , in cluded in the capital bu dget proposed by th e Company 's managers and, especially, to strengthen working capital . 40 of 45
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
(c)
Sha re right s and dividen ds Stockh ol ders are enti tled to receiv e man datory minimum divi dends of 25% of th e profit for th e y ear, adjusted in accordance with th e provisi ons of th e Brazilian Corporati on Law. In 2010 and 2009, despi te th e profit determin ed, n o divi dends were proposed to be distribu ted by th e Com pany , n ot ev en th e assured minimum dividen d, because the profit for th e y ear and th e exi sting retain ed earnings balan ce before appropriati on related substantially to th e recording of the carrying value adjustm ent of bi ol ogical assets an d deferred in com e tax. Th e stockh ol ders declared th eir inten ti on n ot to receive dividen ds, because th ey understood that it woul d n ot be justifiable to pay dividen ds consi dering the Com pany 's financial situati on, an d also th e fact that such profit deriv ed from unrealized results.
23
Tax In centives Th e Com pany (Mon te Dorado - PA plant) an d its su bsi diari es Orsa Em balagens da Amazônia S.A . an d Jari da Amazônia S.A., ben efit from in com e tax in centiv es related to incom e earned from th e sal e of products. Th ese in centiv es con sist of th e exem pti on from or redu cti on of 75% of th e in com e tax based on th e expl oi tati on profi t for the y ears u p to 2017, 2012 and 2017, respectively . In th e y ear en ded Decem ber 31, 2010, the am ount of sai d tax incentiv es total ed R$ 827 (related to Orsa Embalagens da Amazônia). Th e subsi diari es Orsa Em balagens da Amazônia S.A . an d Jari da Amazônia S.A ., ben efit from tax incen tives gran ted by th e Amazonas State Finance Offi ce, whi ch consist of the deferral and/or reducti on in the cal culati on basi s of the Valu e-Added Tax on Sal es an d Services (ICMS), as established in Law 2826 of September 29, 2003. Sai d tax incen tives total ed R$ 227 (2009 - R$ 421). Th e Com pany (Ri oV erde - GO plant), under th e Special Tax System Agreemen t (TARE) 342/2001 and Decree 3822 of July 10, 1992, benefits from a tax incen tive program nam ed "FOMEN TAR", which consists of paying 30% of th e ICMS am ount du e on a m onthly basi s an d deferring paym ent of th e remaining 70% u p to th e terminati on of th e tax incen tive ben efi t schedul ed for July 31, 2018; a discount is given for early paymen t. Said tax incentiv e totaled R$ 4,204 (2009 - R$ 1,702).
24
Net Sales Th e recon ciliati on between gross sales an d n et rev enue i s as foll ows: Pa rent company 201 0
2009
Con soli dated 201 0
2009
Gross sal es and services Taxes on sal es Returns
1,384,733 (260,613) (4,450)
645,832 (108,142) (2,228)
1,569,849 (333,282) (7,938)
882,020 (170,552) (6,738)
N et rev enu e
1,119,670
535,462
1,228,629
704,730
41 of 45
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
25
Oth er In come, Net Parent company
Tax credits Tax incentives Gain on the early rec eipt of tax incentive Fomentar Program - Ri o Ver de (GO) Loss on the di sposal of assets (N ote 29) Other inc ome (expenses), net
2010
2009
2010
2009
3,800 1 ,207
10,681
3,800 1 ,207
10,681
4,204
1 ,702
(1 ,980) 7 ,231
26
Consolidated
9,61 3
4,204 (11 ,647) 441
11 ,1 56
21 ,996
(1 ,995)
23,539
Ex pen ses by Natu re Parent company 2010 Raw materials andc onsumables used Taxes andc ontributions Personnel Depreci ation, amorti zati on and depleti on Tr ansportati on Commi ssions Services to be perfor med Financ e lease expenses Other expenses Cost of sales, selling expenses and general and admini strative expenses
27
1 ,702
2009
Consolidated 2010
2009
(384,1 10) (1 ,7 21) (206,050) (1 91 ,306) (44,1 1 6) (1 4,603) (241 ,937) (1 ,313) (47 ,332)
(256,249 ) (1 ,1 49) (1 20,81 4) (1 01 ,401) (1 9,877) (5,7 38) (1 90,1 07) (704) (51 ,327)
(41 5,971) (5,555) (245,629 ) (205,264) (48,061 ) (1 6,465) (260,57 4) (1 ,421) (59,325)
(353,417 ) (5,31 4) (1 56,321 ) (11 9,352) (23,359 ) (6,91 6 ) (21 5,775) (71 4) (58,680 )
(1 ,1 32,488)
(7 47 ,366)
(1 ,258,265)
(939,84 8 )
Empl oyee Salari esan d Benefit s Ex pen se Parent company
Sal aries Social security costs Pr ofit sharing Benefits
2010
2009
2010
2009
1 20,994 35,023 9,800 40,233
68,299 20,000 6,1 38 26,377
1 50,1 09 44,492 10,963 48,57 2
94,929 27 ,883 6,7 83 31 ,602
206,050
1 20,81 4
254,1 36
1 61 ,1 97
Porti on allocatedto bi ological assets
Number of employees
42 of 45
Consolidated
(8,507)
(4,87 6)
206,050
1 20,81 4
245,629
1 56,321
3,451
3,493
4,962
4,87 2
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
28
Finan ce Result Parent company 2010 Finance costs Charges on financing Interest on taxes overdue/paid in installmen ts Tax on financial transactions Finance costs on notes payable Commissions Other finance costs
Finance income Interest incom e on short-term bank deposits Discounts obtained Decrease in interest and fines on taxes Interest on receivables Other finance incom e
29
2009
Consolidated 2010
2009
(166,810) (10,629) (938) (3,805) (887) (4,854)
(146,672) (167) (423) (657) (192) (613)
(169,881) (10,812) (988) (4,295) (887) (5,316)
(149,169) (254) (501) (982) (192) (4,859)
