FORM
6-K
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Report
of Foreign Issuer
Pursuant
to Rule 13a-16 or 15d-16
of
the Securities Exchange Act of 1934
For the
month of November 2009
Commission
File Number: 1-33659
COSAN
LIMITED
(Translation
of registrant’s name into English)
Av.
Juscelino Kubitschek, 1726 – 6th
floor
São
Paulo, SP 04543-000 Brazil
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual reports under
cover of Form 20-F or Form 40-F:
|
Form
20-F
|
X
|
Form
40-F
|
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(1):
|
Yes
|
No
|
X
|
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(7):
|
Yes
|
No
|
X
|
Indicate
by check mark whether by furnishing the information contained in this Form, the
Registrant is also thereby furnishing the information to the Commission pursuant
to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
|
Yes
|
No
|
X
|
If “Yes”
is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): N/A
COSAN
LIMITED
|
Item
|
|
|
1.
|
Communication
regarding 2Q10 earnings release
|
2
Cosan posts new EBITDA record
of R$355.7 millions on 2Q’10
São Paulo, November 12th, 2009 - COSAN LIMITED (NYSE: CZZ; Bovespa: CZLT11) and
COSAN
S.A. INDÚSTRIA
E COMÉRCIO (Bovespa:
CSAN3)
announce today the Earnings Release for the 2Q’10.
The results presented below are consolidated in accordance with Brazilian
accounting policies.
|
Marcelo
Martins,
CFO & IR Officer Luiz Felipe
Jansen de Mello,
Investors Relations
ri@cosan.com.br www.cosan.com.br |
Highlights 2Q’10 | |
|
●
Net
Revenue on 2Q’10
reached R$3.58 billions, 400% higher than the R$715.1
millions posted on 2Q’09.
●
EBITDA record on 2Q’10,
achieving R$355.7 millions, 95% higher than the 2Q’09
and with an EBITDA margin of 9.9%.
●
Net Profit of R$173.4 millions on 2Q’10
and R$510.6 millions on the accumulated until
September.
|
||
 |
||
 |
Summary of Financial and Operating Information
(R$MM)
|
||||||||||||||||
|
2Q'09
|
2Q'10
|
YTD'09
|
YTD'10
|
||||||||||||||
| 281.7 | 450.7 |
Ethanol Sold
(millions liters)
|
620.2 | 1,207.4 | |||||||||||||
| 739.9 | 1,101.1 |
Sugar Sold
(thousand tonnes)
|
1,531.5 | 2,089.6 | |||||||||||||
| 1,381.8 | 1,318.2 |
Fuels Sold
(million liters)
|
2,701.1 | 2,690.3 | |||||||||||||
|
Definitions:
FY’10 – fiscal year
begun Apr 1, 2009 and ending March
31, 2010
FY’09 - fiscal year
begun May 1, 2008 and ending March
31, 2010
2Q’10 – quarter ended on
September 30, 2009
2Q’09 – quarter ended
October 31, 2009
YTD’10 – period begun on
the same date as the FY’10 and
ended at the close of 2Q’10
YTD’09 - period begun on
the same date as the FY’09 and
ended at the close of 2Q’09
|
33.6 | 34.4 |
Lubes Sold
(million liters)
|
69.3 | 64.0 | ||||||||||||
| 715.1 | 3,575.3 |
Net
sales
|
1,354.7 | 7,141.4 | |||||||||||||
| 167.9 | 523.8 |
● Gross
profit
|
181.5 | 891.5 | |||||||||||||
| 23.5 | % | 14.7 | % |
Gross
Margin
|
13.4 | % | 12.5 | % | |||||||||
| (586.7 | ) | 277.8 |
●
Operating income (loss)
|
(668.0 | ) | 763.4 | |||||||||||
| -82.0 | % | 7.8 | % |
Operating
margin
|
-49.3 | % | 10.7 | % | |||||||||
| 182.5 | 355.7 |
●
EBITDA
|
211.8 | 666.9 | |||||||||||||
| 25.5 | % | 9.9 | % |
EBITDA
Margin
|
15.6 | % | 9.3 | % | |||||||||
| 185.5 | 338.9 |
● EBITDAH
|
259.9 | 811.0 | |||||||||||||
| 25.8 | % | 9.5 | % |
EBITDAH Margin
|
18.5 | % | 11.1 | % | |||||||||
| (380.8 | ) | 173.9 |
●
Income (loss) before minority interest
|
(439.7 | ) | 501.7 | |||||||||||
| (380.7 | ) | 173.4 |
●
Net income (loss)
|
(438.8 | ) | 510.6 | |||||||||||
| -53.2 | % | 4.8 | % |
Profit
(loss) Margin
|
-32.4 | % | 7.2 | % | |||||||||
| 314.3 | 359.1 |
Capex
|
579.1 | 779.7 | |||||||||||||
| 1,124.0 | 4,160.2 |
●
Net
Debt
|
1,124.0 | 4,160.2 | |||||||||||||
| 3,783.1 | 4,250.9 |
●
Shareholders' & Minorities Equity
|
3,783.1 | 4,250.9 | |||||||||||||
1
|
A. Market
Overview
According to UNICA, the sugarcane
growers’ association, crushed cane volume
in Brazil’s Central-South (CS) from the
2009/10 harvest totaled 442.6 million tonnes through November 1, 7.2% up
on the same period in the previous harvest, despite the increased
rainfall. On the other hand, ATR (total recoverable sugar) was badly
affected, falling to 132.6kg/t, 6.4% less than the 141.6kg/t in the
previous year. The production mix continued to prioritize sugar, which
absorbed 44% of crushed cane, 3.5 p.p. up on the previous season, with 56%
going to ethanol. As a result, sugar production
came to 24.7 million tonnes, 9.1% up year-on-year, while ethanol output
declined by 5.2% to 19.2 billion liters, 14.2 billion liters of which
hydrous, up by 6.5%, and 5.0 billion liters anhydrous, down by
28.0%.
UNICA has also recently published its revised
harvest estimates, given the lower number of available harvest days and
the reduced ATR, according to which crushed cane volume in
Brazil’s Central-South should reach 529.5
million tonnes, 3.7% down on the initial estimate, but still 4.9% up on the 505.0
million tonnes recorded last year. ATR is now expected to total 134.9
kg/t, 4.5% down on the initial estimate of 141.2 kg/t and 4.3% less than
the previous harvest. With the higher-than-expected sugar ratio (43.1%,
versus the initially forecast 42% and
40% last year), Central-South sugar output should reach 29.4 million
tonnes, 5.6% less than expected, but still 9.7% more than in the previous
season. Ethanol production, on the other hand, is expected to total 23.7
billion liters, versus 25.1 billion last
year and 9.6% lower than the initial forecast. According to our own
estimates, 28 days of crushing were lost through October 31 to rainfall,
versus the historical average of 13 days for the same
period.
|
||
|
Indian
government establishes “fair and remunerative price”
|
Sugar output from the new Indian harvest is expected
to remain close to 16 million tonnes. Cane production was jeopardized by
the lack of monsoon rains at the beginning of the inter-harvest period in
the main producing regions. The government continues to adopt measures to
increase domestic sugar supply,
given that prices are close to record levels. The most recent such measure
was limiting inventories for industrial consumption to 15 days of demand,
having already restricted the inventories of trading companies and dealers
to 30 days.
Recently, the Indian federal
authorities announced a “fair and remunerative
price” (FRP) for
sugarcane of Rs 1,298.4/t (US$27,9/ton of sugarcane), to remain in force
during the 2009/10 harvest (Nov/09– Oct/10, in India), replacing the
statutory minimum
price (SMP), which had already been raised to Rs 1,077.6/t (US$27.9/tones
of sugarcane). However, the FRP is still below sugarcane prices
established by certain states, such as Uttar Pradesh (Rs 1,650/t),
Tâmil Nadu (Rs
1,437.4/t) and Punjab and Haryana (Rs 1,700 and Rs1,800/t,
respectively). Although the Maharashtra state government has not imposed a
fixed price, growers there are receiving between Rs 2,000 and Rs 2,500/t.
Although this is the highest level for 10 years, it is worth noting that
the prices of the major competing
crops, such as rice, corn and wheat, have also been
increasing.
|
|
2
|
Mexican inventories have been
dwindling due to last year’s poor harvest and exports to the
USA. Up to now, the government has already auctioned sugar import licenses
equivalent to 550,000 tonnes, which could well come from
Brazil’s Central-South due to
the limited capacity of the Central
American refineries. In Russia, preliminary figures for the sugar beet
harvest point towards a reduction in productivity per hectare, in turn
reducing sugar output, which could lead the government to suspend the
import surcharge which currently stands at
US$165/t.
The major hedge funds, plus
smaller funds and speculators, maintained their long sugar positions at
200,000 lots, equivalent to 19% of all open contracts, 41.4% up
year-on-year.
|
||
 |
||
| Source: NYBOT & CFTC (Commodities Futures Trading Commission) | ||
|
International raw sugar prices
averaged 20.52 US¢/lb
in the 2Q’10, 39.7% up on the previous
quarter and 57.7% more than the same period in 2008 (July, August and
September). Despite the appreciation of the Real against the dollar in the
2Q’10, the average price of sugar in Reais increased
by 25.8% year-on-year to 38.23 R$¢/lb.
International refined sugar prices
continued their upward trajectory, averaging US$523.26/t in the
2Q’10, 21.9% up on the previous
quarter and 35.8% more than the same quarter last year. The white premium, comparing
LIFFE#5 and NY#11 maturities in March 2010, closed the quarter at
US$105/t, reflecting expected demand for refined
sugar.
Sugar exports totaled 12.7 million
tonnes in the harvest year to date, 26.4% up year-on-year.
India was still the
main destination, absorbing around 20% of the total, followed by Saudi
Arabia (9.4%) and Russia (7.6%).
Domestic crystal sugar prices
(ESALQ) averaged R$47.37/50kg bag (or R$ 947.34/t) in the 2Q’10, 6.6% up on the previous
quarter and 63.3% up
on the same quarter in 2008, reflecting the combination of strong sugar
exports and the downturn in production due to the atypically high
rainfall.
|
||
3
 |
||
| Source: NYBOT, LIFFE and ESALQ | ||
|
Ethanol
prices begin to recover
|
Domestic ethanol prices began to recover, with
anhydrous moving up 21.9% over 1Q’10 to R$0.838/liter, albeit still
3.7% down year-on-year. Hydrous averaged R$0.736/liter, up by 22.4% and
1.3%, respectively, over the 1Q’10 and the same months in 2008.
The upturn is beginning to reflect the expected
reduction in closing inventories due to the higher sugar ratio in the
production mix, accelerating ethanol sales on the domestic market and the
unseasonably high rainfall, which delayed crushing and lowered the sugar
content (TSR) in the
sugarcane.
|
|
 |
||
| Source: ESALQ | ||
|
Flex-fuel
vehicle sales reach a record high due to the reduction in IPI
tax
|
According to Brazil’s National Petroleum Agency (ANP),
parity of hydrous ethanol prices compared to gasoline prices averaged
67.7%, weighted according to consumption. On the same date, the price of
ethanol was below 70% that of gasoline in 10 Brazilian states, which
jointly accounted for 78% of hydrous
consumption in 2008.
According to Anfavea, the auto
manufacturers’ association, 730,800 flex-fuel
vehicles were licensed in the 2Q’10, accounting for 89.4% of total
new car sales. Flex-fuel vehicle sales in the first nine months were 7.0% more than the same
period in 2008, itself a record at the time, due to the extension of the
IPI reduction until September. As of October, IPI (federal VAT) will
gradually be increased until it returns to its previous level in December.
In October, 245,600 vehicles were
licensed, 7.6% less than in September, but still 26.2% higher than in
October of last year.
|
|
4
 |
||
|
|
Source:
ANP
|
|
|
According to the ANP,
2Q’10 diesel sales volume totaled
11.7 billion liters, 8% up on the previous quarter and very close to the 3
months ended on
September 2008 total of 11.8 billion liters. Gasoline volume dipped by
2.7% over the 1Q’10 to 4.7 billion liters, slightly
below the 4.8 billion recorded in the same quarter last year. Ethanol
volume totaled 4.2 billion liters, 4.3% more than the quarter before and 23.3% up year-on-year
thanks to the increase in the number of flex-fuel
vehicles.
The Real appreciated by 9.8% in the quarter, from R$1.95/US$ at the close of the 1Q’10 to R$1.78/US$ in September 2009, averaged R$1.87/US$ for the quarter as a whole, versus R$2.08/US$ in the 1Q’10 and R$1.67/US$ in the same months in 2008. |
||
|
B. Operational
Performance
As already explained in the
previous quarter, the FY’10 came with certain changes in
the way of looking at Cosan’s operating results, among which
it is worth pointing out: (i) on account of the alteration of fiscal year
2009, which brought forward the closing to March 31, 2009, the periods
relative to 2Q’09 and 2Q’10 are displaced, i.e.,
2Q’09 comprises the months
of August, September and October,
2009, while 2Q’10 comprises the months of July,
August and September, 2009; (ii) the depreciation presented in the
statements and analyses of results had its criterion altered for the
fiscal year, reflecting the depreciation included in COGS (Cost of Goods
Sold) and in operating expenses (SG&A) as opposed to the previous
fiscal year, when depreciation was shown with a production base, i.e., by
entry into production of the goods and services provided, in addition to
the depreciation assessed in operating
expenses. It must be stressed that the depreciation included in operating
expenses did not undergo any change of criterion, only production
depreciation; (iii) CCL’s only started to be consolidated
in December, 2008, therefore CCL figures presented for
2Q’09 are pro-forma only and serve
merely for information and comparison purposes; (iv) the 2Q’10 results do not include the
aviation business, which was sold in June 2009; (v) the 2Q’10 will be the first with results
of 3 full months of NovAmérica operations integrated with
the Cosan Group.
|
||
5
|
2Q'09
|
2Q'10
|
Income Statement
(R$MM)
|
YTD'09
|
YTD'10
|
|||||||||||||
| 715.1 | 3,575.3 |
Net
Operating Revenue
|
1,354.7 | 7,141.4 | |||||||||||||
| (547.1 | ) | (3,051.5 | ) |
(-) Cost of
Goods Sold
|
(1,173.2 | ) | (6,249.9 | ) | |||||||||
| 167.9 | 523.8 |
(=)
Gross Profit
|
181.5 | 891.5 | |||||||||||||
| 23.5 | % | 14.7 | % |
Gross
Margin
|
13.4 | % | 12.5 | % | |||||||||
| (88.6 | ) | (211.3 | ) |
(-) Selling
Expenses
|
(174.3 | ) | (420.9 | ) | |||||||||
| (65.7 | ) | (116.2 | ) |
(-) General
& Adm. Expenses
|
(125.4 | ) | (205.5 | ) | |||||||||
| (8.0 | ) | 2.5 |
(±) Other
Operating Expenses
|
(4.1 | ) | 75.0 | |||||||||||
| 176.8 | 156.8 |
(+)
Depreciation & Amortization
|
334.0 | 326.7 | |||||||||||||
| 182.5 | 355.7 |
(=)
EBITDA
|
211.8 | 666.9 | |||||||||||||
| 25.5 | % | 9.9 | % |
EBITDA
Margin
|
15.6 | % | 9.3 | % | |||||||||
| 185.5 | 338.9 |
(=)
EBITDAH (Adjusted by Hedge)
|
259.9 | 811.0 | |||||||||||||
| 25.8 | % | 9.5 | % |
EBITDAH
Margin
|
18.5 | % | 11.1 | % | |||||||||
| (551.8 | ) | 78.9 |
(±) Net
Financial Expenses
|
(464.8 | ) | 512.3 | |||||||||||
| (0.3 | ) | 0.0 |
(±) Equity
Income
|
(0.1 | ) | (3.5 | ) | ||||||||||
| (40.4 | ) | - |
(-) Goodwill
Amortization
|
(80.8 | ) | (85.6 | ) | ||||||||||
| (586.7 | ) | 277.8 |
(=)
Profit Before Income Tax
|
(668.0 | ) | 763.4 | |||||||||||
| 205.9 | (103.8 | ) |
(±) Income
Tax
|
228.3 | (261.7 | ) | |||||||||||
| 0.1 | (0.6 | ) |
(±) Minority
Interests
|
0.9 | 9.0 | ||||||||||||
| (380.7 | ) | 173.4 |
(=)
Net Profit (Loss)
|
(438.8 | ) | 510.6 | |||||||||||
| -53.2 | % | 4.8 | % |
Net
Margin
|
-32.4 | % | 7.2 | % | |||||||||
|
Production
|
||
|
In the
2Q’10,
Cosan crushed 18.5 million tons of sugar cane, out of which approximately
40% of its own and 60% coming from suppliers. Approximately 65% of the
harvest in the 2Q’09
was mechanically- conducted. Due to the unseasonal
rains in the quarter lowered the number of days available for crushing and
the change in fiscal year, the volume of cane crushed in the accumulated
up to the 2Q’10
was very similar to 2009 figures, despite the increase of almost 25% in
additional capacity.
In the quarter, production accounts for 1.4 million tons of sugar, 30% of
which being refined sugar and 70% being raw sugar, and 675 million liters
of ethanol, out of which 37.2% were anhydrous and 62.8% were
hydrated.
|
||
|
2Q'09
|
2Q'10
|
Production Highlights
|
YTD'09
|
YTD'10
|
|||||||||||||
| 16,778 | 18,452 |
Crushed
Cane (thd tons)
|
34,198 | 35,905 | |||||||||||||
| 7,137 | 6,998 |
Own Cane (thd
tons)
|
17,122 | 17,665 | |||||||||||||
| 9,641 | 11,454 |
Suppliers
(thd tons)
|
17,076 | 18,240 | |||||||||||||
|
Production
|
|||||||||||||||||
| 1,084 | 993 |
Raw Sugar
(thd tons)
|
2,070 | 1,857 | |||||||||||||
| 274 | 421 |
Refined Sugar
(thd tons)
|
517 | 720 | |||||||||||||
| 293 | 251 |
Anhydous
Ethanol (thd cbm)
|
548 | 395 | |||||||||||||
| 396 | 424 |
Hydrous
Ethanol (thd cbm)
|
781 | 899 | |||||||||||||
| 50.7 | % |
65.3
|
% |
Mechanization
(%)
|
50.4 | % | 63.1 | % | |||||||||
|
Net
Revenues
|
||
|
Net revenue amounted to R$3.6 billion in the quarter. The
major contribution for this increase came
from CCL, with revenues of R$2.4 billion in the period, representing 67.5%
of net billings. Among the fuels, diesel accounted for 49.2% of the
revenues, followed by gasoline with 41.0% and by ethanol with 8.5%.
Revenues from Lubricants amounted to R$170.9
million, representing 4.8% of consolidated net revenue. In CAA, sugar and
ethanol accounted for 63.1% and 25.9% of total revenue, respectively.
Sales to the foreign market represented 48% of CAA’s
net revenue in the quarter, versus 70% in the
previous
|
||
6
| period, mainly from NovAmérica’s share of sugar sales in the domestic market and the alcohol mix more oriented to the domestic market (65% in the quarter versus 38% in the previous period). | ||
|
Consolidated Net Revenue
(R$
MM)
|
||
 |
||
| CAA - Sugar | ||
|
|
|
Net Revenue
Evolution
Sugar (R$ MM)
 |
The 95% growth of sugar revenue,
when comparing this
year’s quarter to the same quarter of
the previous year, going from R$409.7 million in 2Q’09 to R$798.9 million in
2Q’10, results from the greater
volume sold and the increase in average unit price. The expectation of
sugar production for this harvest is significantly more than the
production for the 08/09 harvest, due to a mix aimed more at sugar, in
detriment of ethanol, and to the merger of NovAmérica Agroenergia, which added 10.6
million tons of crushing capacity. In this way, the volume of sugar
available for sale also rose, which
explains the increase of sales in 2Q’10. In addition, sales of sugar by
NovAmérica are more
concentrated in the domestic market, raising the share of this market from
12.5% in 2Q’09 to 29.3% in the current
quarter.
|
|
|
Sugar Volume and Average Unit
Prices
(Thousand tons -
R$/ton)
|
||
 |
||
 |
In the foreign market, the average
price of sugar of R$638/ton represented appreciation of 17% when compared
to 2Q’09. It is important to clarify
that the sugar revenues in the foreign market
reflect
|
|
7
| the results from fixation of prices over a period of more than 1 year, and that more than 90% of the shipments made in the period related to forward contracts with maturities in May/09 and July/09 (showing a closing price of approximately ¢US$14.41/lb). Thus, it is very important to bear in mind the horizon of fixation of prices and, although a portion of such benefit has already been secured in the quarter, we project greater impacts for the coming periods, mainly because the increases of price of the commodity ascertained in the prices of forward contracts traded in the New York and London Exchanges are more intense as from the maturity in October, 2009, against which we had shipments of only 8% in the quarter. | ||
|
CAA – Ethanol
|
||
|
Net Revenue
Evolution
Ethanol (R$
MM)
 |
Despite lower market prices,
ethanol revenues (R$327.8 million in the quarter) were 40.8% higher to the
2Q’09 revenues due to the 60% growth
in volume sold, which jumped from 281.7 million liters in 2Q’09 to 450.7 million liters for
2Q’10. This increase was concentrated
in the domestic market, with growing demand from new flex fuel vehicules,
and because of the NovAmérica’s
merger.
|
|
|
Ethanol Volume and Average Unit
Prices
(Million liters - R$/thousand
liters)
|
||
 |
||
 |
Ethanol prices, despite being better than those in
the previous quarter, remain 5% shorter than those in the comparison
period, however prices in October and beginning of November have already
recovered significantly, which will be captured in the next
quarters.
CAA – Other Products and
Services
The income from other products and
services showed a 91.32% increase, from R$72.6 million to R$138.9
million.
|
|
8
|
Other Products and Services
(R$ MM)
|
||
 |
||
|
Co-generation
One
of the highlights in this P&L line was the revenue of the energy
co-generation units, which contributed with R$39.6 million in
2Q’10
vs. R$ 10.9 million in 2Q’09.
The mentioned increase reflects the start of generation from the Costa
Pinto and Rafard mills and the incorporation of NovAmérica,
which is delivering energy
through Tarumã e
Maracaí.
|
||
|
Co-generation
|
2Q'10
|
YTD'10
|
||||||||
|
Volume
Sold (MWh)
|
223,729 | 355,540 | ||||||||
|
Price
(R$/MWh)
|
159.09 | 177.79 | ||||||||
|
Revenues
(R$ thd)
|
35,593 | 63,210 | ||||||||
|
Revenues
- Steam (R$ thd)
|
2,937 | 4,649 | ||||||||
|
Rumo
|
||
|
Despite
the negative impact of the US dollar valuation
before the Real in port services and also the high amount of rain in
2Q’10,
mainly in July and September, Rumo Logística
contributed with a revenue of R$44.2 million in the quarter (out of which
R$31.2 million from loading to third parties) and shipped
a total of 2.5 million tons of sugar (1.8 million tons from third
parties). It is worth pointing out the record of shipped volume, of 891
thousand tons of sugar, in
August.
|
|
Rumo
|
2Q'10
|
YTD'10
|
||||||||
|
Loading
(thd tons)
|
2,501.0 | 4,585.0 | ||||||||
|
Price
(R$/ton)
|
17.7 | 18.3 | ||||||||
|
Revenues
(R$ thd)
|
44,268 | 83,906 | ||||||||
|
Others
Other two important invoicing
items in this category are sales of Da Barra Alimentos products (R$10.5
million in 2Q’10) and Diesel Oil (R$12.2 million
in 2Q’10).
|
||
|
CCL –
Fuel
|
||
|
Net Revenue
Evolution
Fuels (R$
MM)
 |
Fall of 12.2 %,
when comparing this quarter with the same of the previous year, in the
invoicing of fuel distribution (income reduction of R$310.3 million) was
mainly due to:
|
|
|
⇒ Losses of R$ 365.5 million,
mainly due to the impact of the sale of the aviation business line in May,
2009 (R$ 286.6 million in the comparison period) and 7% fall in the volume
of gasoline (R$78.9 million) caused by greater use of ethanol in flex-fuel
cars.
|
||
9
|
⇒ Income of R$ 55.2 million
resulting from (i) 31.2% increase in ethanol volume derived of increase in
flex fuel fleet, or R$30.6 million, reflecting the growth of flex-fuel
cars, and (ii) 12.3% or R$24.6 million in diesel, reflecting incoming of
new industrial
clients.
|
||
|
Fuel Volumes and Average Unit
Prices
(Million liters - R$/thousand
liters)
|
||
|
|
 |
|
 |
Average fuel prices also suffered
small increase q-o-q, which is explained by (i) the sale of the aviation
business; (ii) the 8.8% decrease in diesel prices derived of lower prices at the
refinery, partially compensated by higher CIDE (tax levied on gasoline and
diesel); (iii) and because of the increase of ethanol in the sales
mix.
|
|
| CCL – Lubricants | ||
|
Net Revenue
Evolution
Lubes (R$
MM)
 |
In the lubricants businesss, we
can note that the sales returned to the level they were
before the financial crisis, and even surpassed by 4.6% the invoicing of
2Q’09, or R$7.7 million, positively
affected by the following factors:
|
|
|
⇒ Income of R$3.7 million, caused
by 2.3% raise in volume sold due to retaking of economic
activity;
|
||
|
⇒ Income of R$4.0 million resulting
from 2.4% growth due to improvement in product
mix.
|
||
10
|
Lubricants Volume and Average Unit
Prices
(Million liters- R$/thousand
liters)
|
||
 |
||
| Cost of Products Sold | ||
|
Cost of Products Sold
(R$ MM)
|
||
 |
||
|
The large
increment shown in cost of goods sold reflects the consolidation of the
CCL business, that increased the COGS by R$2,228.3
million.
|
||
|
2Q'09
|
2Q'10
|
Cost of Goods Sold
|
YTD'09
|
YTD'10
|
||||||||||||||
| (547.1 | ) | (3,051.5 | ) |
Cost
of Goods Sold (R$MM)
|
(1,173.2 | ) | (6,249.9 | ) | ||||||||||
| (299.2 | ) | (522.7 | ) |
Sugar
|
(639.7 | ) | (954.1 | ) | ||||||||||
| (189.4 | ) | (318.8 | ) |
Ethanol
|
(432.1 | ) | (864.3 | ) | ||||||||||
| (58.5 | ) | (84.0 | ) |
Other
Products & Services - CA
|
(101.4 | ) | (155.9 | ) | ||||||||||
| (2,533.7 | ) | (2,228.3 | ) |
CCL
|
(4,913.8 | ) | (4,486.0 | ) | ||||||||||
| - | 102.3 |
Eliminations
from Consolidation
|
- | 210.3 | ||||||||||||||
|
Average
Unit Cost (R$)
|
||||||||||||||||||
| 404 | 475 |
Unit COGS of
Sugar (R$/ton)
|
418 | 457 | ||||||||||||||
| 672 | 707 |
Unit COGS of
Ethanol (R$/thd liters)
|
697 | 716 | ||||||||||||||
| 1,790 | 1,647 |
Unit COGS of
CCL (R$/thd liters)
|
1,774 | 1,629 | ||||||||||||||
|
CAA
|
||
| The combined costs of sugar and ethanol showed an increase of 72%, or R$353 million, when compared with costs for 2Q’09, mainly affected by the increase of volume sold, since the higher volume of sugar accounted for an increase of R$146.1 million, while the increase in | ||
11
|
ethanol volume of raised COGS by
R$113.6 million. With the acquisition of NovAmérica, the increase of production
of white sugar to the domestic market justifies the 17.6% increase in
average unit cost of sugar to R$475/ton which increased sugar and ethanol COGS in R$77.5
millions. The 5% increase in average unit cost of ethanol, to R$707/cbm,
added R$15.8 millions to the mentioned COGS.
Other factors negatively
influenced the costs of products sold that are common to sugar and
ethanol; in short,
such effects were:
|
||
|
⇒ In view of the recovery of sugar
prices in both the domestic and foreign markets and also due to the
repositioning of ethanol within the domestic market, the price paid by
sugar cane from suppliers and for land leases experienced an increase that can be verified
by the higher average ATR value by Consecana, which went from R$0.2566 in
2Q’09 to R$0.2996 in 2Q10, a 17.2%
increase;
|
||
|
⇒ Increase in the costs of
production and processing of sugar and ethanol, due to the poor yield of
sucrose (ATR), which
went from 139.3 kg per ton in 2Q’09 to 131.1 kg per ton of sugar
cane in 2Q’10;
|
||
|
⇒ Offsetting part of the negative
impacts above, the cutting, loading and transportation costs (CCT)
presented the effects of the consolidation of the mechanization process, which covered
63% of the areas harvested up to
September 30, 1270 basis point more than the YTD’2Q09. This category of CCT was
R$5.22/ton of sugar cane ton lower than the traditional cutting
process, which is carried out with the burning of sugarcane
husk.
|
||
| CCL | ||
|
The COGS from CCL totaled
R$2,228.3 million, or R$1,647/cbm in the 2Q’10 with a reduction of R$143/cbm
when compared to the 2Q’09. This reduction was
mainly caused by: (i)
the change in the mix of products sold, with the growth of ethanol and
diesel and the reduction in gasoline and jet fuel. (ii) lower prices of
diesel charged by Petrobras; and (iii) capture of synergies and
efficiencies in the acquisition of oil related products and
ethanol.
Gross Profit
With these results, 2Q’10 showed gross profit of R$523.8
million, more than 3 times the total for the same period in the previous
year, with a margin of 14.7%. In CAA, ethanol continues to operate with
low margins, that is,
around 3%, versus the 18.6% of the same comparison period, while sugar
showed a positive margin of 34.6%, benefiting in part from the higher
prices in the international market and from the greater participation of
sugar in the domestic market. In CCL, in turn,
lubricants continued to be the most profitable product, followed by
gasoline, diesel and, finally,
ethanol.
|
12
|
2Q'09
|
2Q'10
|
Gross
Margin
|
YTD'09
|
YTD'10
|
||||||||||||||
|
Average
Unit COGS
|
||||||||||||||||||
| 149 | 251 |
Sugar
(R$/ton)
|
80 | 237 | ||||||||||||||
| 154 | 20 |
Ethanol
(R$/thd liters)
|
68 | (47 | ) | |||||||||||||
| 115 | 136 |
CCL (R$/thd
liters)
|
113 | 121 | ||||||||||||||
|
Gross
Margin %
|
||||||||||||||||||
| 27.0 | % | 34.6 | % |
Sugar
|
16.1 | % | 34.2 | % | ||||||||||
| 18.6 | % | 2.7 | % |
Ethanol
|
8.9 | % | -7.1 | % | ||||||||||
| 6.0 | % | 7.7 | % |
CCL
|
6.0 | % | 6.9 | % | ||||||||||
|
Selling
Expenses
|
||
|
Selling expenses of R$211.3
million were 138.5% higher than the R$88.6 million in 2Q’09 mainly due to the absorption of
CCL (R$93.7 million) and NovAmérica (R$30.3 million). Excluding
these impacts, CAA selling expenses decreased 1.5% (R$87.3 million on the
2Q’10 versus R$88.6 million on the
2Q’09), even despite the 16.6% growth
of sugar exports, due to the 12.9%
decrease in ethanol volumes exported and to the commercial area strategy
in the sense of reducing budget through the review of sugar-related
agreements and commercial understandings and the elimination less
profitable accounts and the resulting drop in sales
volumes of DaBarra products.
|
||
|
2Q'09
|
2Q'10
|
Selling
Expenses
|
YTD'09
|
YTD'10
|
||||||||||||||
| (88.6 | ) | (211.3 | ) |
Selling
Expenses (R$MM)
|
(174.3 | ) | (420.9 | ) | ||||||||||
| (88.6 | ) | (117.6 | ) |
CAA
|
(174.3 | ) | (232.8 | ) | ||||||||||
| - | (93.7 | ) |
CCL
|
- | (188.1 | ) | ||||||||||||
|
Due to different accounting
policies and
allocation of expenses adopted by Esso Brasileira (currently named CCL)
before the acquisition by Cosan, comparison of the 2Q’10 with the 2Q’09 is inadequate for analysis,
therefore it is
suggested the use of 1Q’10 information. Selling expenses
in 1Q’10 amounted R$94.4 million,
aligned with the R$93.7 million in the 2Q’10, which is compounded mostly by
Salaries and Benefits and Product Delivery
Freight.
|
||
|
General and Administrative
Expenses
|
||
|
General and administrative
expenses of R$116.2 million, representing 3.3% of the net income of
2Q’10, showed a significant increase
(76.9%) in relation to the R$65.7 million of 2Q’09, mainly due to incoming of CCL
expenses (R$13.5 million) and NovAmérica’s (R$8.1 million). Excluding CCL
and NovAmérica
impacts, general and administrative expenses grew 44%, from R$94.6 million
in 2Q’10 versus R$65.7 million in
2Q’09.
The growth of general and
administrative expenses was leveraged mainly by the following reasons: (i) expenses
of R$6.3 million related to the adoption of Stock Options accounting as
per Technical Opinion CPC10; (ii) R$3 million expenses referring to labor
indemnifications in inactive companies that are part of the group; (iii)
R$3.5 million referring to payment
of fine to ANEEL due to breach of agreement to supply electric power at
the Paraúna Unit;
(iv) R$3 million referring to the provisioning of amounts payable on
account of variable compensation of the management and
employees (v) R$4.5 million with
consultancy services.
|
||
13
|
2Q'09
|
2Q'10
|
General & Administrative
Expenses
|
YTD'09
|
YTD'10
|
||||||||||||||
| (65.7 | ) | (116.2 | ) |
G&A
Expenses (R$MM)
|
(125.4 | ) | (205.5 | ) | ||||||||||
| (65.7 | ) | (102.7 | ) |
CAA
|
(125.4 | ) | (175.7 | ) | ||||||||||
| - | (13.5 | ) |
CCL
|
- | (29.8 | ) | ||||||||||||
| EBITDA | ||
|
Depreciation and amortization of R$156.8 million, 11.3%
shorter than those registered in 2Q’09, are mainly due to the change
in the criteria determining the depreciation adjusted to EBITDA
calculations, as commented previously. As result of this new criterion,
part of such reduction is due to the fact that part
of the depreciation and amortization from the production remains in
inventory before being appropriated to the results at the moment of sale.
This impact is partially offset by the beginning of the useful life of
goods and equipment included in the
Company’s investment plans, including
agricultural mechanization and co-generation. Thus, if one were to exclude
this non-cash effect of operating costs and expenses, the Company had an
EBITDA of R$355.7 million against R$182.5 million in the same period last
year, represented by an EBITDA margin of 9.9%.
|
||
|
Out of this amount, R$269.3 were
generated by CAA, 47.6% higher than the same quarter from the previous
year due to better sugar prices, higher volumes commercialized, lower
depreciation and
increase in contribution from cogeneration projects and port services
(Rumo). CCL’s EBITDA, even without the
contribution from the aviation business, reached R$86.3 million in
2Q’10, maintaining a high margin of
3.6%, or R$63.8/cbm, in view of the growth in sales volumes of
diesel and ethanol and due to the
increase in gasoline, ethanol, diesel and lubricants unit
margins.
|
||
|
Consolidated EBITDA
(R$ MM)
|
||
 |
||
|
Financial
Results
This quarter’s net financial result of positive
R$78.9 million, as opposed to a negative result of R$551.8 million in the
same period last year, for the reasons below:
(i) the positive currency effect of
R$200.3 million in this quarter as opposed to a negative currency effect of R$ 501.8
million in the same
|
||
14
|
quarter last year, in view of the
currency variation over the net exposure of assets and liabilities listed
in foreign currency. In the current quarter, the R$ was valued in relation
to the USD by 9% (from R$1.9516/US$ on June 30 to
R$1.7781/US$ on September 30) whereas in the same quarter last year the
Brazilian Real depreciated by 35% (from R$1.5616/US$ on July 31 to
R$2.1153/US$ on October 31, 2008).
(ii) 100% growth in gross debt charges,
occurred in view of
greater average indebtedness, considering the new debts made by reason of
the acquisitions of CCL in December/08 and of NovAmerica in June/09
and
The result with derivatives in
2Q’10 reflects the negative effect
generated by the increase in the price of sugar in the commodities
futures market, which was partially offset by the positive effect of the
currency hedge, in view of the dollar depreciation. Thusly, the net result
for derivatives was of R$16.7 million negative this quarter as opposed to
an income of R$3.0 million in the same
quarter last year.
|
||
|
2Q'09
|
2Q'10
|
Financial Expenses, Net
(R$MM)
|
YTD'09
|
YTD'10
|
|||||||||||||||
| (43.2 | ) | (105.9 | ) |
Interest on
Financial Debt
|
(81.0 | ) | (201.5 | ) | |||||||||||
| 15.7 | 17.0 |
Financial
Investments Income
|
35.7 | 27.6 | |||||||||||||||
| (27.4 | ) | (88.9 | ) |
(=)
Sub-total: Interest on Net Financial De
|
(45.4 | ) | (173.9 | ) | |||||||||||
| (25.5 | ) | (17.9 | ) |
Other
interest and monetary variation
|
(67.1 | ) | (41.5 | ) | |||||||||||
| (501.4 | ) | 200.3 |
Exchange
Variation
|
(399.8 | ) | 578.9 | |||||||||||||
| 3.0 | (16.7 | ) |
Gains
(losses) with Derivatives
|
48.2 | 144.1 | ||||||||||||||
| (0.4 | ) | (0.5 | ) |
CPMF Taxes,
Banking Fees and Other
|
(0.8 | ) | (0.9 | ) | |||||||||||
| - | 2.6 |
Interest on
Indemnity from Government
|
- | 5.6 | |||||||||||||||
| (551.8 | ) | 78.9 |
(=)
Net Financial Expenses
|
(464.8 | ) | 512.3 | |||||||||||||
|
On September 30rd, 2009, the
derivatives portfólio
contracted with the purpose of hedging prices of sugar, ethanol, and the
currency exchange
rate is as follows:
|
||
|
Summary of Hedge on September 30,
2009:
|
Fiscal Year
|
|||||||||
| 2009/10 | 2010/11 | |||||||||
|
Sugar
|
||||||||||
|
Sugar #11
(NY) - *
|
||||||||||
|
Volume
(thd tons)
|
1,121 | 1,063 | ||||||||
|
Average
Price (¢US$/lb)
|
18.5 | 20.5 | ||||||||
|
London
#5
|
||||||||||
|
Volume
(thd tons)
|
14 | - | ||||||||
|
Average
Price (US$/ton)
|
573.7 | - | ||||||||
|
FX
|
||||||||||
|
US$
|
||||||||||
|
Volume
(US$ million)
|
803 | 457 | ||||||||
|
Average
Price (R$/US$)
|
1.837 | 1.931 | ||||||||
|
* - Includes
futures, 'in the money' options and commercial contracts of sale at fixed
prices.
|
||||||||||
|
EBITDAH
The EBITDAH of the quarter was of
R$338.9 millions, as opposed to R$182.5 million in the same quarter last
year. The results from hedge from these periods are not comparable, since
starting on the 4Q’09, according to changes in the
Brazilian accounting
policies, the results from derivatives began to reflect the adjustments to
the portfolio of contracted and open derivative positions at market value
in the period,
|
||
15
|
which is already performed under
US GAAP. Therefore, the results from derivatives no longer reflects the
amount of gains or losses with derivatives associated with the volume of
operating revenue in the period, but rather the adjustment of open
derivative positions to their fair value independent of the objected being
hedged by the
derivatives.
The result of R$338.9 millions was
affected by a net derivatives effect of only R$16.7 millions, derived of a
negative result of losses with sugar agreements totaling R$242.9 millions,
which were partially offset by income of R$ 226.2 millions with derivative exchange
agreements, as seen in the building blocks
below:
|
||
|
Consolidated EBITDAH
(R$ MM)
|
||
 |
||
|
Net Profit
As a result of the foregoing,
Cosan closed 2Q’09 with a net profit of R$173.4
million, resulting from the non-cash currency exchange variation positive effect and,
mainly due to the solid operational performance of the period, caused by
good prices for sugar, recovery of ethanol prices and maintenance of good
distribution margins.
|
||
|
Net Profit
(R$ MM)
|
||
 |
||
|
C. Financial
Situation
|
16
| procurement of funds made by CCL Finance totaling U$350 million in Senior Notes with maturity set to 2014, with the purpose of extending short-term liabilities, in addition to the partial disbursements of resources made by the National Bank for Economic and Social Development (BNDES) to Jataí’s Greenfield and to the co-generation projects at the Bonfim and Gasa units, amounting R$354.6 millions. Part of this effect in the increase of the indebtedness was offset by the impact, in the dollar debt, of the Real appreciation, which went from R$1.95 to R$1.78/US$. Moreover, we had the amortization of short-term installments of the debt, a result of NovaAmerica’s merger. | ||
|
Debt per Type
(R$MM)
|
1Q'10
|
2Q'10
|
% ST
|
Var.
|
||||||||||||||
|
Foreign
Currency
|
2,135.2 | 2,494.4 | 359.2 | |||||||||||||||
|
Perpetual
Notes
|
888.6 | 809.6 | 1.2 | % | (79.0 | ) | ||||||||||||
|
Senior Notes
2017
|
803.3 | 719.4 | 1.1 | % | (83.9 | ) | ||||||||||||
|
Senior Notes
2009
|
71.1 | 66.4 | 100.0 | % | (4.7 | ) | ||||||||||||
|
Senior Notes
2014
|
- | 630.0 | 1.3 | % | 630.0 | |||||||||||||
|
IFC
|
98.8 | 83.0 | 23.2 | % | (15.9 | ) | ||||||||||||
|
FX
Advances
|
152.1 | 91.0 | 100.0 | % | (61.1 | ) | ||||||||||||
|
Pre-Export
Contracts
|
121.3 | 95.1 | 40.2 | % | (26.3 | ) | ||||||||||||
|
Local
Currency
|
2,489.3 | 2,764.0 | 274.7 | |||||||||||||||
|
Promissory
Notes
|
1,198.2 | 1,233.7 | 24.5 | % | 35.5 | |||||||||||||
|
BNDES
|
360.1 | 714.8 | 3.4 | % | 354.6 | |||||||||||||
|
Finame
(BNDES)
|
222.7 | 210.0 | 24.5 | % | (12.7 | ) | ||||||||||||
|
Working
Capital
|
24.5 | 20.5 | 20.5 | % | (4.0 | ) | ||||||||||||
|
Overdraft
|
0.3 | 37.2 | 98.5 | % | 37.0 | |||||||||||||
|
Credit
Banking Note
|
216.8 | 217.4 | 72.4 | % | 0.6 | |||||||||||||
|
Debentures
|
157.8 | 152.6 | 100.0 | % | (5.2 | ) | ||||||||||||
|
Credit
Notes
|
343.2 | 222.9 | 98.8 | % | (120.3 | ) | ||||||||||||
|
Expenses with
Placement of Debt
|
(34.3 | ) | (45.2 | ) | 40.6 | % | (10.9 | ) | ||||||||||
|
Gross
Debt
|
4,624.4 | 5,258.3 | 22.3 | % | 633.9 | |||||||||||||
|
Cash and
Marktable Securities
|
932.9 | 1,098.2 | 165.3 | |||||||||||||||
|
Net
Debt
|
3,691.5 | 4,160.2 | 5.4 | % | 468.7 | |||||||||||||
|
Short
Term
|
1,115.9 | 1,171.6 | (55.6 | ) | ||||||||||||||
|
Long
Term
|
3,508.5 | 4,086.8 | (578.3 | ) | ||||||||||||||
|
By the end of 2Q’10 Cosan’s cash position was of R$1098.2
million, raising its net indebtedness to R$4,160.2 or 3.12 times the
EBITDA of 12 months.