(187,923)
(148,724)
(192,179)
(155,957)
312 12,855
324 13,312
69,931 4,344
1,086 192 248,457 59,532 207
69,931 4,678
1,162 211 248,686 59,919 127
87,442
309,474
88,245
310,105
Monetary and exchange variations, net
30,314
106,258
30,578
120,188
Finance result, net
(70,167)
267,008
(73,356)
274,336
Bu sin ess Combinati on s On N ov ember 30, 2009, th e Com pany acquired 100% of the share capi tal of Jari da Amazônia S.A. (form erly Rigesa da Amazônia S.A .) for R$ 50,000, whi ch total ed R$ 45,654 after adjustmen t to presen t value. As required by accounting stan dard CPC 15 of th e Brazilian A ccoun ting Pron ouncem ents Commi ttee (CPC), th e Company valued i ts inv estmen t at fair value at th e acquisi ti on date. A s a result, an d according to the agreemen t for the purchase an d sale of shares, th e assets and liabiliti es that were n ot included in th e purchase were eliminated u pon th e determinati on of th e fair valu e of th e n et assets acquired, and n egativ e goodwill of R$ 4,168 was determined (bargain purchase) and credited to th e results of operati ons for th e y ear un der "Oth er in com e, n et", as described bel ow: Book values at the acquisitions date Cash and cash equivalents Trade accounts receivable Inventories Taxes recoverable Judicial deposits Property, plant and equipment Other assets Trade payables Salaries and social charges Taxes payable Provision for contingencies Other liabilities
4,808 3,586 7,480 2,297 2,803 6,207 4,943 (892) (1,151) (427) (2,375) (159)
Net assets acquired
27,120
Net assets not acquired
Adjusted book values
(2,493)
2,315 3,586 4,669 553
(2,811) (1,744) (2,803) (4,387) 201 2,298 92 (11,647)
6,207 556 (892) (950) (427) (77) (67) 15,473
Fair value adjustment
Fair value 2,315 3,586 4,669 553
34,349
40,556 556 (892) (950) (427) (77) (67)
34,349
49,822
Gain from bargain purchase
(4,168)
Purchase consideration adjusted to present value
45,654
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Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
Th e adjustm ent of th e fair valu e of property , plant an d equi pmen t is represented by th e deeme d cost recorded by th e su bsi diary on January 1, 2010. 30
Cu rrent In come Tax an d Social Cont ributi on Th e Com pany an d its su bsi diari es adopt the quarterly taxabl e income meth od to calculate corporate income tax (IRPJ) an d th e social contri buti on on n et income (CSLL), and also ben efi t from tax incen tives (redu cti on of 75% in IRPJ cal culated based on the expl oitati on profit), as di scussed in N ote 23. Th e Com pany determined tax l osses of R$ 16,097, related to certain quarters for th e y ear en ded December 31, 2010. IRPJan d CSLL charges presented in th e consoli dated statemen t of income totaling R$ 726 (2009 - R$ 588) relate to taxabl e income determined by the Com pany and subsidiari es in certain quarters of th e y ears ended December 31, 2010an d 2009. Tran sitional Tax Sy stem Th e Transiti onal Tax System (RTT) will be effective un til th e enactm ent of legislati on that will address th e tax effects of th e n ew accounting m eth ods, whil e seeking to maintain tax n eutrality. Th e sy stem was opti onal for cal endar years 2008 and 2009, as l ong as th e foll owing were observ ed: (a) the RTTmu st be used in both 2008 an d 2009, n ot just on e cal endar y ear;an d (b) th e el ecti on of th e RTT must be declared in the Federal Corporate In com e Tax Return (DIPJ). Th e Com pany an d its su bsi diari es opted for th e adopti on of th e RTT in 2008. Consequ ently , for in com e tax an d social con tribu ti on on n et incom e calculati on purposes for th e y ear en ded December 31, 2009, th e Com pany used the prerogativ es defined in th e RTT. As from 2010, th e adopti on of th e RTT started to be mandatory .
31
In su ran ce Cov era ge Th e forests an d reforestati on s own ed by th e Com pany, as well as th ose un der i ts managem ent, are n ot cov ered by fire insuran ce. Howev er, prev entiv e m easures are taken tominimize th e any fire risks. Th e Com pany uses in surance consultant support to establish cov erage com pati ble wi th its si ze an d operati ons. Th e in surance poli cies at December 31, 2010, indi cate th e foll owing l ev els of cov erage for property and civil liability . Th e Com pany has an insurance policy for l oss of profi ts according to projecti ons for all plan ts. Lines Fire - property, plant and equipment items Plants Almeirim - PA Nova Campina - SP Paulínia - SP Suzano - SP Franco da Rocha - SP Rio Verde - GO Manaus - AM Marquesa - Itapeva - SP (headquarters) Alphaville - SP (offices)
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Amounts insured
1,290,380 307,000 160,900 139,250 47,500 79,500 19,900 5,000 2,500
Jari Celulose, Papel e Embalagens S.A. Not es t o the Financial Stat ement s at December 31 , 201 0
In thousands of reais, unless otherwise stated
Lines
Amounts insured
Inventories Plants Almeirim - PA Nova Campina - SP Paulínia - SP Suzano - SP Franco da Rocha - SP Rio Verde - GO Manaus - AM
48,000 21,900 11,000 12, 150 2,500 12, 100 8,900
Civil liability Almeirim - PA Other plants
65,283 3,000
*
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*
*