It is worth pointing out that this EBITDA is calculated by using the last
12 months of CAA, the yearly CCL EBITDA since its acquisition (10 months)
and the EBITDA of 4 months of NovAmerica, also on a yearly
basis.
The debt’s profile had a slight
improvement, to 22%
of the total of the debt in the short-term, mainly due to the procurement
of funds with the BNDES and CCL, which has a long-term profile. The
installment of the debt in dollars also suffered a reduction to 47.6% of
the total indebtedness, due to the reduction of debts in
dollars, caused by the appreciation of the Real and by the BNDES
procurement in Reais.
D. Investments
The total investments flow of R$
386.8 million in
2Q’10 is mainly reflected by the
execution of the greenfield projects, in Jataí and Caarapó and the power
co-generation.
|
||
17
|
2Q'09
|
2Q'10
|
Capex(R$MM)
|
YTD'09
|
YTD'10
|
||||||||||||||
| 24.6 | 44.8 |
●
Sugar Cane Planting Costs
|
79.5 | 116.4 | ||||||||||||||
| 14.7 | 1.8 |
●
Inter-harvest Maintenance Costs
|
14.7 | 26.6 | ||||||||||||||
| 34.4 | 57.2 |
●
Projects CAA
|
134.4 | 127.9 | ||||||||||||||
| - | 7.7 |
●
Projects CCL
|
- | 19.3 | ||||||||||||||
| 73.7 | 111.5 |
(=)
Operating Capex
|
228.7 | 290.2 | ||||||||||||||
| 127.3 | 92.4 |
●
Co-generation Projects
|
168.9 | 170.9 | ||||||||||||||
| 113.3 | 155.2 |
●
Greenfield
|
181.6 | 318.6 | ||||||||||||||
| 314.3 | 359.1 |
(=)
Capex
|
579.1 | 779.7 | ||||||||||||||
| 61.4 | 29.2 |
●
Investments
|
62.1 | (29.4 | ) | |||||||||||||
| 1.6 | (1.5 | ) |
● Cash
from Sale of Fixed Assets
|
(119.2 | ) | |||||||||||||
| 377.3 | 386.8 |
(=)
Investment Cash Flow
|
641.3 | 631.1 | ||||||||||||||
18
|
Rubens O. Silveira Mello resigned
from his position as
CEO of Cosan S.A., keeping his position as Chairman of the Board, to fully
engage in the Company’s strategic management. As of
November 1, 2009, Mr. Marcos Marinho Lutz, former Commercial and Logistic
Executive Officer and Vice-President, was appointed as
CEO.
|
||
|
On September 14, 2009, Cosan
Limited disposed of 10,000,000 subscription bonuses, part of the
54,993,482 bonuses that had been granted as per capital increase made at
Cosan S.A. on November 10, 2008. On October 29, 2009, Cosan
Limited exercised
39,589,922 subscription bonuses, equivalent to 23,753,953 new Cosan S.A
shares. Cosan Limited further intends to exercise the 5,406,560 remaining
bonuses, corresponding to 3,243,936 shares until their date of maturity,
on December 31, 2009.
F. Guidance
This section contains guidance
ranges for selected key parameters of the Company. Note that statements in
other sections of this letter may also contain projections. These
projections and guidance are merely estimates and indicative, and should
not be construed as a
guarantee of future performance.
This guidance takes into
consideration the operations held by the Cosan group today, which includes
CCL, NovAmérica
Agroenergia (10 months) and Rumo Logística, as well as the typical and
known sugar, ethanol
and cogeneration operations of Cosan.
|
||
|
Guidance
|
2008FY
|
2009FY
|
2010FY
|
||||||||||||||
|
Crushed Cane
Volume (thousand tons)
|
40,315 | 43,127 | +20 | % |
≤ ∆ ≤
+30%
|
||||||||||||
|
Sugar Volume
Sold (thousand tons)
|
3,147 | 3,052 | +30 | % |
≤ ∆ ≤
+50%
|
||||||||||||
|
Ethanol
Volume Sold (million liters)
|
1,568 | 1,495 | +40 | % |
≤ ∆ ≤
+60%
|
||||||||||||
|
Revenues
(R$MM)
|
2,736 | 6,270 | +110 | % |
≤ ∆ ≤
+140%
|
||||||||||||
|
EBITDA
(R$MM)
|
183 | 718 | +100 | % |
≤ ∆ ≤
+120%
|
||||||||||||
|
Net
Profit/Loss (R$MM)
|
(48 | ) | (474 | ) |
*
|
||||||||||||
|
Capex
(R$MM)
|
1,053 | 1,346 | +20 | % |
≤ ∆ ≤
+30%
|
||||||||||||
|
* The Net profit (loss) is very
sensitive to FX variations. Considering today’s FX rate of R$1.73/US$, it is
expected that the FY’09 net loss of R$473.8 million
will be reverted to net profit in the next fiscal
year.
|
|||||||||||||||||
|
2Q'09
|
2Q'10
|
Sales Composition
(R$MM)
|
YTD'09
|
YTD'10
|
|||||||||||||
| 715.1 | 3,575.3 |
Net
Operating Revenue
|
1,354.7 | 7,141.4 | |||||||||||||
| 409.7 | 798.9 |
●
Sugar Revenue - CAA
|
762.1 | 1,450.0 | |||||||||||||
| 57.2 | 302.2 |
Local
|
115.1 | 438.8 | |||||||||||||
| 352.5 | 496.7 |
Export
|
647.0 | 1,011.2 | |||||||||||||
| 232.8 | 327.8 |
●
Ethanol Revenue - CAA
|
474.6 | 807.2 | |||||||||||||
| 89.3 | 212.9 |
Local
|
249.3 | 526.9 | |||||||||||||
| 143.5 | 114.9 |
Export
|
225.2 | 280.3 | |||||||||||||
| 72.6 | 138.9 |
●
Other Revenue - CAA
|
118.0 | 237.8 | |||||||||||||
| 2,533.5 | 2,223.2 |
●
Fuels Revenue - CCL
|
4,908.7 | 4,498.7 | |||||||||||||
| 159.2 | 189.9 |
Ethanol
|
299.8 | 345.8 | |||||||||||||
| 991.0 | 912.1 |
Gasoline
|
1,927.6 | 1,799.9 | |||||||||||||
| 1,069.8 | 1,094.4 |
Diesel
|
2,069.8 | 2,172.8 | |||||||||||||
| 313.4 | 26.8 |
Other
|
611.4 | 180.2 | |||||||||||||
| 163.2 | 170.9 |
●
Lubes Revenue - CCL
|
318.3 | 321.2 | |||||||||||||
| 17.2 | 18.0 |
●
Other Revenue - CCL
|
34.5 | 36.8 | |||||||||||||
| - | (102.3 | ) |
●
Eliminations from Consolidation
|
- | (210.3 | ) | |||||||||||
|
2. Volume
Sold
|
|
2Q'09
|
2Q'10
|
Volume Sold
|
YTD'09
|
YTD'10
|
|||||||||||||
| 739.9 | 1,101.1 |
Sugar
(thd tons)
|
1,531.5 | 2,089.6 | |||||||||||||
| 92.2 | 322.5 |
Local
|
196.4 | 491.8 | |||||||||||||
| 647.7 | 778.6 |
Export
|
1,335.1 | 1,597.8 | |||||||||||||
| 281.7 | 450.7 |
Ethanol
(MM liters)
|
620.2 | 1,207.4 | |||||||||||||
| 114.3 | 285.0 |
Local
|
337.9 | 797.7 | |||||||||||||
| 167.4 | 165.6 |
Export
|
282.3 | 409.7 | |||||||||||||
| 223,729 |
Energy
(MWh)
|
355,540 | |||||||||||||||
| 1,381.8 | 1,318.2 |
Fuels
(MM liters)
|
2,701.1 | 2,690.3 | |||||||||||||
| 171.3 | 224.7 |
Ethanol
|
329.7 | 426.3 | |||||||||||||
| 456.7 | 418.9 |
Gasoline
|
891.6 | 830.8 | |||||||||||||
| 568.7 | 638.5 |
Diesel
|
1,110.4 | 1,227.5 | |||||||||||||
| 185.1 | 36.1 |
Others
|
369.4 | 205.6 | |||||||||||||
| 33.6 | 34.4 |
Lubes
(MM liters)
|
69.3 | 64.0 | |||||||||||||
| - | 2,501.0 |
Loading
(thd tons)
|
- | 4,585.0 | |||||||||||||
|
3. Average
Prices
|
|
2Q'09
|
2Q'10
|
Average
Price
|
YTD'09
|
YTD'10
|
|||||||||||||
| 554 | 726 |
Sugar
(R$/ton)
|
498 | 694 | |||||||||||||
| 620 | 937 |
Local
|
586 | 892 | |||||||||||||
| 544 | 638 |
Export
|
485 | 633 | |||||||||||||
| 826 | 727 |
Ethanol
(R$/thd liters)
|
765 | 669 | |||||||||||||
| 781 | 747 |
Local
|
738 | 661 | |||||||||||||
| 857 | 694 |
Export
|
798 | 684 | |||||||||||||
| 1,833 | 1,686 |
Fuels
(R$/Thd liters)
|
1,817 | 1,672 | |||||||||||||
| 930 | 845 |
Ethanol
|
909 | 811 | |||||||||||||
| 2,170 | 2,177 |
Gasoline
|
2,162 | 2,166 | |||||||||||||
| 1,881 | 1,714 |
Diesel
|
1,864 | 1,770 | |||||||||||||
| 1,693 | 741 |
Others
|
1,655 | 876 | |||||||||||||
| 4,853 | 4,968 |
Lubes
(R$/Thd liters)
|
4,595 | 5,015 | |||||||||||||
H. Financial Statements of Cosan S.A.
– BR GAAP
|
Income
Statement
|
Apr'07
|
Apr'08
|
Mar'09
|
Jan'08
|
Apr'08
|
Jul'08
|
Oct'08
|
Jan'09
|
Mar'09
|
Jun'09
|
Sep'09
|
|||||||||||||||||||||||||||||||||||
|
(In million of
reais)
|
FY'07
|
FY'08
|
FY'09
|
3Q'08
|
4Q'08
|
1Q'09
|
2Q'09
|
3Q'09
|
4Q'09
|
1Q'10
|
2Q'10
|
|||||||||||||||||||||||||||||||||||
|
Gross
Operating Revenue
|
3,902.9 | 2,978.6 | 6,732.8 | 747.5 | 916.4 | 692.7 | 760.1 | 2,746.4 | 2,533.6 | 3,843.5 | 3,907.2 | |||||||||||||||||||||||||||||||||||
| (-) |
Sales Taxes
and Deductions
|
(297.8 | ) | (242.5 | ) | (462.7 | ) | (73.5 | ) | (73.4 | ) | (53.1 | ) | (45.0 | ) | (180.7 | ) | (183.8 | ) | (277.4 | ) | (331.9 | ) | |||||||||||||||||||||||
| (=) | Net Operating Revenue | 3,605.1 | 2,736.2 | 6,270.1 | 674.0 | 843.0 | 639.6 | 715.1 | 2,565.6 | 2,349.8 | 3,566.1 | 3,575.3 | ||||||||||||||||||||||||||||||||||
| (-) |
Cost of Goods
Sold and Services Rendered
|
(2,481.1 | ) | (2,387.1 | ) | (5,470.7 | ) | (594.4 | ) | (693.6 | ) | (626.0 | ) | (547.1 | ) | (2,187.6 | ) | (2,109.9 | ) | (3,198.4 | ) | (3,051.5 | ) | |||||||||||||||||||||||
| (=) | Gross Profit | 1,123.9 | 349.0 | 799.4 | 79.6 | 149.4 | 13.6 | 167.9 | 378.0 | 239.9 | 367.7 | 523.8 | ||||||||||||||||||||||||||||||||||
|
Margin
|
31.2 | % | 12.8 | % | 12.7 | % | 11.8 | % | 17.7 | % | 2.1 | % | 23.5 | % | 14.7 | % | 10.2 | % | 10.3 | % | 14.7 | % | ||||||||||||||||||||||||
| (-) |
Operating
Income (Expenses):
|
(556.6 | ) | (418.0 | ) | (1,508.5 | ) | (185.1 | ) | (161.8 | ) | (94.9 | ) | (754.7 | ) | (319.6 | ) | (339.4 | ) | 117.9 | (246.1 | ) | ||||||||||||||||||||||||
| (-) |
Selling
|
(282.0 | ) | (301.3 | ) | (432.6 | ) | (73.4 | ) | (74.9 | ) | (85.7 | ) | (88.6 | ) | (156.8 | ) | (101.5 | ) | (209.6 | ) | (211.3 | ) | |||||||||||||||||||||||
| (-) |
General and
Administrative
|
(246.2 | ) | (210.2 | ) | (275.9 | ) | (49.9 | ) | (57.7 | ) | (59.7 | ) | (65.7 | ) | (72.3 | ) | (78.2 | ) | (89.3 | ) | (116.2 | ) | |||||||||||||||||||||||
| (-) |
Financial
Income (Expenses), Net
|
158.0 | 284.3 | (817.4 | ) | (11.9 | ) | 1.0 | 86.9 | (551.8 | ) | (159.2 | ) | (193.4 | ) | 433.4 | 78.9 | |||||||||||||||||||||||||||||
|
(±)
Earnings (Losses) on Equity Investments
|
(0.1 | ) | 6.6 | 14.0 | 0.1 | 6.4 | 0.2 | (0.3 | ) | 13.6 | 0.5 | (3.6 | ) | 0.0 | ||||||||||||||||||||||||||||||||
| (-) |
Goodwill
Amortization
|
(223.7 | ) | (201.4 | ) | (196.5 | ) | (48.2 | ) | (40.6 | ) | (40.4 | ) | (40.4 | ) | (65.2 | ) | (50.5 | ) | (85.6 | ) | - | ||||||||||||||||||||||||
| (±) | Other Operating Income (Expenses), Net | 37.3 | 4.0 | 199.9 | (1.7 | ) | 4.0 | 3.9 | (8.0 | ) | 120.2 | 83.7 | 72.5 | 2.5 | ||||||||||||||||||||||||||||||||
| (=) | Operating Income (Loss) | 567.3 | (69.0 | ) | (709.1 | ) | (105.5 | ) | (12.4 | ) | (81.3 | ) | (586.7 | ) | 58.5 | (99.5 | ) | 485.6 | 277.8 | |||||||||||||||||||||||||||
|
Margin
|
15.7 | % | -2.5 | % | -11.3 | % | -15.7 | % | -1.5 | % | -12.7 | % | -82.0 | % | 2.3 | % | -4.2 | % | 13.6 | % | 7.8 | % | ||||||||||||||||||||||||
|
(±)
|
Income and
Social Contribution Taxes
|
(203.9 | ) | 18.7 | 234.7 | 33.5 | 6.6 | 22.4 | 205.9 | (53.3 | ) | 59.6 | (157.9 | ) | (103.8 | ) | ||||||||||||||||||||||||||||||
|
(±)
Minority Interest
|
(6.2 | ) | 2.5 | 0.6 | 0.6 | 0.5 | 0.8 | 0.1 | 0.0 | (0.4 | ) | 9.6 | (0.6 | ) | ||||||||||||||||||||||||||||||||
| (=) | Net Income (Loss) for the Year | 357.0 | (48.0 | ) | 474.0 | ) | (71.0 | ) | (5.0 | ) | (58.0 | ) | (381.0 | ) | 5.0 | (40.0 | ) | 337.3 | 173.4 | |||||||||||||||||||||||||||
|
Margin
|
9.9 | % | -1.8 | % | -7.6 | % | -10.5 | % | -0.6 | % | -9.1 | % | -53.3 | % | 0.2 | % | -1.7 | % | 9.5 | % | 4.8 | % | ||||||||||||||||||||||||
|
●
EBITDA
|
930.0 | 182.9 | 718.0 | 2.3 | 49.9 | 29.2 | 182.5 | 340.4 | 165.9 | 311.2 | 355.7 | |||||||||||||||||||||||||||||||||||
|
Margin
|
25.8 | % | 6.7 | % | 11.5 | % | 0.3 | % | 5.9 | % | 4.6 | % | 25.5 | % | 13.3 | % | 7.1 | % | 8.7 | % | 9.9 | % | ||||||||||||||||||||||||
|
● EBITDAH (Ebitda adjusted
by Hedge)
|
855.7 | 407.8 | 765.7 | 95.5 | 31.0 | 74.4 | 185.5 | 465.3 | 40.4 | 472.0 | 338.9 | |||||||||||||||||||||||||||||||||||
|
Margin
|
24.2 | % | 13.8 | % | 12.1 | % | 12.4 | % | 3.8 | % | 10.9 | % | 25.8 | % | 17.3 | % | 1.8 | % | 12.7 | % | 9.5 | % | ||||||||||||||||||||||||
|
●
Depreciation & Amortization
|
297.0 | 341.3 | 427.2 | 47.8 | 29.1 | 157.2 | 176.8 | 71.1 | 22.0 | 169.9 | 156.8 | |||||||||||||||||||||||||||||||||||
|
Cash
Flow Statement
|
Apr'07
|
Apr'08
|
Mar'09
|
Jan'08
|
Apr'08
|
Jul'08
|
Oct'08
|
Jan'09
|
Mar'09
|
Jun'09
|
Se´p'09
|
|||||||||||||||||||||||||||||||||
|
(In millions of
reais)
|
FY'07
|
FY'08
|
FY'09
|
3Q'08
|
4Q'08
|
1Q'09
|
2Q'09
|
3Q'09
|
4Q'09
|
1Q'10
|
2Q'10
|
|||||||||||||||||||||||||||||||||
|
Net
Income (Loss) for the Year
|
357.3 | (47.8 | ) | (473.8 | ) | (71.4 | ) | (5.3 | ) | (58.1 | ) | (380.7 | ) | 5.2 | (40.2 | ) | 337.3 | 173.4 | ||||||||||||||||||||||||||
|
Non-cash
Adjustments:
|
||||||||||||||||||||||||||||||||||||||||||||
|
Earnings (Losses) from Equity Investments
|
0.1 | (6.6 | ) | (14.0 | ) | (0.1 | ) | (6.4 | ) | (0.2 | ) | 0.3 | (13.6 | ) | (0.5 | ) | 3.6 | (0.0 | ) | |||||||||||||||||||||||||
|
Depreciation & Amortization
|
297.0 | 341.3 | 427.2 | 47.8 | 29.1 | 157.2 | 176.8 | 71.1 | 22.0 | 169.9 | 156.8 | |||||||||||||||||||||||||||||||||
|
Losses (Gains) in Fixed Assets Disposals
|
8.4 | (1.2 | ) | (208.9 | ) | 0.1 | (8.1 | ) | 1.2 | 4.5 | 3.0 | (217.6 | ) | (103.2 | ) | 0.8 | ||||||||||||||||||||||||||||
|
Goodwill Amortization
|
223.7 | 201.4 | 196.5 | 48.2 | 40.6 | 40.4 | 40.4 | 65.2 | 50.5 | 85.6 | - | |||||||||||||||||||||||||||||||||
|
Accrued Financial Expenses
|
(190.6 | ) | (116.0 | ) | 932.5 | 87.5 | (37.2 | ) | (26.2 | ) | 572.0 | 297.8 | 89.0 | (287.8 | ) | (84.0 | ) | |||||||||||||||||||||||||||
|
Other Non-cash Items
|
119.7 | (42.4 | ) | (197.9 | ) | (17.6 | ) | (0.7 | ) | (32.2 | ) | (162.9 | ) | 49.3 | (52.1 | ) | 133.1 | 74.0 | ||||||||||||||||||||||||||
|
(=)
Adjusted Net Profit (Loss)
|
815.5 | 328.8 | 661.5 | 94.5 | 12.1 | 82.0 | 250.4 | 478.0 | (148.9 | ) | 338.5 | 321.0 | ||||||||||||||||||||||||||||||||
|
(±) Variation
on Assets and Liabilities
|
(148.0 | ) | (360.1 | ) | (234.5 | ) | (152.6 | ) | 323.9 | (129.5 | ) | (399.0 | ) | (140.7 | ) | 434.7 | 195.7 | (312.9 | ) | |||||||||||||||||||||||||
|
(=) Cash
Flow from Operating Activities
|
667.5 | (31.3 | ) | 427.0 | (58.1 | ) | 335.9 | (47.4 | ) | (148.6 | ) | 337.3 | 285.8 | 534.2 | 8.7 | |||||||||||||||||||||||||||||
|
Additions on
Investments, Net of Cash Received
|
(83.7 | ) | (160.5 | ) | (1,823.6 | ) | (0.4 | ) | (155.9 | ) | (0.7 | ) | (61.4 | ) | (1,533.7 | ) | (227.7 | ) | 58.5 | (29.2 | ) | |||||||||||||||||||||||
|
Additions on
Property, Plant and Equipment
|
(684.2 | ) | (1,053.1 | ) | (1,346.1 | ) | (271.0 | ) | (474.4 | ) | (264.8 | ) | (314.3 | ) | (432.4 | ) | (334.6 | ) | (420.6 | ) | (359.1 | ) | ||||||||||||||||||||||
|
Cash Received
on Sale of Fixed Asset
|
- | 12.2 | 372.1 | - | 12.2 | 1.6 | (1.6 | ) | - | 372.1 | 117.7 | 1.5 | ||||||||||||||||||||||||||||||||
|
(=)
Cash Flow from Investment Activities
|
(767.9 | ) | (1,201.4 | ) | (2,797.6 | ) | (271.4 | ) | (618.1 | ) | (263.9 | ) | (377.4 | ) | (1,966.1 | ) | (190.3 | ) | (244.3 | ) | (386.8 | ) | ||||||||||||||||||||||
|
Additions of
Debt
|
854.7 | 198.3 | 1,478.0 | 213.0 | (25.5 | ) | 3.0 | 315.8 | 1,196.4 | (37.1 | ) | 172.9 | 1,045.8 | |||||||||||||||||||||||||||||||
|
Payments of
Principal and Interest on Debt
|
(375.6 | ) | (839.4 | ) | (257.2 | ) | (319.6 | ) | (52.2 | ) | (67.8 | ) | (26.7 | ) | (148.3 | ) | (14.4 | ) | (127.8 | ) | (317.3 | ) | ||||||||||||||||||||||
|
Capital
Increase
|
6.9 | 1,742.6 | 884.5 | 1,742.6 | - | - | 880.0 | - | 4.5 | - | 1.4 | |||||||||||||||||||||||||||||||||
|
Treasury
Stock
|
- | - | (4.2 | ) | - | - | - | (4.2 | ) | - | - | - | - | |||||||||||||||||||||||||||||||
|
Capital
Increase at subsidiaries
|
- | - | 15.4 | - | - | - | 3.5 | - | 11.9 | - | - | |||||||||||||||||||||||||||||||||
|
Dividends
|
- | (75.8 | ) | - | - | (75.8 | ) | - | - | - | - | - | - | |||||||||||||||||||||||||||||||
|
Other
|
- | - | (36.6 | ) | - | (2.4 | ) | - | - | (5.9 | ) | (30.7 | ) | (121.4 | ) | (335.4 | ) | |||||||||||||||||||||||||||
|
(=) Cash
Flows from Financing Activities
|
486.0 | 1,025.7 | 2,079.9 | 1,636.0 | (155.9 | ) | (64.8 | ) | 1,168.4 | 1,042.2 | (65.8 | ) | (76.3 | ) | 393.9 | |||||||||||||||||||||||||||||
|
(=)
Total Cash Flow
|
385.6 | (207.0 | ) | (290.7 | ) | 1,306.6 | (438.1 | ) | (376.2 | ) | 642.4 | (586.7 | ) | 29.7 | 213.6 | 15.7 | ||||||||||||||||||||||||||||
|
(+) Cash
& Equivalents, Beginning
|
831.5 | 1,217.1 | 1,010.1 | 141.6 | 1,448.2 | 1,010.1 | 633.9 | 1,276.3 | 689.7 | 719.4 | 932.9 | |||||||||||||||||||||||||||||||||
|
(=)
Cash & Equivalents, Closing
|
1,217.1 | 1,010.1 | 719.4 | 1,448.2 | 1,010.1 | 633.9 | 1,276.3 | 689.7 | 719.4 | 932.9 | 948.6 | |||||||||||||||||||||||||||||||||
21
|
Balance
Sheet
|
Apr'07
|
Apr'08
|
Mar'09
|
Jan'08
|
Apr'08
|
Jul'08
|
Oct'08
|
Jan'09
|
Mar'09
|
Jun'09
|
Sep'09
|
|||||||||||||||||||||||||||||||||
|
(In million of
reais)
|
FY'07
|
FY'08
|
FY'09
|
3Q'08
|
4Q'08
|
1Q'09
|
2Q'09
|
3Q'09
|
4Q'09
|
1Q'10
|
2Q'10
|
|||||||||||||||||||||||||||||||||
|
Cash and Cash
Equivalents
|
1,217.1 | 1,010.1 | 719.4 | 1,448.2 | 1,010.1 | 633.9 | 1,276.3 | 689.7 | 719.4 | 932.9 | 948.6 | |||||||||||||||||||||||||||||||||
|
Restricted
Cash
|
35.9 | 79.6 | 11.8 | 62.0 | 79.6 | 79.4 | 0.2 | 11.9 | 11.8 | 40.1 | 149.5 | |||||||||||||||||||||||||||||||||
|
Derivative
Financial Instruments
|
1.6 | 6.9 | 17.0 | 5.4 | 6.9 | 9.0 | 8.6 | 6.1 | 17.0 | 86.6 | 97.4 | |||||||||||||||||||||||||||||||||
|
Trade Accounts
Receivable
|
112.3 | 215.2 | 599.2 | 105.4 | 215.2 | 115.5 | 215.9 | 459.0 | 599.2 | 585.6 | 589.7 | |||||||||||||||||||||||||||||||||
|
Inventories
|
503.4 | 570.5 | 1,106.2 | 1,019.7 | 570.5 | 905.6 | 1,439.9 | 1,643.7 | 1,106.2 | 1,149.9 | 1,531.5 | |||||||||||||||||||||||||||||||||
|
Advances to
Suppliers
|
211.4 | 226.1 | 206.0 | 243.1 | 226.1 | 252.3 | 287.0 | 239.9 | 206.0 | 386.1 | 336.7 | |||||||||||||||||||||||||||||||||
|
Related
Parties
|
- | 16.3 | 57.2 | - | 16.3 | 1.1 | 28.4 | 35.8 | 57.2 | 36.1 | 21.6 | |||||||||||||||||||||||||||||||||
|
Deferred
Income and Social Contribution Taxes
|
38.1 | - | 42.5 | 26.0 | - | - | - | - | 42.5 | 53.5 | 48.1 | |||||||||||||||||||||||||||||||||
|
Recoverable
Taxes
|
54.0 | 129.8 | 265.4 | 50.4 | 129.8 | 121.3 | 160.6 | 240.7 | 265.4 | 299.0 | 342.9 | |||||||||||||||||||||||||||||||||
|
Other
Assets
|
50.9 | 17.9 | 50.3 | 29.3 | 17.9 | 21.9 | 37.1 | 82.3 | 50.3 | 32.7 | 41.7 | |||||||||||||||||||||||||||||||||
|
Current
Assets
|
2,224.7 | 2,272.4 | 3,074.9 | 2,989.4 | 2,272.4 | 2,140.0 | 3,453.9 | 3,409.0 | 3,074.9 | 3,602.6 | 4,107.9 | |||||||||||||||||||||||||||||||||
|
Accounts
Receivable from Federal Government
|
318.4 | 342.2 | 323.4 | 339.2 | 342.2 | 342.2 | 342.2 | 342.2 | 323.4 | 326.4 | 329.0 | |||||||||||||||||||||||||||||||||
|
CTN's-Restricted
Brazilian Treasury Bills
|
123.3 | 151.7 | 177.6 | 144.9 | 151.7 | 164.8 | 170.9 | 175.5 | 177.6 | 184.7 | 189.3 | |||||||||||||||||||||||||||||||||
|
Deferred
Income and Social Contribution Taxes
|
242.5 | 357.0 | 700.0 | 297.9 | 357.0 | 386.7 | 567.8 | 665.0 | 700.0 | 644.6 | 551.5 | |||||||||||||||||||||||||||||||||
|
Advances to
Suppliers
|
- | 77.3 | 48.0 | 44.5 | 77.3 | 88.2 | 93.6 | 125.3 | 48.0 | 55.5 | 85.1 | |||||||||||||||||||||||||||||||||
|
Related
Parties
|
- | - | - | - | - | - | - | - | - | 153.2 | 151.8 | |||||||||||||||||||||||||||||||||
|
Other
Assets
|
112.4 | 94.4 | 132.4 | 107.2 | 94.4 | 124.1 | 124.0 | 159.1 | 132.4 | 185.4 | 190.2 | |||||||||||||||||||||||||||||||||
|
Investments
|
93.2 | 120.3 | 278.2 | 14.0 | 120.3 | 124.2 | 184.7 | 280.5 | 278.2 | 181.3 | 196.5 | |||||||||||||||||||||||||||||||||
|
Property,
Plant and Equipment
|
2,015.7 | 2,776.3 | 3,493.9 | 2,297.0 | 2,776.3 | 2,882.8 | 3,020.8 | 3,389.0 | 3,493.9 | 4,516.4 | 4,671.4 | |||||||||||||||||||||||||||||||||
|
Goodwill
|
1,133.2 | 1,160.7 | 2,418.8 | 1,042.4 | 1,160.7 | 1,115.6 | 1,074.5 | 2,493.8 | 2,418.8 | 2,724.3 | 2,737.5 | |||||||||||||||||||||||||||||||||
|
Noncurrent
Assets
|
4,038.6 | 5,079.9 | 7,572.5 | 4,287.1 | 5,079.9 | 5,228.5 | 5,578.5 | 7,630.4 | 7,572.5 | 8,971.7 | 9,102.3 | |||||||||||||||||||||||||||||||||
|
(=)
Total Assets
|
6,263.4 | 7,352.4 | 10,647.4 | 7,276.4 | 7,352.4 | 7,368.5 | 9,032.4 | 11,039.4 | 10,647.4 | 12,574.3 | 13,210.2 | |||||||||||||||||||||||||||||||||
|
Loans and
Financings
|
117.2 | 78.2 | 1,449.5 | 86.1 | 78.2 | 74.2 | 311.0 | 1,480.6 | 1,449.5 | 1,127.4 | 1,184.7 | |||||||||||||||||||||||||||||||||
|
Derivatives
Financial Instruments
|
45.3 | 50.7 | 66.9 | 24.5 | 50.7 | 19.3 | 32.6 | 49.5 | 66.9 | 98.9 | 215.4 | |||||||||||||||||||||||||||||||||
|
Trade Accounts
Payable
|
113.8 | 191.0 | 456.1 | 196.3 | 191.0 | 331.6 | 489.9 | 518.2 | 456.1 | 662.8 | 712.5 | |||||||||||||||||||||||||||||||||
|
Salaries
Payable
|
63.3 | 80.7 | 93.2 | 51.7 | 80.7 | 119.0 | 143.0 | 77.7 | 93.2 | 152.3 | 180.9 | |||||||||||||||||||||||||||||||||
|
Taxes and
Social Contributions Payable
|
126.2 | 116.1 | 168.6 | 93.3 | 116.1 | 115.0 | 109.7 | 163.2 | 168.6 | 189.8 | 230.9 | |||||||||||||||||||||||||||||||||
|
Related
Parties
|
0.7 | - | 5.2 | - | - | - | - | 2.5 | 5.2 | 4.5 | 3.8 | |||||||||||||||||||||||||||||||||
|
Other
Liabilities
|
125.4 | 49.9 | 85.8 | 28.6 | 49.9 | 34.4 | 126.1 | 66.6 | 85.8 | 134.1 | 100.7 | |||||||||||||||||||||||||||||||||
|
Current
Liabilities
|
591.7 | 566.5 | 2,325.2 | 480.5 | 566.5 | 693.4 | 1,212.3 | 2,358.2 | 2,325.2 | 2,369.7 | 2,629.0 | |||||||||||||||||||||||||||||||||
|
Loans and
Financing
|
2,819.9 | 2,106.2 | 2,885.5 | 2,196.8 | 2,106.2 | 2,047.9 | 2,679.3 | 2,904.5 | 2,885.5 | 4,091.4 | 4,667.4 | |||||||||||||||||||||||||||||||||
|
Taxes and
Social Contributions Payable
|
338.5 | 359.3 | 328.8 | 340.1 | 359.3 | 351.5 | 346.1 | 336.0 | 328.8 | 335.5 | 288.9 | |||||||||||||||||||||||||||||||||
|
Provision for
Legal Proceedings
|
728.0 | 832.4 | 1,105.9 | 775.3 | 832.4 | 849.8 | 873.1 | 1,114.1 | 1,105.9 | 1,135.5 | 1,143.4 | |||||||||||||||||||||||||||||||||
|
Related
Parties
|
- | - | 405.2 | - | - | - | - | 405.3 | 405.2 | 341.5 | - | |||||||||||||||||||||||||||||||||
|
Pension
Fund
|
- | - | 60.4 | - | - | - | - | 58.5 | 60.4 | 61.0 | 62.3 | |||||||||||||||||||||||||||||||||
|
Other
Liabilities
|
134.0 | 144.4 | 139.9 | 134.5 | 144.4 | 141.3 | 138.4 | 134.8 | 139.9 | 169.2 | 168.4 | |||||||||||||||||||||||||||||||||
|
Noncurrent
Liabilities
|
4,020.4 | 3,442.3 | 4,925.5 | 3,446.7 | 3,442.3 | 3,390.5 | 4,037.0 | 4,953.1 | 4,925.5 | 6,134.1 | 6,330.3 | |||||||||||||||||||||||||||||||||
|
Minority
Shareholders' Interest
|
20.2 | 17.7 | 30.9 | 18.2 | 17.7 | 17.0 | 20.3 | 31.5 | 30.9 | 29.9 | 30.4 | |||||||||||||||||||||||||||||||||
|
Capital
|
1,192.7 | 2,935.3 | 3,819.8 | 2,935.3 | 2,935.3 | 2,935.3 | 3,815.3 | 3,815.3 | 3,819.8 | 4,153.9 | 4,155.3 | |||||||||||||||||||||||||||||||||
|
Capital
Reserve
|
- | - | 41.7 | - | - | - | (4.2 | ) | (4.2 | ) | 41.7 | 45.1 | 50.2 | |||||||||||||||||||||||||||||||
|
Profits
Reserve
|
227.3 | 180.2 | - | 227.3 | 180.2 | 180.2 | 180.2 | 180.2 | - | - | - | |||||||||||||||||||||||||||||||||
|
Legal
Reserve
|
16.0 | 16.0 | - | 16.0 | 16.0 | 16.0 | 16.0 | 16.0 | - | - | - | |||||||||||||||||||||||||||||||||
|
Revaluation
Reserves
|
195.0 | 194.4 | - | 194.4 | 194.4 | 194.2 | 193.8 | 93.2 | - | - | - | |||||||||||||||||||||||||||||||||
|
Accumulated
losses
|
- | - | (495.7 | ) | (41.9 | ) | - | (57.9 | ) | (438.2 | ) | (403.9 | ) | (495.7 | ) | (158.4 | ) | 15.0 | ||||||||||||||||||||||||||
|
Shareholders'
Equity
|
1,631.0 | 3,325.8 | 3,365.7 | 3,331.1 | 3,325.8 | 3,267.7 | 3,762.8 | 3,696.6 | 3,365.7 | 4,040.7 | 4,220.5 | |||||||||||||||||||||||||||||||||
|
(=) Total
Liabilities & Shareholders' Equity
|
6,263.4 | 7,352.4 | 10,647.4 | 7,276.4 | 7,352.4 | 7,368.5 | 9,032.4 | 11,039.4 | 10,647.4 | 12,574.3 | 13,210.2 | |||||||||||||||||||||||||||||||||
|
Credit Statistics
(LTM)
|
Apr'07
|
Apr'08
|
Mar'09
|
Jan'08
|
Apr'08
|
Jul'08
|
Oct'08
|
Jan'09
|
Mar'09
|
Jun'09
|
Sep'09
|
|||||||||||||||||||||||||||||||||
|
(In million of
reais)
|
FY'07
|
FY'08
|
FY'09
|
3Q'08
|
4Q'08
|
1Q'09
|
2Q'09
|
3Q'09
|
4Q'09
|
1Q'10
|
2Q'10
|
|||||||||||||||||||||||||||||||||
|
Net
Operating Revenues
|
3,605.1 | 2,736.2 | 6,270.1 | 2,575.2 | 2,736.2 | 2,784.1 | 2,871.6 | 4,763.3 | 6,270.1 | 9,196.6 | 12,056.9 | |||||||||||||||||||||||||||||||||
|
●
Gross Profit
|
1,123.9 | 349.0 | 799.4 | 369.9 | 349.0 | 318.9 | 410.5 | 708.9 | 799.4 | 1,153.6 | 1,509.4 | |||||||||||||||||||||||||||||||||
|
●
EBITDA
|
930.0 | 182.9 | 718.0 | 261.8 | 182.9 | 159.6 | 264.0 | 602.1 | 718.0 | 1,000.0 | 1,173.1 | |||||||||||||||||||||||||||||||||
|
●
EBIT
|
633.1 | (158.4 | ) | 290.8 | (186.9 | ) | (158.4 | ) | (213.5 | ) | (147.0 | ) | 167.7 | 290.8 | 560.2 | 753.3 | ||||||||||||||||||||||||||||
|
●
Encargos Financeiros da Dívida Líquida
|
127.8 | 106.2 | 179.9 | 126.2 | 106.2 | 91.9 | 85.2 | 136.1 | 179.9 | 247.0 | 308.4 | |||||||||||||||||||||||||||||||||
|
●
Net Profit
|
357.3 | (47.8 | ) | (473.8 | ) | 122.2 | (47.8 | ) | (119.6 | ) | (515.5 | ) | (438.9 | ) | (473.8 | ) | (78.4 | ) | 475.6 | |||||||||||||||||||||||||
|
Liquid
Funds
|
||||||||||||||||||||||||||||||||||||||||||||
|
●
Cash and Cash Equivalents
|
1,217.1 | 1,010.1 | 719.4 | 1,448.2 | 1,010.1 | 633.9 | 1,276.3 | 689.7 | 719.4 | 932.9 | 1,098.2 | |||||||||||||||||||||||||||||||||
|
Short-Term
Debt
|
||||||||||||||||||||||||||||||||||||||||||||
|
●
Loans and Financings
|
109.0 | 69.3 | 1,442.7 | 80.2 | 69.3 | 62.9 | 298.6 | 1,475.3 | 1,442.7 | 1,115.9 | 1,171.6 | |||||||||||||||||||||||||||||||||
|
Long-Term
Debt
|
||||||||||||||||||||||||||||||||||||||||||||
|
●
Loans and Financings
|
2,324.8 | 1,562.5 | 2,312.3 | 1,663.6 | 1,562.5 | 1,474.9 | 2,101.7 | 2,327.6 | 2,312.3 | 3,508.5 | 4,086.8 | |||||||||||||||||||||||||||||||||
|
Total
Debt
|
2,433.8 | 1,631.8 | 3,755.0 | 1,743.8 | 1,631.8 | 1,537.7 | 2,400.3 | 3,802.9 | 3,755.0 | 4,624.4 | 5,258.3 | |||||||||||||||||||||||||||||||||
|
Net
Debt
|
1,216.7 | 621.7 | 3,035.6 | 295.6 | 621.7 | 903.8 | 1,124.0 | 3,113.3 | 3,035.6 | 3,691.5 | 4,160.2 | |||||||||||||||||||||||||||||||||
|
Current
Assets
|
2,224.7 | 2,272.4 | 3,074.9 | 2,989.4 | 2,272.4 | 2,140.0 | 3,453.9 | 3,409.0 | 3,074.9 | 3,602.6 | 4,107.9 | |||||||||||||||||||||||||||||||||
|
Current
Liabilities
|
591.7 | 566.5 | 2,325.2 | 480.5 | 566.5 | 693.4 | 1,212.3 | 2,358.2 | 2,325.2 | 2,369.7 | 2,629.0 | |||||||||||||||||||||||||||||||||
|
Shareholders'
Equity
|
1,631.0 | 3,325.8 | 3,365.7 | 3,331.1 | 3,325.8 | 3,267.7 | 3,762.8 | 3,696.6 | 3,365.7 | 4,040.7 | 4,220.5 | |||||||||||||||||||||||||||||||||
|
Capex
- Property, Plant and Equipment
|
684.2 | 1,053.1 | 1,346.1 | 944.2 | 1,053.1 | 1,147.4 | 1,324.5 | 1,485.9 | 1,346.1 | 1,501.9 | 1,546.7 | |||||||||||||||||||||||||||||||||
|
●
Capex - Operational
|
598.0 | 781.9 | 565.0 | 798.1 | 781.9 | 796.9 | 762.7 | 727.5 | 565.0 | 588.7 | 626.5 | |||||||||||||||||||||||||||||||||
|
EBITDA
Margin
|
25.8 | % | 6.7 | % | 11.5 | % | 10.2 | % | 6.7 | % | 5.7 | % | 9.2 | % | 12.6 | % | 11.5 | % | 10.9 | % | 9.7 | % | ||||||||||||||||||||||
|
●
Gross Profit Margin
|
31.2 | % | 12.8 | % | 12.7 | % | 14.4 | % | 12.8 | % | 11.5 | % | 14.3 | % | 14.9 | % | 12.7 | % | 12.5 | % | 12.5 | % | ||||||||||||||||||||||
|
● EBIT
Margin
|
17.6 | % | -5.8 | % | 4.6 | % | -7.3 | % | -5.8 | % | -7.7 | % | -5.1 | % | 3.5 | % | 4.6 | % | 6.1 | % | 6.2 | % | ||||||||||||||||||||||
|
● Net
Profit Margin
|
9.9 | % | -1.7 | % | -7.6 | % | 4.7 | % | -1.7 | % | -4.3 | % | -18.0 | % | -9.2 | % | -7.6 | % | -0.9 | % | 3.9 | % | ||||||||||||||||||||||
|
Net
Debt ÷ Shareholders' Equity
|
||||||||||||||||||||||||||||||||||||||||||||
|
● Net
Debt %
|
42.7 | % | 15.8 | % | 47.4 | % | 8.2 | % | 15.8 | % | 21.7 | % | 23.0 | % | 45.7 | % | 47.4 | % | 47.7 | % | 50.5 | % | ||||||||||||||||||||||
|
●
Shareholders' Equity %
|
57.3 | % | 84.2 | % | 52.6 | % | 91.8 | % | 84.2 | % | 78.3 | % | 77.0 | % | 54.3 | % | 52.6 | % | 52.3 | % | 49.5 | % | ||||||||||||||||||||||
|
Long-Term
Payable Debt to Equity Ratio
|
1.4 | x | 0.5 | x | 0.7 | x | 0.5 | x | 0.5 | x | 0.5 | x | 0.6 | x | 0.6 | x | 0.7 | x | 0.9 | x | 1.0 | x | ||||||||||||||||||||||
|
Liquidity
Ratio (Current Assets ÷ Current Liabilities)
|
3.8 | x | 4.0 | x | 1.3 | x | 6.2 | x | 4.0 | x | 3.1 | x | 2.8 | x | 1.4 | x | 1.3 | x | 1.5 | x | 1.6 | x | ||||||||||||||||||||||
|
Net
Debt ÷ EBITDA
|
1.3 | x | 3.4 | x | 4.2 | x | 1.1 | x | 3.4 | x | 5.7 | x | 4.3 | x | 5.2 | x | 4.2 | x | 3.7 | x | 3.7 | x | ||||||||||||||||||||||
|
●
Short-Term Net Debt ÷ EBITDA
|
0.1 | x | 0.4 | x | 2.0 | x | 0.3 | x | 0.4 | x | 0.4 | x | 1.1 | x | 2.5 | x | 2.0 | x | 1.1 | x | 1.0 | x | ||||||||||||||||||||||
|
Net
Debt ÷ (EBITDA - Capex)
|
4.9 | x | -0.7 | x | -4.8 | x | -0.4 | x | -0.7 | x | -0.9 | x | -1.1 | x | -3.5 | x | -4.8 | x | -7.4 | x | -11.5 | x | ||||||||||||||||||||||
|
● Net
Debt ÷ (EBITDA - Operational Capex)
|
3.7 | x | -1.0 | x | 19.8 | x | -0.6 | x | -1.0 | x | -1.4 | x | -2.3 | x | -24.8 | x | 19.8 | x | 9.0 | x | 7.9 | x | ||||||||||||||||||||||
|
Interest
Cover (EBITDA ÷ Net Financial Exp.)
|
7.3 | x | 1.7 | x | 4.0 | x | 2.1 | x | 1.7 | x | 1.7 | x | 3.1 | x | 4.4 | x | 4.0 | x | 4.0 | x | 3.8 | x | ||||||||||||||||||||||
|
●
Interest Cover (EBITDA -
Op.Capes)÷Net Fin.)
|
2.6 | x | -5.6 | x | 0.9 | x | -4.3 | x | -5.6 | x | -6.9 | x | -5.9 | x | -0.9 | x | 0.9 | x | 1.7 | x | 1.8 | x | ||||||||||||||||||||||
|
Avg.
Debt Cost (Net.Fin.Exp. ÷ Net Debt)
|
10.5 | % | 17.1 | % | 5.9 | % | 42.7 | % | 17.1 | % | 10.2 | % | 7.6 | % | 4.4 | % | 5.9 | % | 6.7 | % | 7.2 | % | ||||||||||||||||||||||
22
I. Financial Statements of Cosan Limited
– US GAAP
|
Income
Statement
|
Apr'07
|
Apr'08
|
Apr'09
|
Jan'08
|
Apr'08
|
Jul'08
|
Oct'08
|
Jan'09
|
Apr'09
|
Jun'09
|
Sep'09
|
||||||||||||||||||||||||||||||||||
|
(In millions of U.S.
dollars)
|
FY'07
|
FY'08
|
FY'09
|
3Q'08
|
4Q'08
|
1Q'09
|
2Q'09
|
3Q'09
|
4Q'09
|
1Q'10
|
2Q'10
|
||||||||||||||||||||||||||||||||||
|
Net
sales
|
1,679.1 | 1,491.2 | 2,926.5 | 376.7 | 485.3 | 394.0 | 383.8 | 1,103.4 | 1,045.3 | 1,720.3 | 1,915.7 | ||||||||||||||||||||||||||||||||||
| (-) |
Cost of goods
sold
|
(1,191.3 | ) | (1,345.6 | ) | (2,621.9 | ) | (343.5 | ) | (418.4 | ) | (398.9 | ) | (320.2 | ) | (950.3 | ) | (952.4 | ) | (1,561.4 | ) | (1,655.5 | ) | ||||||||||||||||||||||
| (=) | Gross profit | 487.8 | 145.6 | 304.6 | 33.2 | 66.9 | (4.9 | ) | 63.6 | 153.0 | 92.8 | 158.8 | 260.1 | ||||||||||||||||||||||||||||||||
| (-) |
Selling
expenses
|
(133.8 | ) | (168.6 | ) | (213.3 | ) | (41.6 | ) | (44.9 | ) | (53.0 | ) | (47.9 | ) | (67.6 | ) | (44.7 | ) | (102.1 | ) | (115.1 | ) | ||||||||||||||||||||||
|
(-)
|
General and
administrative expenses
|
(121.1 | ) | (115.1 | ) | (140.1 | ) | (30.2 | ) | (30.5 | ) | (36.3 | ) | (34.9 | ) | (42.2 | ) | (26.8 | ) | (7.9 | ) | (62.8 | ) | ||||||||||||||||||||||
| (=) | Operating income (loss) | 232.9 | (138.1) | (48.8 | ) | (38.6 | ) | (8.5 | ) | (94.2 | ) | (19.2 | ) | 43.2 | 21.4 | 48.9 | 82.3 | ||||||||||||||||||||||||||||
|
Operating
margin
|
13.9 | % | -9.3 | % | -1.7 | % | -10.2 | % | -1.8 | % | -23.9 | % | -5.0 | % | 3.9 | % | 2.0 | % | 2.8 | % | 4.3 | % | |||||||||||||||||||||||
| (-) |
Other income
(expense):
|
||||||||||||||||||||||||||||||||||||||||||||
|
Financial
|
289.4 | 116.8 | (370.8 | ) | (131.8 | ) | 119.3 | 26.5 | (234.4 | ) | (137.2 | ) | (25.7 | ) | 215.7 | 64.1 | |||||||||||||||||||||||||||||
|
Other
|
16.3 | (3.7 | ) | (2.3 | ) | (1.4 | ) | (1.8 | ) | (3.5 | ) | (8.1 | ) | 6.6 | 2.7 | (7.9 | ) | 0.9 | |||||||||||||||||||||||||||
|
(=)
Income (loss) before income taxes
|
538.5 | (25.0 | ) | (421.9 | ) | (171.9 | ) | 109.0 | (71.2 | ) | (261.7 | ) | (87.3 | ) | (1.6 | ) | 256.7 | 147.3 | |||||||||||||||||||||||||||
| (-) |
Income taxes
expense (benefit)
|
(188.8 | ) | 19.8 | 144.7 | 57.5 | (27.9 | ) | 23.2 | 94.5 | (1.7 | ) | 28.7 | (76.5 | ) | (49.4 | ) | ||||||||||||||||||||||||||||
| (=) | Income (loss) before equity | 349.7 | (5.2 | ) | (277.2 | ) | (114.3 | ) | 81.1 | (48.0) | (167.2 | ) | (89.1 | ) | 27.1 | 180.1 | 97.9 | ||||||||||||||||||||||||||||
| (±) | Equity in income of affiliates | (0.0 | ) | (0.2 | ) | 6.1 | (0.5 | ) | 2.3 | 0.1 | 1.2 | 5.2 | (0.3) | (1.7) | 0.0 | ||||||||||||||||||||||||||||||
| (±) | Minority interest in net (income) loss | (173.0 | ) | 22.0 | 83.0 | 55.2 | (26.1 | ) | 18.6 | 52.0 | 19.3 | (6.9) | (55.8 | ) | (34.0 | ) | |||||||||||||||||||||||||||||
| (=) | Net income (loss) | 176.7 | 16.6 | (188.1 | ) | (59.7 | ) | 57.3 | (29.3 | ) | (114.1 | ) | (64.6 | ) | 19.9 | 122.6 | 63.9 | ||||||||||||||||||||||||||||
|
Margin
|
10.5 | % | 1.1 | % | -6.4 | % | -15.8 | % | 11.8 | % | -7.4 | % | -29.7 | % | -5.9 | % | 1.9 | % | 7.1 | % | 3.3 | % | |||||||||||||||||||||||
| ● | EBITDA | 436.5 | 94.3 | 239.6 | 11.8 | 15.0 | 14.6 | 72.2 | 92.2 | 60.7 | 140.3 | 190.9 | |||||||||||||||||||||||||||||||||
|
Margin
|
26.0 | % | 6.3 | % | 8.2 | % | 3.1 | % | 3.1 | % | 3.7 | % | 18.8 | % | 8.4 | % | 5.8 | % | 8.2 | % | 10.0 | % | |||||||||||||||||||||||
| ● | EBIT | 249.2 | (141.8 | ) | (51.1 | ) | (40.0 | ) | (10.3 | ) | (97.7 | ) | (27.3 | ) | 49.9 | 24.1 | 40.9 | 83.1 | |||||||||||||||||||||||||||
|
Margin
|
14.8 | % | -9.5 | % | -1.7 | % | -10.6 | % | -2.1 | % | -24.8 | % | -7.1 | % | 4.5 | % | 2.3 | % | 2.4 | % | 4.3 | % | |||||||||||||||||||||||
|
●
Depreciation and amortization
|
187.4 | 236.1 | 290.7 | 51.8 | 25.3 | 112.3 | 99.5 | 42.3 | 36.6 | 99.3 | 107.7 | ||||||||||||||||||||||||||||||||||
|
Cash Flow
Statement
|
Apr'07
|
Apr'08
|
Mar'09
|
Jan'08
|
Apr'08
|
Jul'08
|
Oct'08
|
Jan'09
|
Mar'09
|
Jun'09
|
Se´p'09
|
|||||||||||||||||||||||||||||||||
|
(In millions of U.S. dollars)
|
FY'07
|
FY'08
|
FY'09
|
3Q'08
|
4Q'08
|
1Q'09
|
2Q'09
|
3Q'09
|
4Q'09
|
1Q'10
|
2Q'10
|
|||||||||||||||||||||||||||||||||
|
●
Cash flow
from operating activities:
|
||||||||||||||||||||||||||||||||||||||||||||
|
Net income
(loss) for the year/quarter
|
176.7 | 16.6 | (188.1 | ) | (59.7 | ) | 57.3 | (29.3 | ) | (114.1 | ) | (64.6 | ) | 19.9 | 122.6 | 63.9 | ||||||||||||||||||||||||||||
|
Adjustments to
reconcile net income (loss)
to cash
provided by operating activities:
|
||||||||||||||||||||||||||||||||||||||||||||
|
Depreciation
and amortization
|
187.4 | 236.1 | 290.7 | 51.8 | 25.3 | 112.3 | 99.5 | 42.3 | 36.6 | 99.3 | 107.7 | |||||||||||||||||||||||||||||||||
|
Deferred
income and social contribution taxes
|
150.2 | (52.4 | ) | (145.3 | ) | (51.9 | ) | 14.0 | (31.6 | ) | (86.7 | ) | 13.9 | (40.9 | ) | 66.6 | 59.3 | |||||||||||||||||||||||||||
|
Interest,
monetary and exchange variation
|
116.3 | (43.7 | ) | 497.3 | 56.5 | (2.5 | ) | (14.5 | ) | 327.5 | 2.2 | 182.1 | (136.3 | ) | (67.9 | ) | ||||||||||||||||||||||||||||
|
Minority
interest in net income of subsidiaries
|
173.0 | (22.0 | ) | (83.0 | ) | (55.2 | ) | 26.1 | (18.6 | ) | (52.0 | ) | (19.3 | ) | 6.9 | 55.8 | 34.0 | |||||||||||||||||||||||||||
|
Others
|
(176.8 | ) | 15.2 | 14.5 | (6.2 | ) | 8.7 | 9.2 | 5.4 | (55.0 | ) | 54.9 | 12.2 | (47.8 | ) | |||||||||||||||||||||||||||||
| 626.8 | 149.8 | 386.1 | (64.6 | ) | 128.9 | 27.5 | 179.7 | (80.5 | ) | 259.5 | 220.3 | 149.3 | ||||||||||||||||||||||||||||||||
|
Decrease/increase
in operating assets and liabilities:
|
||||||||||||||||||||||||||||||||||||||||||||
|
Trade accounts
receivable, net
|
48.2 | (57.1 | ) | (23.7 | ) | 6.4 | (62.2 | ) | 63.9 | (63.7 | ) | 26.5 | (50.5 | ) | 56.5 | (8.5 | ) | |||||||||||||||||||||||||||
|
Inventories
|
(54.1 | ) | (31.7 | ) | (85.9 | ) | 103.1 | 253.5 | (214.0 | ) | (197.2 | ) | 96.0 | 229.3 | 88.4 | (178.6 | ) | |||||||||||||||||||||||||||
|
Advances to
suppliers
|
(38.7 | ) | (8.4 | ) | 21.1 | 35.2 | 8.6 | (16.8 | ) | (12.1 | ) | 22.8 | 27.2 | (38.8 | ) | 7.3 | ||||||||||||||||||||||||||||
|
Trade accounts
payable
|
(43.2 | ) | 33.7 | 33.4 | (100.9 | ) | (12.2 | ) | 90.1 | 54.8 | (83.8 | ) | (27.6 | ) | 24.1 | 30.3 | ||||||||||||||||||||||||||||
|
Derivative
financial instruments
|
(155.0 | ) | 90.4 | 4.4 | 127.4 | (79.6 | ) | 11.3 | (4.8 | ) | 56.0 | (58.1 | ) | (16.2 | ) | 57.9 | ||||||||||||||||||||||||||||
|
Taxes
payable
|
(36.6 | ) | (19.6 | ) | (17.1 | ) | 13.7 | (17.1 | ) | (7.9 | ) | (5.0 | ) | (1.2 | ) | (2.9 | ) | (29.3 | ) | (29.7 | ) | |||||||||||||||||||||||
|
Other assets
and liabilities, net
|
(63.4 | ) | (99.4 | ) | (61.8 | ) | (107.9 | ) | 23.0 | 16.2 | (126.6 | ) | 23.5 | 25.0 | 33.0 | (12.1 | ) | |||||||||||||||||||||||||||
| (342.8 | ) | (92.2 | ) | (129.6 | ) | 77.1 | 114.0 | (57.1 | ) | (354.6 | ) | 139.8 | 142.4 | 117.7 | (133.3 | ) | ||||||||||||||||||||||||||||
|
(=)
Net cash provided by operating actitivities
|
284.0 | 57.6 | 256.6 | 12.5 | 242.9 | (29.6 | ) | (174.9 | ) | 59.2 | 401.9 | 338.0 | 16.0 | |||||||||||||||||||||||||||||||
|
●
Cash
flow from investing activities:
|
||||||||||||||||||||||||||||||||||||||||||||
|
Restricted
cash
|
47.0 | (25.9 | ) | 29.3 | (33.6 | ) | (11.1 | ) | 0.1 | 37.4 | (8.3 | ) | 0.1 | (14.5 | ) | (63.0 | ) | |||||||||||||||||||||||||||
|
Marketable
securities
|
97.0 | (671.0 | ) | 558.8 | (71.0 | ) | 191.8 | (202.4 | ) | (123.4 | ) | 791.6 | 93.0 | - | - | |||||||||||||||||||||||||||||
|
Acquisition of
property, plant and equipment
|
(356.2 | ) | (642.9 | ) | (606.2 | ) | (157.3 | ) | (300.8 | ) | (169.3 | ) | (143.9 | ) | (131.7 | ) | (161.2 | ) | (227.0 | ) | (211.5 | ) | ||||||||||||||||||||||
|
Acquisitions,
net of cash acquired
|
(39.4 | ) | (102.0 | ) | (930.4 | ) | (1.2 | ) | (100.8 | ) | 0.8 | (45.2 | ) | (671.5 | ) | (214.5 | ) | (2.1 | ) | 2.1 | ||||||||||||||||||||||||
|
Other
|
- | - | 160.7 | 1.2 | - | - | - | (65.5 | ) | 226.2 | 92.4 | (8.8 | ) | |||||||||||||||||||||||||||||||
|
(=)
Net cash used in investing
actitivities
|
(251.6 | ) | (1,441.7 | ) | (787.8 | ) | (261.9 | ) | (220.8 | ) | (370.8 | ) | (275.2 | ) | (85.4 | ) | (56.4 | ) | (151.2 | ) | (281.3 | ) | ||||||||||||||||||||||
|
●
Cash flow
from financing activities:
|
||||||||||||||||||||||||||||||||||||||||||||
|
Proceeds from
issuance of common stock
|
3.2 | 1,118.4 | 200.0 | - | - | - | 196.2 | 0.0 | 3.8 | - | 0.7 | |||||||||||||||||||||||||||||||||
|
Capital
increase on subsidiary from minority
|
- | 324.4 | 11.2 | 312.7 | 11.7 | - | - | - | 11.2 | (62.2 | ) | (0.3 | ) | |||||||||||||||||||||||||||||||
|
Dividends
Paid
|
- | (44.9 | ) | - | - | (44.9 | ) | - | - | - | - | - | - | |||||||||||||||||||||||||||||||
|
Additions of
financial debt
|
424.6 | 117.5 | 789.5 | - | 117.5 | - | 174.5 | 630.4 | (15.4 | ) | 88.6 | 596.8 | ||||||||||||||||||||||||||||||||
|
Payments of
financial debt
|
(205.0 | ) | (492.1 | ) | (111.1 | ) | (60.4 | ) | (171.2 | ) | (39.8 | ) | (26.2 | ) | (37.1 | ) | (8.0 | ) | (69.2 | ) | (351.4 | ) | ||||||||||||||||||||||
|
Other
|
- | - | (17.8 | ) | - | - | - | - | - | (17.8 | ) | - | - | |||||||||||||||||||||||||||||||
|
(=)
Net cash provided by financing
actitivities
|
222.8 | 1,023.3 | 871.9 | 252.3 | (86.9 | ) | (39.8 | ) | 344.6 | 593.4 | (26.2 | ) | (42.8 | ) | 245.8 | |||||||||||||||||||||||||||||
|
Effect of
exchange rate changes on cash and cash
|
32.1 | 112.6 | 99.7 | 3.6 | 49.8 | 458.1 | 81.8 | (529.2 | ) | 89.0 | 23.5 | 112.4 | ||||||||||||||||||||||||||||||||
|
(=)
Variation in cash & equivalents
|
287.3 | (248.2 | ) | 440.4 | 6.4 | (15.0 | ) | 17.9 | (23.7 | ) | 37.9 | 408.3 | 167.5 | 92.9 | ||||||||||||||||||||||||||||||
|
(+) Cash
and cash equivalents at beginning of year
|
29.2 | 316.5 | 68.4 | 77.0 | 83.4 | 68.4 | 86.3 | 62.6 | 100.5 | 508.8 | 676.3 | |||||||||||||||||||||||||||||||||
|
(=) Cash
and cash equivalents at end of year
|
316.5 | 68.4 | 508.8 | 83.4 | 68.4 | 86.3 | 62.6 | 100.5 | 508.8 | 676.3 | 769.1 | |||||||||||||||||||||||||||||||||
23
|
Balance
Sheet
|
Apr'07
|
Apr'08
|
Mar'09
|
Jan'08
|
Apr'08
|
Jul'08
|
Oct'08
|
Jan'09
|
Mar'09
|
Jun'09
|
Sep'09
|
|||||||||||||||||||||||||||||||||
|
(In millions of U.S.
dollars)
|
FY'07
|
FY'08
|
FY'09
|
3Q'08
|
4Q'08
|
1Q'09
|
2Q'09
|
3Q'09
|
4Q'09
|
1Q'10
|
2Q'10
|
|||||||||||||||||||||||||||||||||
|
Assets
|
||||||||||||||||||||||||||||||||||||||||||||
|
Current
assets:
|
||||||||||||||||||||||||||||||||||||||||||||
|
Cash and cash
equivalents
|
316.5 | 68.4 | 508.8 | 83.4 | 68.4 | 86.3 | 62.6 | 100.5 | 508.8 | 676.3 | 769.1 | |||||||||||||||||||||||||||||||||
|
Restricted
cash
|
17.7 | 47.2 | 5.1 | 35.2 | 47.2 | 50.7 | 0.1 | 5.1 | 5.1 | 20.5 | 84.1 | |||||||||||||||||||||||||||||||||
|
Marketable
securities
|
281.9 | 1,014.5 | - | 1,188.5 | 1,014.5 | 804.2 | 771.5 | 397.0 | - | - | - | |||||||||||||||||||||||||||||||||
|
Derivative
financial instruments
|
65.2 | 31.5 | 7.4 | 12.7 | 31.5 | 65.3 | 86.8 | 3.7 | 7.4 | 44.4 | 54.8 | |||||||||||||||||||||||||||||||||
|
Trade accounts
receivable, net
|
55.2 | 126.9 | 258.9 | 59.8 | 126.9 | 73.0 | 101.9 | 197.9 | 258.9 | 300.1 | 331.6 | |||||||||||||||||||||||||||||||||
|
Inventories
|
247.5 | 337.7 | 477.8 | 571.2 | 337.7 | 577.6 | 680.5 | 709.5 | 477.8 | 589.2 | 861.3 | |||||||||||||||||||||||||||||||||
|
Advances to
suppliers
|
104.0 | 133.7 | 89.0 | 137.1 | 133.7 | 160.8 | 135.5 | 103.5 | 89.0 | 200.8 | 189.4 | |||||||||||||||||||||||||||||||||
|
Deferred
income taxes
|
- | - | 114.6 | - | - | - | - | 25.7 | 114.6 | 153.2 | 192.8 | |||||||||||||||||||||||||||||||||
|
Other current
assets
|
51.6 | 103.2 | 66.0 | 44.5 | 103.2 | 99.7 | 132.6 | 158.4 | 66.0 | 69.0 | 56.1 | |||||||||||||||||||||||||||||||||
| 1,139.5 | 1,863.0 | 1,527.5 | 2,132.6 | 1,863.0 | 1,917.6 | 1,971.5 | 1,701.3 | 1,527.5 | 2,053.5 | 2,539.3 | ||||||||||||||||||||||||||||||||||
|
Noncurrent
assets:
|
||||||||||||||||||||||||||||||||||||||||||||
|
Property,
plant and equipment, net
|
1,194.1 | 2,018.1 | 2,271.8 | 1,514.3 | 2,018.1 | 2,217.3 | 1,738.6 | 1,828.8 | 2,271.8 | 3,178.1 | 3,554.3 | |||||||||||||||||||||||||||||||||
|
Goodwill
|
491.9 | 772.6 | 888.8 | 626.3 | 772.6 | 823.4 | 623.4 | 1,197.3 | 888.8 | 1,464.2 | 1,592.5 | |||||||||||||||||||||||||||||||||
|
Intangible
assets, net
|
94.0 | 106.1 | 230.7 | 102.0 | 106.1 | 111.8 | 81.8 | 73.1 | 230.7 | 240.5 | 256.9 | |||||||||||||||||||||||||||||||||
|
Accounts
Receivable from Federal Government
|
156.5 | 202.8 | 139.7 | 192.7 | 202.8 | 218.4 | 161.8 | 147.7 | 139.7 | 167.3 | 185.1 | |||||||||||||||||||||||||||||||||
|
Other
non-current assets
|
177.5 | 306.4 | 362.6 | 237.9 | 306.4 | 345.3 | 322.0 | 536.5 | 362.6 | 491.7 | 580.5 | |||||||||||||||||||||||||||||||||
| 2,113.9 | 3,406.1 | 3,893.6 | 2,673.3 | 3,406.1 | 3,716.3 | 2,927.5 | 3,783.5 | 3,893.6 | 5,541.6 | 6,169.2 | ||||||||||||||||||||||||||||||||||
|
(=)
Total assets
|
3,253.4 | 5,269.1 | 5,421.1 | 4,805.9 | 5,269.1 | 5,634.0 | 4,899.0 | 5,484.7 | 5,421.1 | 7,595.1 | 8,708.6 | |||||||||||||||||||||||||||||||||
|
Liabilities
and shareholders' equity
|
||||||||||||||||||||||||||||||||||||||||||||
|
Current
liabilities:
|
||||||||||||||||||||||||||||||||||||||||||||
|
Trade accounts
payable
|
55.9 | 114.4 | 197.2 | 110.5 | 114.4 | 212.0 | 235.8 | 223.7 | 197.2 | 339.8 | 401.3 | |||||||||||||||||||||||||||||||||
|
Taxes
payable
|
57.5 | 62.9 | 69.0 | 47.1 | 62.9 | 67.4 | 47.4 | 66.1 | 69.0 | 92.9 | 125.1 | |||||||||||||||||||||||||||||||||
|
Salaries
payable
|
31.1 | 47.8 | 40.2 | 29.2 | 47.8 | 75.8 | 67.5 | 33.5 | 40.2 | 78.0 | 101.7 | |||||||||||||||||||||||||||||||||
|
Current
portion of long-term debt
|
36.1 | 38.2 | 781.7 | 27.9 | 38.2 | 33.2 | 134.2 | 786.7 | 781.7 | 582.9 | 673.0 | |||||||||||||||||||||||||||||||||
|
Derivative
financial instruments
|
9.8 | 55.0 | 28.9 | 102.3 | 55.0 | 102.1 | 112.1 | 83.3 | 28.9 | 50.7 | 121.1 | |||||||||||||||||||||||||||||||||
|
Dividends
payable
|
37.3 | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
|
Deferred
income taxes
|
- | - | - | - | - | - | 10.3 | - | - | - | - | |||||||||||||||||||||||||||||||||
|
Other
liabilities
|
46.5 | 40.8 | 47.6 | 24.9 | 40.8 | 29.4 | 28.5 | 30.2 | 47.6 | 87.1 | 70.7 | |||||||||||||||||||||||||||||||||
| 274.2 | 359.1 | 1,164.7 | 342.0 | 359.1 | 519.8 | 635.7 | 1,223.6 | 1,164.7 | 1,231.5 | 1,493.0 | ||||||||||||||||||||||||||||||||||
|
Long-term
liabilities:
|
||||||||||||||||||||||||||||||||||||||||||||
|
Long-term
debt
|
1,342.5 | 1,249.3 | 1,251.1 | 1,226.5 | 1,249.3 | 1,291.4 | 1,257.4 | 1,246.5 | 1,251.1 | 2,249.1 | 2,632.3 | |||||||||||||||||||||||||||||||||
|
Estimated
liability for legal proceedings
|
379.2 | 494.1 | 497.6 | 442.0 | 494.1 | 545.0 | 414.1 | 546.4 | 497.6 | 607.5 | 672.6 | |||||||||||||||||||||||||||||||||
|
Taxes
payable
|
106.9 | 170.4 | 151.5 | 127.7 | 170.4 | 181.9 | 133.4 | 187.1 | 151.5 | 184.7 | 178.3 | |||||||||||||||||||||||||||||||||
|
Advances from
customers
|
24.3 | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
|
Deferred
income taxes
|
141.6 | 101.8 | 40.4 | 85.9 | 101.8 | 83.6 | - | - | 40.4 | 84.0 | 118.3 | |||||||||||||||||||||||||||||||||
|
Other
long-term liabilities
|
47.5 | 101.7 | 175.0 | 72.8 | 101.7 | 103.3 | 107.7 | 181.6 | 175.0 | 213.2 | 224.6 | |||||||||||||||||||||||||||||||||
| 2,042.0 | 2,117.4 | 2,115.6 | 1,954.9 | 2,117.4 | 2,205.3 | 1,912.7 | 2,161.5 | 2,115.6 | 3,338.5 | 3,826.2 | ||||||||||||||||||||||||||||||||||
|
Minority
interest in consolidated subsidiaries
|
463.6 | 796.8 | 544.5 | 873.4 | 796.8 | 839.7 | 602.8 | 530.7 | 544.5 | 1,037.8 | 1,181.8 | |||||||||||||||||||||||||||||||||
|
Shareholders'
equity:
|
||||||||||||||||||||||||||||||||||||||||||||
|
Common
stock
|
1.0 | 2.3 | 2.7 | 2.1 | 2.3 | 2.3 | 2.7 | 2.7 | 2.7 | 2.7 | 2.7 | |||||||||||||||||||||||||||||||||
|
Additional
paid-in capital
|
354.0 | 1,723.1 | 1,926.7 | 1,471.0 | 1,723.1 | 1,724.6 | 1,920.9 | 1,922.0 | 1,926.7 | 1,964.7 | 1,961.8 | |||||||||||||||||||||||||||||||||
|
Accumulated
other comprehensive income
|
36.7 | 171.8 | (243.6 | ) | 121.3 | 171.8 | 273.1 | (130.9 | ) | (246.2 | ) | (243.6 | ) | (13.1 | ) | 146.1 | ||||||||||||||||||||||||||||
|
Retained
earnings (losses)
|
81.9 | 98.5 | (89.6 | ) | 41.2 | 98.5 | 69.2 | (44.9 | ) | (109.5 | ) | (89.6 | ) | 33.0 | 96.9 | |||||||||||||||||||||||||||||
|
Total
shareholders' equity
|
473.6 | 1,995.7 | 1,596.2 | 1,635.6 | 1,995.7 | 2,069.1 | 1,747.8 | 1,569.0 | 1,596.2 | 1,987.3 | 2,207.6 | |||||||||||||||||||||||||||||||||
|
(=)
Total liabilities and shareholders' equity
|
3,253.4 | 5,269.1 | 5,421.1 | 4,805.9 | 5,269.1 | 5,634.0 | 4,899.0 | 5,484.7 | 5,421.1 | 7,595.1 | 8,708.6 | |||||||||||||||||||||||||||||||||
24
Cosan
S.A. Indústria e Comércio
Condensed Consolidated Financial
Statements
For the six-month
periods ended September 30, 2009 and October 31, 2008
COSAN
S.A. INDÚSTRIA E COMÉRCIO
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
CONTENTS
|
Report of
independent registered public accounting firm
|
1
|
|
Condensed
consolidated balance sheets
|
2
|
|
Condensed
consolidated statements of operations
|
4
|
|
Condensed
consolidated statements of shareholders’ equity and comprehensive income
(loss)
|
5
|
|
Condensed
consolidated statements of cash flows
|
6
|
|
Notes to the
condensed consolidated financial statements
|
7
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of
Directors and Shareholders of
Cosan
S.A. Indústria e Comércio
We have reviewed the condensed
consolidated balance sheet of Cosan S.A. Indústria e
Comércio and subsidiaries
as of September 30, 2009, the related condensed
consolidated statements of operations and cash flows for the six-month periods ended September 30, 2009 and October 31, 2008 and the condensed consolidated
statement of shareholders’ equity and comprehensive income (loss)
for the six-month period ended September 30, 2009. These financial statements
are the responsibility of the Company's management.
We conducted our
review in accordance with the standards of the Public Company Accounting
Oversight Board (United States). A review of interim financial information
consists principally of applying analytical procedures and making inquiries of
persons responsible for financial and accounting matters. It is substantially
less in scope than an audit conducted in accordance with the standards of the
Public Company Accounting Oversight Board, the objective of which is the
expression of an opinion regarding the financial statements taken as whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of
any material modifications that should be made to the condensed consolidated
financial statements referred to above for them to be in conformity with
U.S. generally accepted accounting
principles.
We have previously audited, in
accordance with the
standards of the Public
Company Accounting Oversight Board (United States), the consolidated balance
sheet of Cosan S.A.
Indústria e Comércio and
subsidiaries as of March
31, 2009, and the related
consolidated statements of operations, shareholders’ equity and cash flows for
the eleven-month
period then ended not
presented herein and in our report dated June 19, 2009, we expressed an unqualified opinion on
those consolidated financial statements. In our opinion, the information set
forth in the accompanying condensed consolidated balance sheet as of
March 31, 2009, is fairly stated, in all material
respects, in relation to the consolidated balance sheet from which it has been
derived.
|
São Paulo,
Brazil
|
ERNST &
YOUNG
|
|
November 12,
2009
|
Auditores
Independentes S.S.
|
|
CRC2SP015199/O-8
|
|
|
Luiz Carlos
Nannini
|
|
|
Accountant
CRC 1SP171638/O-7
|
1
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Condensed consolidated balance
sheets
September 30, 2009 and March 31,
2009
(In thousands of U.S. dollars, except
share data)
|
(Unaudited)
September
30,
|
March 31,
|
|||||||
|
2009
|
2009
|
|||||||
|
Assets
|
||||||||
|
Current
assets:
|
||||||||
|
Cash and cash
equivalents
|
533,517 | 310,710 | ||||||
|
Restricted
cash
|
84,097 | 5,078 | ||||||
|
Derivative
financial instruments
|
54,793 | 7,352 | ||||||
|
Trade
accounts receivable, less allowances: September 30, 2009 – $33,672; March
31, 2009 – $21,241
|
331,628 | 258,863 | ||||||
|
Inventories
|
861,325 | 477,793 | ||||||
|
Advances to
suppliers
|
189,386 | 88,991 | ||||||
|
Recoverable
taxes
|
192,843 | 114,641 | ||||||
|
Other current
assets
|
56,129 | 62,145 | ||||||
| 2,303,718 | 1,325,573 | |||||||
|
Property,
plant, and equipment, net
|
3,400,677 | 2,114,188 | ||||||
|
Goodwill
|
1,507,951 | 803,270 | ||||||
|
Intangible
assets, net
|
255,130 | 228,950 | ||||||
|
Accounts
receivable from federal government
|
185,057 | 139,700 | ||||||
|
Judicial
deposits
|
101,851 | 73,975 | ||||||
|
Other non-current
assets
|
459,882 | 277,028 | ||||||
| 5,910,548 | 3,637,111 | |||||||
|
Total
assets
|
8,214,266 | 4,962,684 | ||||||
2
|
(Unaudited)
September
30,
|
March 31,
|
|||||||
|
2009
|
2009
|
|||||||
|
Liabilities
and shareholders’ equity
|
||||||||
|
Current
liabilities:
|
||||||||
|
Trade accounts
payable
|
400,710 | 197,009 | ||||||
|
Taxes
payable
|
125,395 | 69,273 | ||||||
|
Salaries
payable
|
101,740 | 40,237 | ||||||
|
Current portion
of long-term debt
|
672,469 | 630,260 | ||||||
|
Derivative
financial instruments
|
121,143 | 28,894 | ||||||
|
Other
liabilities
|
70,704 | 47,946 | ||||||
| 1,492,161 | 1,013,619 | |||||||
|
Long-term
liabilities:
|
||||||||
|
Long-term
debt
|
2,629,133 | 1,246,994 | ||||||
|
Estimated liability for legal
proceedings and labor claims
|
672,647 | 497,648 | ||||||
|
Taxes
payable
|
176,311 | 149,621 | ||||||
|
Due to Cosan
Limited
|
- | 175,000 | ||||||
|
Deferred
income taxes
|
118,321 | 40,377 | ||||||
|
Other
long-term liabilities
|
167,641 | 116,429 | ||||||
| 3,764,053 | 2,226,069 | |||||||
|
Shareholders’
equity
|
||||||||
|
Cosan shareholders’
equity:
|
||||||||
|
Common stock, no
par value. Authorized 372,810,142 shares; issued and outstanding
372,810,142 in September 30, 2009 and 328,284,884 shares in March 31,
2009
|
2,121,369 | 1,945,741 | ||||||
|
Treasury
stock
|
(1,979 | ) | (1,979 | ) | ||||
|
Common stock
warrants
|
25,273 | 25,273 | ||||||
|
Additional
paid-in capital
|
350,310 | 167,610 | ||||||
|
Accumulated
other comprehensive income (accumulated loss)
|
316,164 | (280,888 | ) | |||||
|
Retained
earnings (losses)
|
124,463 | (146,099 | ) | |||||
|
Equity attributable to
shareholders of Cosan
|
2,935,600 | 1,709,658 | ||||||
|
Equity attributable to
noncontrolling interests
|
22,452 | 13,338 | ||||||
|
Total shareholders’
equity
|
2,958,052 | 1,722,996 | ||||||
|
Total liabilities and
shareholders' equity
|
8,214,266 | 4,962,684 | ||||||
See accompanying notes to condensed
consolidated financial statements.
3
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Condensed consolidated statements of
operations
Six-month
period ended September 30, 2009
and October 31, 2008
(In thousands of U.S. dollars, except
share data)
(Unaudited)
|
September
30,
|
October 31,
|
|||||||
|
2009
|
2008
|
|||||||
|
Net sales
|
3,635,926 | 777,834 | ||||||
|
Cost of goods sold
|
(3,215,304 | ) | (717,368 | ) | ||||
|
Gross
profit
|
420,622 | 60,466 | ||||||
|
Selling
expenses
|
(217,156 | ) | (100,948 | ) | ||||
|
General and administrative
expenses
|
(70,204 | ) | (70,464 | ) | ||||
|
Operating income
(loss)
|
133,262 | (110,946 | ) | |||||
|
Other income
(expenses):
|
||||||||
|
Financial
income
|
61,205 | 130,772 | ||||||
|
Financial
expenses
|
207,330 | (338,253 | ) | |||||
|
Other
|
(7,007 | ) | (11,601 | ) | ||||
|
Income (loss) before income taxes
and equity in income (loss) of affiliates
|
394,790 | (330,028 | ) | |||||
|
Income taxes benefit
(expense)
|
(125,959 | ) | 116,011 | |||||
|
Income (loss) before equity in
income (loss) of affiliates
|
268,831 | (214,017 | ) | |||||
|
Equity income (loss) of
affiliates
|
(1,698 | ) | 574 | |||||
|
Net (loss)
income
|
267,133 | (213,443 | ) | |||||
|
Net income (loss) attributable to noncontrolling
interests
|
3,429 | (1,602 | ) | |||||
|
Net income (loss) attributable to
Cosan
|
270,562 | (215,045 | ) | |||||
|
Per-share amounts attributable to
Cosan
|
||||||||
|
Net Income
(loss)
|
||||||||
|
Basic
|
0.77 | (0,77 | ) | |||||
|
Diluted
|
0.76 | (0.77 | ) | |||||
|
Weighted number of shares
outstanding
|
||||||||
|
Basic
|
353,351,384 | 279,267,670 | ||||||
|
Diluted
|
358,195,397 | 279,267,670 | ||||||
See accompanying notes to condensed
consolidated financial statements.
4
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Condensed consolidated statements of
shareholders’ equity and comprehensive income (loss)
Six-month
period ended September 30,
2009
(In thousands of U.S. dollars, except
share data)
(Unaudited)
|
Retained
|
Accumulated
|
|||||||||||||||||||||||||||||||||||||||||||
|
Common
stock
|
Treasury
stock
|
Common
stock
|
Additional
|
earnings
|
other
|
Non
|
Total
|
|||||||||||||||||||||||||||||||||||||
|
warrants
|
paid-in
|
(accumulated
|
comprehensive
|
controlling
|
shareholders
|
|||||||||||||||||||||||||||||||||||||||
|
shares
|
Amount
|
Shares
|
amount
|
number
|
amount
|
capital
|
loss)
|
income
(loss)
|
interest
|
equity
|
||||||||||||||||||||||||||||||||||
|
Balances at March 31,
2009
|
328,284,884 | 1,945,741 | 343,139 | (1,979 | ) | 55,000,000 | 25,273 | 167,610 | (146,099 | ) | (280,888 | ) | 13,338 | 1,722,996 | ||||||||||||||||||||||||||||||
|
Acquisition of
Teaçu
|
- | - | - | - | - | - | 60,009 | - | - | 68,285 | 128,294 | |||||||||||||||||||||||||||||||||
|
Issuance of common shares in
business combination
|
44,300,389 | 169,553 | - | - | - | - | 123,557 | - | - | (62,476 | ) | 230,634 | ||||||||||||||||||||||||||||||||
|
Exercise of stock
options
|
224,819 | 6,074 | - | - | - | - | (5,367 | ) | - | - | - | 707 | ||||||||||||||||||||||||||||||||
|
Exercise of common stock
warrants
|
50 | 1 | - | - | (83 | ) | - | - | - | - | - | 1 | ||||||||||||||||||||||||||||||||
|
Share based
compensation
|
- | - | - | - | - | - | 4,501 | - | - | - | 4,501 | |||||||||||||||||||||||||||||||||
|
Pension
plan
|
- | - | - | - | - | - | - | - | (85 | ) | - | (85 | ) | |||||||||||||||||||||||||||||||
|
Net income
|
- | - | - | - | - | - | - | 270,562 | - | (3,429 | ) | 267,133 | ||||||||||||||||||||||||||||||||
|
Currency translation
adjustment
|
- | - | - | - | - | - | - | - | 597,137 | 6,734 | 603,871 | |||||||||||||||||||||||||||||||||
|
Total comprehensive income
|
870,919 | |||||||||||||||||||||||||||||||||||||||||||
|
Balances at September 30,
2009
|
372,810,142 | 2,121,369 | 343,139 | (1,979 | ) | 54,999,917 | 25,273 | 350,310 | 124,463 | 316,164 | 22,452 | 2,958,052 | ||||||||||||||||||||||||||||||||
See accompanying notes to condensed
consolidated financial statements.
5
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Condensed consolidated statements of
cash flows
Six-month
period ended September 30, 2009
and October 31, 2008
(In thousands of U.S.
dollars)
(Unaudited)
|
September
30,
|
October 31,
|
|||||||
|
2009
|
2008
|
|||||||
|
Cash flow from operating
activities
|
||||||||
|
Net (loss) income for the
period attributable to
Cosan
|
270,562 | (215,045 | ) | |||||
|
Adjustments to reconcile net
income to cash provided by operating activities:
|
||||||||
|
Depreciation
and amortization
|
205,371 | 257,024 | ||||||
|
Deferred
income and social contribution taxes
|
125,959 | (116,011 | ) | |||||
|
Interest,
monetary and exchange variation
|
(206,095 | ) | 315,453 | |||||
|
Others
|
(38,641 | ) | 17,512 | |||||
|
Decrease/increase in operating
assets and liabilities
|
||||||||
|
Trade accounts receivable,
net
|
48,076 | 260 | ||||||
|
Inventories
|
(90,194 | ) | (411,156 | ) | ||||
|
Advances to
suppliers
|
(31,518 | ) | (28,887 | ) | ||||
|
Trade accounts
payable
|
54,393 | 142,356 | ||||||
|
Derivative financial
instruments
|
41,622 | 6,525 | ||||||
|
Taxes
payable
|
(58,948 | ) | (12,926 | ) | ||||
|
Other assets and liabilities,
net
|
16,980 | 2,229 | ||||||
|
Net cash provided by (used in)
operating activities
|
337,567 | (42,666 | ) | |||||
|
Cash flows from investing
activities:
|
||||||||
|
Restricted
cash
|
(77,485 | ) | 37,546 | |||||
|
Marketable
securities
|
- | (228,348 | ) | |||||
|
Cash received
from sales of noncurrent assets
|
67,027 | - | ||||||
|
Others
|
(7,383 | ) | - | |||||
|
Acquisition
of property, plant and equipment
|
(438,509 | ) | (315,998 | ) | ||||
|
Acquisitions,
net of cash acquired
|
23,903 | (17,490 | ) | |||||
|
Net cash used in investing
activities
|
(432,447 | ) | (524,290 | ) | ||||
|
Cash flows from financing
activities:
|
||||||||
|
Related
parties
|
(256,896 | ) | - | |||||
|
Proceeds from
issuance of common stock
|
707 | 456,084 | ||||||
|
Treasury
stock
|
- | (1,979 | ) | |||||
|
Additions of
long-term debts
|
685,371 | 174,501 | ||||||
|
Payments of
long-term debts
|
(250,652 | ) | (66,013 | ) | ||||
|
Net cash provided by financing
activities
|
178,530 | 562,593 | ||||||
|
Effect of exchange rate changes on
cash and
|
||||||||
|
cash
equivalents
|
139,157 | 29,138 | ||||||
|
Net increase in cash and cash
equivalents
|
222,807 | 24,775 | ||||||
|
Cash and cash equivalents at
beginning of period
|
310,710 | 38,832 | ||||||
|
Cash and cash equivalents at end
of period
|
533,517 | 63,607 | ||||||
|
Supplemental
cash flow information
|
||||||||
|
Cash paid during the period for:
|
||||||||
|
Interest
|
77,584 | 37,302 | ||||||
|
Income
taxes
|
20,431 | - | ||||||
See accompanying notes to condensed
consolidated financial statements.
6
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
1.
|
Operations
|
Cosan S.A.
Indústria e Comércio and subsidiaries (“Cosan” or “the Company”) is incorporated
under the laws of the Federative Republic of Brazil. Cosan shares are traded on
the São Paulo Stock Exchange (Bovespa).
Cosan Limited, a
company incorporated in Bermuda, is the controlling shareholder of Cosan holding
a 60.67% interest therein as of September 30, 2009 (68.89% as of March 31,
2009). The change in interest was mainly related to the issuance of shares for
the acquisition of Curupay S.A. Participações (Note 3). The class “A” common
shares of Cosan Limited are traded on the New York Stock Exchange (NYSE) and
Bovespa.
The companies
included in the consolidated financial statements have as their primary activity
the production of ethanol and sugar, and the marketing and distribution of fuel
and lubricants in Brazil.
On
April 23, 2008, the Company entered into an agreement with ExxonMobil
International Holding B.V., or “Exxon”, for the acquisition of 100% of the
outstanding shares of Esso Brasileira de Petróleo Ltda. and its subsidiaries
(“Essobrás”), a distributor and seller of fuels and producer and seller of
lubricants and specialty petroleum products of ExxonMobil in Brazil. On December
1, 2008 the Company completed the acquisition. On January 16, 2009 the Company
changed the corporate name of Essobrás to Cosan Combustíveis e Lubrificantes
S.A. (“Cosan CL”).
On
August 29, 2008 the Company held an Annual and Special General Shareholders
Meeting and unanimously approved the modification of the end of its fiscal year
from April 30 to March 31 of each year. Therefore the income statement and cash
flow information presented in these financial statements lack comparison to the
prior period represented by the six-month period ended October 31,
2008.
On
August 28, 2008, the Company announced the incorporation of a new affiliate
named Radar Propriedades Agrícolas S.A. (“Radar”), which engages in farm real
estate investments in Brazil by identifying and acquiring rural properties
likely to experience an increase in value and acquiring them for later leasing
and/or sale. The initial capital contribution was US$185,000, of which US$35,000
was invested by Cosan (18.92%) and US$150,000 by another shareholder (81.08%).
On August 25, 2009, an additional capital contribution of US$33,262, was
approved, of which US$6,293 (18.92%) was invested by Cosan and the remainder by
the other shareholder.
7
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
1.
|
Operations
(Continued)
|
On
April 09, 2009, the Company entered into an agreement with Rezende Barbosa S.A.
Administração e Participações (“Rezende Barbosa”) to acquire 100% of the
outstanding shares of Teaçu Armazéns Gerais S.A. (“Teaçu”). Teaçu operates a
port terminal concession in the city of Santos. See further discussion regarding this acquisition
at Note 3.
On
June 17, 2009, Cosanpar Participações S.A. (“Cosanpar”), a wholly-owned
subsidiary of Cosan sold its equity interest in Jacta Participações S.A.
(“Jacta”), a distributor of aviation fuel that was acquired in the Essobrás
acquisition, to Shell Brasil Ltda. for US$59,234 cash. The results of operations
of Jacta were recorded in the fuel distribution segment. The carrying value of
the net assets sold was US$40,084, which resulted in a gain of
US$19,150.
On
June 18, 2009, the Company entered into an agreement with Rezende Barbosa to
acquire 100% of the outstanding shares of Curupay S.A. Participações
(“Curupay”). The principal investment of Curupay was 100% of the
outstanding shares of Cosan Alimentos S.A. (former Nova América S.A.
Agroenergia). Cosan Alimentos S.A. (“Cosan Alimentos”) is a producer of sugar,
ethanol and energy co-generation which also operates in trading and logistics.
See further discussion regarding
this acquisition at Note 3.
|
2.
|
Presentation
of the consolidated financial
statements
|
|
a.
|
Basis of reporting for
interim financial statements
|
In
the opinion of management, the unaudited condensed consolidated financial
statements reflect all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation of the Company’s results for the
periods presented. Interim results for the six-month period ended September 30,
2009, are not necessarily indicative of the results that may be expected for the
fiscal year.
The unaudited
condensed consolidated financial statements include the accounts of Cosan and
its subsidiaries. All significant intercompany transactions have been
eliminated.
These financial
statements should be read in conjunction with Cosan`s annual financial
statements for the fiscal year ended March 31, 2009.
8
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
2.
|
Presentation of the
consolidated financial statements
(Continued)
|
|
a.
|
Basis of reporting for
interim financial statements
(Continued)
|
The accounts of
Cosan and its subsidiaries are maintained in Brazilian reais, which is the
functional currency. The accounts have been translated into U.S.
dollars in accordance with Accounting Standards Codification 830 “Foreign
Currency Matters”.
The exchange rate
of the Brazilian real
(R$) to the US$ was R$1.7781=US$ 1.00 at September 30, 2009 and R$2.3152=US$1.00
at March 31, 2009.
|
b.
|
Use of
estimates
|
The preparation of condensed
consolidated financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the amounts reported in
the condensed consolidated financial statements and accompanying notes. Actual
results could differ from these estimates. These estimates and assumptions are
reviewed and updated regularly to reflect recent experience.
|
c.
|
Recently
issued accounting standards
|
FASB Accounting Standards
Codification
In
September 2009, the Accounting Standards Codification (“ASC”) became the
source of authoritative U.S. GAAP recognized by the Financial Accounting
Standards Board (“FASB”) for nongovernmental entities, except for certain FASB
Statements not yet incorporated into ASC. Rules and interpretive releases of the
SEC under federal securities laws are also sources of authoritative U.S. GAAP
for registrants. The authoritative guidance mentioned in these financial
statements includes the applicable ASC reference.
Subsequent
Events
We
adopted ASC 855, Subsequent
Events, which established general accounting standards and disclosure for
subsequent events,during the six-month period ended September 30, 2009. In
accordance with ASC 855, the Company has evaluated subsequent events through
November 12, 2009, the date the financial statements were issued or available to
be issued.
9
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
2.
|
Presentation of the
consolidated financial statements
(Continued)
|
|
c.
|
Recently
issued accounting standards
(continued)
|
Noncontrolling
Interests
Effective
April 1, 2009, the Company adopted new accounting guidance ASC 810, which
changed the accounting for and the reporting of an entity’s minority
ownership. Such minority ownership, previously referred to as
minority interest, is now referred to as noncontrolling interests. The
adoption of this guidance resulted in the reclassification of amounts previously
attributable to minority interest and classified in the mezzanine outside of
shareholders’ equity, to a separate component of stockholders’ equity titled
“Noncontrolling Interests” in the accompanying condensed consolidated balance
sheets and statement of changes in equity.
Additionally, net
income and comprehensive income attributable to noncontrolling interests are
shown separately from consolidated net income and comprehensive income in the
accompanying condensed consolidated statements of operations and statements of
changes in equity. Prior period financial statements have been reclassified to
conform to the current year presentation as required by the authoritative
guidance.
New Accounting
Pronouncements
The following
accounting standards have been issued, but as of September 30, 2009 are not
yet effective and have not been adopted by the Company.
SFAS
No. 166, Accounting for Transfers of Financial Assets – an amendment of
FASB Statement No. 140 (“SFAS No. 166”)
In
June 2009, the FASB issued SFAS No. 166, which removes the concept of a
qualifying special-purpose entity (“QSPE”) from SFAS No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities-a replacement
of FASB Statement No. 125. The QSPE concept had initially been
established to facilitate off-balance sheet treatment for certain
securitizations. SFAS No. 166 also removes the exception from applying FASB
Interpretation (“FIN”) No. 46(R), Consolidation of Variable Interest
Entities (“FIN No. 46(R)”), to QSPEs. SFAS No. 166 has not been
incorporated into ASC and is effective for fiscal years beginning after
November 15, 2009, or April 1, 2010 for Cosan. The Company does not
believe the adoption of SFAS No. 166 will have a material impact on its
financial statements.
10
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
2.
|
Presentation of the
consolidated financial statements
(Continued)
|
|
c.
|
Recently
issued accounting standards
(Continued)
|
New
Accounting Pronouncements (Continued)
SFAS
No. 167, Amendments to FASB Interpretation No. 46(R) (“SFAS
No. 167”)
In
June 2009, the FASB issued SFAS No. 167, which amends FIN 46(R) to among
other things, require an entity to qualitatively rather than quantitatively
assess the determination of the primary beneficiary of a variable interest
entity (“VIE”). This determination should be based on whether the entity has 1)
the power to direct matters that most significantly impact the activities of the
VIE and 2) the obligation to absorb losses or the right to receive benefits of
the VIE that could potentially be significant to the VIE. Other key changes
include: the requirement for an ongoing reconsideration of the primary
beneficiary, the criteria for determining whether service provider or decision
maker contracts are variable interests, the consideration of kick-out and
removal rights in determining whether an entity is a VIE, the types of events
that trigger the reassessment of whether an entity is a VIE and the expansion of
the disclosures previously required under FASB Staff Position (“FSP”) SFAS 140-4
and FIN 46(R), Disclosures by
Public Entities (Enterprises) about Transfers of Financial Assets and
Interests in Variable Interest Entities. SFAS No. 167 has not been
incorporated into ASC and is effective for fiscal years beginning after
November 15, 2009, or April 1, 2010 for Cosan. The Company does not
believe the adoption of SFAS No. 166 will have a material impact on its
financial statements.
SFAS
No. 168, FASB Codification and the Hierarchy of GAAP (“SFAS
No. 168”)
In
June 2009, the FASB issued SFAS No. 168, which identifies the sources of
accounting principles and the framework for selecting the principles used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with U.S. GAAP. SFAS No. 168 replaces SFAS
No. 162, The Hierarchy of
Generally Accepted Accounting Principles, and establishes the FASB
Accounting Standards Codification (“the Codification”) as the single source of
authoritative guidance recognized by the FASB. Under the Codification, all
guidance carries an equal level of authority. SFAS No. 168 has not been
incorporated into ASC and is effective for interim and annual periods ending
after September 15, 2009, or the quarter ending September 30, 2009 for
Cosan. We adopted this guidance effective July 1, 2009, with no impact on our
consolidated results of operations or financial position.
11
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
3.
|
Acquisitions
|
a. Teaçu
Armazéns Gerais S.A.
On
April 9, 2009, Cosan S.A. Indústria e Comércio, through its 90% owned
subsidiary, Copsapar Participações S.A., which owns 100% of Novo Rumo Logística
S.A. (“Novo Rumo”), acquired 100% of the outstanding shares of Teaçu Armazéns
Gerais S.A. (“Teaçu”) from Rezende Barbosa S.A. Administração e Participações
(“Rezende Barbosa”) for $52,985 cash and issuance of 90,736,131 shares of Novo
Rumo, equivalent to 28.82% of its share capital. Teaçu holds a port concession
in the city of Santos and operates a terminal dedicated to exporting sugar and
other agricultural products. This acquisition combines the Santos port
operations previously held separately by Cosan S.A. and Teaçu.
As
a result of this transaction, Cosan S.A. reduced its indirect share ownership in
Novo Rumo to 64.06%.
The
acquisition-date fair value of the consideration transferred totaled $150,501,
which consisted of the following:
|
Cash
|
52,985 | |||
|
Common stock
at estimated fair value
|
97,516 | |||
|
Total
|
150,501 |
The fair value of
the 90,736,131 common shares issued was provisionally determined at the
acquisition date and is being reviewed in order to finalize the purchase
price.
12
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
3.
|
Acquisitions
(Continued)
|
a. Teaçu
Armazéns Gerais S.A. (Continued)
The following table
summarizes the estimated fair values of the assets acquired and liabilities
assumed at the acquisition date. The company is in the process of obtaining
valuations of certain intangible assets and fixed assets; thus, the provisional
measurements of intangible assets, goodwill and deferred income tax assets are
subject to change.
|
Description
|
||||
|
Property,
plant and equipment
|
40,224 | |||
|
Inventories
|
973 | |||
|
Other
assets
|
29,012 | |||
|
Long-term
debt including current installments
|
(18,780 | ) | ||
|
Trade
accounts payable
|
(361 | ) | ||
|
Estimated
liability for legal proceedings and labor claims
|
(976 | ) | ||
|
Other
liabilities
|
(1,922 | ) | ||
|
Net assets
acquired
|
48,170 | |||
|
Provisional
purchase price, net of cash acquired
|
150,222 | |||
|
Goodwill
|
102,052 | |||
The provisional
goodwill of $102,052 arising from the acquisition, which will be substantially
deductible for tax purposes, consists largely of the synergies and economies of
scale expected from combining the port operations of Cosan S.A. and
Teaçu. The provisional goodwill was assigned to the sugar
segment.
The amounts of
Teaçu’s revenue and earnings included in Cosan S.A.’s consolidated income
statement for the six-month period ended October 31, 2008, and the revenue and
earnings of the combined entity had the acquisition date been May 1, 2008,
are:
|
Revenue
|
Earnings
(Loss)
|
|||||||
|
Actual from
April 9, 2009 – September 30, 2009 (*)
|
18,589 | 2,775 | ||||||
|
Supplemental
pro forma from May 1, 2008 – October 31, 2008
|
793,679 | (213,583 | ) | |||||
(*) Revenues and
earning represent the full six-month period ended September 30,
2009.
13
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
3.
|
Acquisitions
(Continued)
|
b. Curupay S.A.
Participações
On
June 18, 2009, Cosan S.A. acquired 100% of the outstanding shares of Curupay
S.A. Participações from Rezende Barbosa, through the issuance of 44,300,389
common shares valued at $7.25 per share (fair value at the acquisition date) and
a total purchase price of US$321,087. The assets acquired include the
non-controlling interest in Novo Rumo representing 28.82% of its outstanding
shares which were issued in the Teaçu acquisition, and 100% of the outstanding
shares of two operating companies, Nova América S.A. Trading and Cosan Alimentos
(collectively referred to as “Nova América”). Nova América is a producer of
sugar, ethanol and energy co-generation and also operates in trading and
logistics.
With the
acquisition of the noncontrolling interest of Novo Rumo, Cosan S.A. increased
its share ownership in Novo Rumo to 92.88%. This transaction was a change in
ownership interest without a loss of control and accounted for as a transaction
in shareholders’ equity.
The following table
summarizes the assets acquired and liabilities assumed in relation to Nova
América. These amounts are preliminary as valuations of certain
intangible assets, fixed assets and other assets and liabilities are currently
in process.
|
Description
|
||||
|
Property,
plant and equipment
|
370,651 | |||
|
Noncontrolling
interest in Novo Rumo
|
62,476 | |||
|
Inventories
|
63,572 | |||
|
Account
receivables
|
62,377 | |||
|
Other
assets
|
251,267 | |||
|
Long-term
debt including current installments
|
(606,118 | ) | ||
|
Trade
accounts payable
|
(81,563 | ) | ||
|
Related
parties
|
(16,591 | ) | ||
|
Estimated
liability for legal proceedings and labor claims
|
(7,009 | ) | ||
|
Taxes and
contributions payable
|
(28,821 | ) | ||
|
Other
liabilities
|
(66,155 | ) | ||
|
Net assets
acquired
|
4,086 | |||
|
Purchase
price, net of cash acquired
|
294,605 | |||
|
Goodwill
|
290,519 | |||
14
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
3.
|
Acquisitions
(Continued)
|
b. Curupay
S.A. Participações (Continued)
The provisional
goodwill of $290,519 arising from the acquisition consists largely of the
synergies and economies of scale expected from combining the ethanol and sugar
operations of Cosan S.A. and Nova America. US$207,285 of the
provisional goodwill was assigned to the sugar segment and US$83,234 was
assigned to the ethanol segment.
The amounts of Nova
America’s revenue and earnings included in Cosan S.A.’s consolidated income
statement for the six-month period ended October 31, 2008, and the revenue and
earnings of the combined entity had the acquisition date been May 1, 2008,
are:
|
Revenue
|
Earnings
|
|||||||
|
Actual from
June 18, 2009 – September 30, 2009
|
219,290 | 12,988 | ||||||
|
Supplemental
pro forma from April 1, 2009 – September 30, 2009
|
3,728,870 | 259,225 | ||||||
|
Supplemental
pro forma from May 1, 2008 – October 31, 2008
|
1,116,831 | (221,731 | ) | |||||
15
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
4.
|
Derivative
financial instruments
|
Cosan enters into
derivative financial instruments with various counterparties and uses
derivatives to manage the overall exposures related to sugar price variations in
the international market, interest rate and exchange rate variation. The
instruments are commodity futures contracts, forward currency agreements,
interest rate and foreign exchange swap contracts, and option contracts. Cosan
recognizes all derivatives on the balance sheet at fair value.
The following table
summarizes the notional value of derivative financial instruments as well as the
related amounts recorded in balance sheet accounts:
|
Notional
amounts
|
Carrying
value asset (liability)
|
|||||||||||||||
|
September
30, 2009
|
March 31,
2009
|
September
30, 2009
|
March 31,
2009
|
|||||||||||||
|
Commodities
derivatives
|
||||||||||||||||
|
Future
contracts:
|
||||||||||||||||
|
Purchase
commitments - sugar
|
38,194 | 61 | 2,429 | (4 | ) | |||||||||||
|
Purchase
Commitments - oil
|
28,577 | - | 724 | - | ||||||||||||
|
Sell
commitments
|
316,583 | 182,943 | (30,099 | ) | 4,163 | |||||||||||
|
Swap
agreements - sugar
|
56,594 | - | 4,622 | - | ||||||||||||
|
Options:
|
||||||||||||||||
|
Purchased
|
186,599 | - | 9,351 | - | ||||||||||||
|
Written
|
302,227 | 64,366 | (82,161 | ) | (2,906 | ) | ||||||||||
|
Foreign
exchange derivatives
|
||||||||||||||||
|
Forward
contracts:
|
||||||||||||||||
|
Purchase
Commitments
|
417,069 | - | (5,051 | ) | - | |||||||||||
|
Sale
commitments
|
893,220 | 184,653 | 10,876 | (23,035 | ) | |||||||||||
|
Swap
agreements
|
||||||||||||||||
|
Swap
agreements – Senior notes 2009
|
320,961 | 246,501 | (2,515 | ) | (2,949 | ) | ||||||||||
|
Swap
agreements – Note export credit
|
10,012 | - | (1,317 | ) | - | |||||||||||
|
Future
contracts
|
||||||||||||||||
|
Sale
commitments
|
577,779 | 372,230 | 17,865 | 3,189 | ||||||||||||
|
Options
|
||||||||||||||||
|
Purchased
|
263,202 | - | 8,926 | - | ||||||||||||
|
Total
assets
|
54,793 | 7,352 | ||||||||||||||
|
Total
liabilities
|
(121,143 | ) | (28,894 | ) | ||||||||||||
When quoted market prices were not
available, fair values were based on estimates using discounted cash flows or
other valuation techniques.
16
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
5.
|
Inventories
|
|
September
30, 2009
|
March
31,
2009
|
|||||||
|
Finished
goods:
|
||||||||
|
Sugar
|
269,857 | 47,195 | ||||||
|
Ethanol
|
177,371 | 86,809 | ||||||
|
Lubricants
|
40,525 | 38,852 | ||||||
|
Fuel
(Gasoline, Diesel and Ethanol)
|
96,692 | 74,582 | ||||||
|
Valuation
allowance
|
(8,441 | ) | (5,222 | ) | ||||
|
Others
|
12,948 | 11,896 | ||||||
| 588,952 | 254,112 | |||||||
|
Annual
maintenance cost of growing crops
|
181,105 | 167,576 | ||||||
|
Others
|
91,268 | 56,105 | ||||||
| 861,325 | 477,793 | |||||||
|
6.
|
Long-term
debt
|
Long-term debt is
summarized as follows:
|
Index
|
Average
annual interest rate
|
September
30, 2009
|
March
31, 2009
|
||||||||||
|
Resolution
No. 2471 (PESA)
|
IGP-M
|
4.0 | % | 287,877 | 213,314 | ||||||||
|
Corn
price
|
12.5 | % | - | 56 | |||||||||
|
Senior notes
due 2009
|
US
Dollar
|
9.0 | % | 37,343 | 37,343 | ||||||||
|
Senior notes
due 2014
|
US
Dollar
|
9.5 | % | 354,293 | - | ||||||||
|
Senior notes
due 2017
|
US
Dollar
|
7.0 | % | 404,589 | 404,589 | ||||||||
|
IFC
|
US
Dollar
|
7.4 | % | 46,655 | 49,379 | ||||||||
|
Perpetual
notes
|
US
Dollar
|
8.3 | % | 455,303 | 455,304 | ||||||||
|
BNDES
|
TJLP
|
2.6 | % | 401,980 | 99,561 | ||||||||
|
Promissory
notes
|
DI
|
3.0 | % | 693,834 | 501,888 | ||||||||
|
Export credit
notes
|
DI
|
2.4 | % | 125,374 | - | ||||||||
|
Debentures
|
DI
|
3.3 | % | 85,797 | - | ||||||||
|
Credit
notes
|
DI
|
3.9 | % | 122,290 | - | ||||||||
|
Export credit
notes
|
US
Dollar
|
2.6 | % | 53,475 | - | ||||||||
|
Others
|
Various
|
Various
|
232,792 | 115,820 | |||||||||
| 3,301,602 | 1,877,254 | ||||||||||||
|
Current
portion
|
(672,469 | ) | (630,260 | ) | |||||||||
|
Long-term
debt
|
2,629,133 | 1,246,994 | |||||||||||
17
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
6.
|
Long-term debt
(Continued)
|
Long-term debt has
the following scheduled maturities:
|
2011
|
643,361 | |||
|
2012
|
118,851 | |||
|
2013
|
70,067 | |||
|
2014
|
394,854 | |||
|
2015
|
43,151 | |||
|
2016
|
40,203 | |||
|
2017
|
438,855 | |||
|
2018
and thereafter
|
879,791 | |||
| 2,629,133 |
Resolution
No. 2471 - Special Agricultural Financing Program (Programa Especial de
Saneamento de Ativos), or PESA
To
extend the repayment period of debts incurred by Brazilian agricultural
producers, the Brazilian government passed Law 9.138 followed by Central Bank
Resolution 2,471, which, together, formed the PESA program. PESA
offered certain agricultural producers with certain types of debt the
opportunity to acquire Brazilian treasury bills (“CTNs”) in an effort to
restructure their agricultural debt. The face value of the Brazilian treasury
bills was the equivalent of the value of the restructured debt and was for a
term of 20 years.
The acquisition
price was calculated by the present value, discounted at a rate of 12% per year
or at the equivalent of 10.4% of its face value. The CTNs were deposited as a
guarantee with a financial institution and cannot be renegotiated until the
outstanding balance is paid in full. The outstanding balance associated with the
principal is adjusted in accordance with the IGP-M until the expiration of the
restructuring term, which is also 20 years, at which point the debt will be
discharged in exchange for the CTNs. Because the CTNs will have the same face
value as the outstanding balance at the end of the term, it will not be
necessary to incur additional debt to pay PESA debt.
18
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
6.
|
Long-term debt
(Continued)
|
Resolution No.
2471 - Special Agricultural Financing Program (Programa Especial de Saneamento
de Ativos), or PESA (Continued)
On
July 31, 2003, the Central Bank issued Resolution 3,114, authorizing the
reduction of up to five percentage points of PESA related interest rates,
effectively lowering the above-mentioned rates to 3%, 4% and 5%, respectively.
The CTNs held by Cosan as of September 30, 2009 and March 31, 2009 amounted to
US$125,043 and US$113,877, respectively, and are classified as Other non-current
assets.
Senior
notes due 2017
On
January 26, 2007, the wholly-owned subsidiary Cosan Finance Limited issued
US$400,000 of senior notes in the international capital markets. These senior
notes, listed on the Luxembourg Stock Exchange, mature in November 2017 and bear
interest at a rate of 7% per annum, payable semi-annually. The senior notes are
guaranteed by Cosan, and its subsidiary, Usina da Barra.
Senior
notes due 2014
On
August 4, 2009, the indirect subsidiary CCL Finance Limited issued US$ 350,000
of senior notes in the international capital markets. These senior notes, listed
on the Luxembourg Stock Exchange, mature in August 2014 and bear interest at a
rate of 9,5% per annum, payable semi-annually in February and August of each
year, from February of 2010.
Perpetual
notes
On
January 24 and February 10, 2006, Cosan issued perpetual notes which are listed
on the Luxembourg Stock Exchange - EURO MTF. These notes bear interest at a rate
of 8.25% per year, payable quarterly on May 15, August 15, November 15 and
February 15 of each year, beginning May 15, 2006.
These notes may, at
the discretion of Cosan, be redeemed on any interest payment date subsequent to
February 15, 2011. The notes are guaranteed by Cosan and by Usina da
Barra.
19
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
6.
|
Long-term debt
(Continued)
|
Promissory Notes
On
November 17, 2008, the Company issued one series of 44 registered promissory
notes for US$613,941. The notes which are due in one year, will bear interest,
due at maturity, at the average rates of DI - Interbank Deposits plus
3%.
On
June 25, 2009 the Company signed a Stand-by Facility, which
extended the maturity date from November 12, 2009 to November 12, 2010.
Management intends to pay US$170,000 before November 12,
2009. Therefore, the remaining balance of US$523,834 was reclassified
to long term debt as management intends to utilize the stand by facility to
settle this remaining balance on a long-term basis.
The notes are
secured by a guarantee from Mr. Rubens Ometto Silveira Mello (Controlling
Shareholder) and collateralized by a chattel mortgage to be established for the
units of interest issued by Cosan CL which are or may be held by the
Company.
Covenants
Cosan and its
subsidiaries are subject to certain restrictive covenants related to their
indebtedness, including the following: limitation on transactions with
shareholders and affiliated companies; limitation on payment of dividends and
other payments affecting subsidiaries; and limitation on guarantees granted on
assets.
Also, the Company
and its subsidiaries are subject to other financial restrictive covenants, as
follows:
- net
debt/EBTIDA ratio must be less than 3.5 to 1;
- current
asset/current liability ratio equal or higher than 1.3; and
- long-term
indebtedness/shareholders´ equity ratio must be lower than 1.3.
At
September 30, 2009, Cosan was in compliance with its
debt covenants.
20
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
7.
|
Related
parties
|
|
Assets
|
||||||||
|
September
30, 2009
|
March
31, 2009
|
|||||||
|
Cosan
Alimentos
|
- | 13,123 | ||||||
|
Rezende
Barbosa S.A. Administração e Participações
|
89,519 | - | ||||||
|
Vertical UK
LLP
|
7,297 | 11,597 | ||||||
|
Others
|
723 | - | ||||||
| 97,539 | 24,720 | |||||||
|
Current
(*)
|
(12,155 | ) | (24,720 | ) | ||||
|
Noncurrent
(*)
|
85,384 | - | ||||||
|
Liabilities
|
||||||||
|
September
30, 2009
|
March
31, 2009
|
|||||||
|
Cosan
Limited
|
- | 175,307 | ||||||
|
Others
|
2,158 | 1,926 | ||||||
| 2,158 | 177,233 | |||||||
|
Current
(*)
|
(2,158 | ) | (2,233 | ) | ||||
|
Noncurrent
|
- | 175,000 | ||||||
(*) included in
other current and noncurrent assets or liabilities captions
Cosan conducts some
of its operations through various joint ventures and other partnership forms
which are principally accounted for using the equity method. The
income statement includes the following amounts resulting from transactions with
related parties:
|
September
30, 2009
|
October 31,
2008
|
|||||||
|
Transactions
involving assets
|
||||||||
|
Cash received
due to the sale of finished products and assets and services held, net of
payments
|
(84,757 | ) | (75,694 | ) | ||||
|
Sale of
finished products and services in a affiliated company
|
73,349 | 81,564 | ||||||
|
Added through
acquisition of Nova América
|
70,379 | - | ||||||
|
Transactions
involving liabilities
|
||||||||
|
Payment of
financial resources, net of funding
|
(3,507 | ) | - | |||||
|
Payment to
Cosan Limited
|
(175,307 | ) | - | |||||
|
Financial
income
|
(39,202 | ) | - | |||||
The purchase and
sale of products are carried out at arm’s length and unrealized profit or losses
with consolidated companies have been eliminated.
21
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
7.
|
Related parties
(Continued)
|
In
addition, at March 31, 2009, the Company and its subsidiary Usina da Barra
leased 35,000 hectares (unaudited) of land (37,599 hectares (unaudited) in 2008)
from related companies under the same control as Cosan. These leases are carried
out on an arm’s length basis, and the rent is calculated based on sugarcane tons
per hectare, valued according to price established by CONSECANA (São Paulo State
Council of Sugarcane, Sugar and Ethanol Producers).
The amount
receivable from Cosan Alimentos S.A. (“Cosan Alimentos”, former Nova América
S.A. – Agroenergia) refered to an intercompany loan subject to interest
equivalent to 100% of CDI.
A
receivable of US$89,519 with Rezende Barbosa S.A. Administração e Participações
related to credits assumed by Rezende Barbosa, in connection with the
acquisition of Nova América and intercompany loans at the interest rate
equivalent to 100% of CDI.
The amount
receivable from the affiliate Vertical UK LLP, located in British Virgin
Islands, refers to ethanol trading, whith average maturity date of 30
days.
The payable to
Cosan Limited related to Floating Rate Notes issued by Cosan CL., equivalent to
US$175,000, with original maturity in 2018. Such balance bore variable interest
equivalent to the quarterly Libor rate plus interest of
2.8% p.a., paid quarterly. On August 25, 2009, Cosan CL fully paid this debt
with the proceeds from the issuance of the Senior Notes due 2014 (Note
6).
During the
six-month period the Company executed lease contracts with Radar to formalize
land leases that were already in existence, with an average lease term of 19
years. Total lease expense in the six-month period was US$7,297.
22
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
8.
|
Estimated
liability for legal proceedings and labor claims and
commitments
|
|
September
30,
2009
|
March
31, 2009
|
|||||||
|
Tax
contingencies
|
585,848 | 430,342 | ||||||
|
Civil and
labor contingencies
|
86,799 | 67,306 | ||||||
| 672,647 | 497,648 | |||||||
Cosan and its
subsidiaries are parties in various ongoing labor claims, civil and tax
proceedings in Brazil arising in the normal course of its business. Respective
provisions for contingencies were recorded considering those cases in which the
likelihood of loss has been rated as probable. Management believes resolution of
these disputes will have no effect significantly different than the estimated
amounts accrued.
Judicial deposits
recorded by Cosan under non-current assets, amounting to US$101,851 at September
30, 2009 (US$73,975 at March 31, 2009) have been made for certain of these
suits. Judicial deposits are restricted assets of Cosan placed on deposit with
the court and held in judicial escrow pending legal resolution of the related
legal proceedings. Judicial deposits include US$66,601 related to exposures of
Cosan CL prior to its acquisition by Cosan. If the Company prevails in the
defense of these exposures, these related judicial deposits must be refunded to
the seller.
The tax
contingencies as of September 30, 2009 and March 31, 2009 are described as
follows:
|
September
30, 2009
|
March
31, 2009
|
|||||||
|
Credit
premium – IPI
|
155,628 | 116,256 | ||||||
|
PIS and
Cofins
|
83,181 | 62,556 | ||||||
|
IPI
credits
|
53,445 | 40,049 | ||||||
|
Contribution
to IAA
|
48,599 | 36,672 | ||||||
|
IPI – Federal
VAT
|
53,969 | 23,626 | ||||||
|
ICMS
credits
|
32,178 | 19,966 | ||||||
|
Compensation
with Finsocial
|
94,796 | 70,693 | ||||||
|
Other
|
64,052 | 60,524 | ||||||
| 585,848 | 430,342 | |||||||
23
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
8.
|
Estimated liability for legal
proceedings and labor claims and commitments
(Continued)
|
On May 27, 2009, the paragraph 1st and 3rd of
Brazilian Law No 9718/98 that regulated the
collection of PIS and Cofins (federal tax contributions) on exchange variation
and other financial income was revoked by Law No 11941/09. The Company is
evaluating its ongoing judicial demands related to the legal obligations not
paid related to the increase in the calculation basis of PIS and Cofins. Once
the absence of errors or flaws in the ongoing demands is confirmed, the Company
will revaluate the maintenance of the provision for the respective legal
obligations in its financial statements.
The company is currently evaluating the
options provided by
Brazilian Law No 11941/09
to settle tax related claims (e.g. credit premium – IPI), as well as the impacts in its
financial statements.
In
addition to the aforementioned claims, Cosan and its subsidiaries are involved
in other contingent liabilities relating to tax, civil and labor claims and
environmental matters, which have not been recorded, considering their current
stage and the likelihood of unfavorable outcomes rated as possible. These claims
are broken down as follows:
|
September
30,
2009
|
March
31, 2009
|
|||||||
|
Withholding
Income Tax
|
92,409 | 69,730 | ||||||
|
ICMS – State
VAT
|
102,700 | 77,052 | ||||||
|
IAA - Sugar
and Ethanol Institute
|
41,554 | 31,610 | ||||||
|
IPI - Federal
Value-added tax
|
169,528 | 100,722 | ||||||
|
INSS
|
1,204 | 795 | ||||||
|
PIS and
COFINS
|
20,635 | 15,529 | ||||||
|
Civil and
labor
|
127,789 | 94,599 | ||||||
|
Other
|
79,636 | 34,851 | ||||||
| 635,455 | 424,888 | |||||||
The subsidiary
Usina da Barra has several indemnification suits filed against the Federal
Government. The suits relate to product prices that did not conform to the
reality of the market, which were mandatorily established at the time the sector
was under the Government‘s control.
24
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
8.
|
Estimated liability for legal
proceedings and labor claims and commitments
(Continued)
|
In
connection with one of these suits, a final and unappealable decision in the
amount of US$149,121 was rendered in September 2006 in favor of Usina de Barra.
This has been recorded as a gain in the statement of operations. Since the
recorded amount is substantially composed of interest and monetary restatement,
it was recorded in Financial income and in a non-current receivable on the
balance sheet. In connection with the settlement process, the form of payment is
being determined.
The Company is
expecting to finalize the payment terms within three years which will result in
the amount being received over a ten year period. The amount is subject to
interest and inflation adjustment by an official index. Lawyers fees in the
amount of US$18,783 relating to this suit have been recorded in General and
administrative expenses in 2007 and remain unpaid at September 30,
2009.
At
September 30, 2009, these amounts totaled US$185,057 and US$22,207 (US$139,700
and US$16,764 at March 31, 2009), corresponding to related suit and lawyers’
fees, respectively.
|
9.
|
Income
taxes
|
The Company and its
subsidiaries file income tax returns in the Brazilian federal jurisdiction.
These subsidiaries are no longer subject to Brazilian federal income tax
examinations by tax authorities for years before December 31, 2003.
Additionally, Cosan has not been under a Brazilian Internal Revenue Service
(IRS) income tax examination for 2003 through 2008.
Cosan accounts for
unrecognized tax benefits in accordance with ASC 740, Accounting for Uncertainly
in Income Taxes. A reconciliation of the beginning and ending amount of
unrecognized tax benefits in the estimated liability for legal proceedings, and
labor claims, is as follows:
|
Balance at
March 31, 2009
|
53,995 | |||
|
Accrued
interest on unrecognized tax benefit
|
1,968 | |||
|
Effect of
foreign currency translation
|
16,310 | |||
|
Settlements
|
(36 | ) | ||
|
Balance at
September 30, 2009 (*)
|
72,237 |
(*) Recorded as
taxes payable
(non-current)
25
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
9.
|
Income taxes
(Continued)
|
It
is possible that the amount of unrecognized tax benefits will change in the next
twelve months, however, an estimate of the range of the possible change cannot
be made at this time due to the long time to reach a settlement agreement or
decision with the taxing authorities.
The Company
recognizes interest accrued related to unrecognized tax benefits in interest
expense and penalties in operating expenses.
|
10.
|
Shareholders’
equity
|
On
September 19, 2008, the board of directors approved a capital increase of
US$456,084 through issuance of 55,000,000 previously unissued registered common
shares without par value in a private subscription at an issuance price of
US$8.29 each. The subscribers of each new share also received one Subscription
Warrant (Warrant) which resulted in 55,000,000 Warrants being issued. Each
Warrant grants its holder the right to subscribe 0.6 common shares, with the
distribution of fractional shares not being permitted. Therefore, the Warrants
issued allow the holders to purchase 33,000,000 shares. The Warrants
are valid from their issue date to December 31, 2009. The exercise price of each
amount of Warrants which totals one share is US$8.29 per share. As of September
30, 2009, Warrants to purchase 32,999,950 shares of Common stock at US$9.00 per
share were outstanding and expire on December 31, 2009.
October 22, 2008
was the deadline to exercise the right of capital subscription, approved in the
meeting of the board of directors on September 19, 2008. Since a large number of
the minority shareholders did not exercise their preemptive rights, Cosan
Limited, the controlling shareholder, subscribed for and paid up 54,993,482
common shares valued at US$456,034, and the minority shareholders subscribed for
and paid up 6,518 common shares, valued at US$50. As a result, Cosan Limited
increased its holding of company’s common shares from 171,172,252 to
226,165,734. This increased their ownership percentage from 62.81% to 69.05% of
the Company’s capital.
On
March 6, 2009, the Board of Directors approved a capital increase of US$1,945
through issuance of 736,852 new common shares, with no par value, for purposes
of meeting the needs of the Stock Option Plan, due to exercise of such options
by qualifying executives.
26
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
10.
|
Shareholders’ equity
(Continued)
|
On
June 18, 2009, the shareholders approved a capital increase of US$169,533
through the issuance of 44,300,389 new common shares, with no par value, for
purposes of the acquisition of Curupay. As part of this acquisition Cosan
acquired noncontrolling interest in Novo Rumo in the amount of US$62,476, which
has been accounted for as an equity transaction, with a dilution of
noncontrolling interest. (Note 3).
On
July 15, 2009, the Board of Directors approved a capital increase of US$707
through issuance of 224,819 new common shares, with no par value, for purposes
of meeting the needs of the Stock Option Plan, due to exercise of such options
by qualifying executives.
On
August 7, 2009, the Board of Directors approved a capital increase of US$440
(four hundred and forty dollars) through issuance of 50 new common shares, with
no par value, at issue price of US$9.00, due to exercise of subscription
warrants by the holders.
As
of September 30, 2009, the Company’s capital is represented by 372,810,142
common shares (328,284,884 as of March 31, 2009), with no par
value.
|
11.
|
Deferred gain on sale of
investments in subsidiaries
|
|
|
Agrícola
Ponte Alta S.A. is a subsidiary whose principal assets are land used for
the growing of sugarcane for Cosan. On December 15, 2008, the shareholders
approved a partial spin-off of the assets of Ponte Alta and created four
new subsidiaries. Agricultural land was then transferred from
Ponte Alta to each of the entities. On December 30, 2008, two of the
entities, Nova Agrícola Ponte Alta S.A. and Terras da Ponte Alta S.A. were
sold to Radar, an affiliate company accounted for by the equity method.
The selling price was fair value, US$123,596, which resulted in a gain of
US$47,080. This gain has previously been deferred since there were no
lease contracts executed for the land, which was being used by Cosan for a
monthly fee. During the current period the lease contracts were
executed, and the gain is being amortized to profit and loss over the 19
year average term of the leases.
|
|
|
During the
six-month period ended September 30, 2009, the Company has amortized a
gain of US$1,505 related to this sale-leaseback
transaction.
|
27
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
12.
|
Share-based
compensation
|
In
the ordinary and extraordinary general meeting held on August 30, 2005, the
guidelines for the outlining and structuring of a stock option plan for Cosan
officers and employees were approved, thus authorizing the issue of up to 5% of
shares comprising Cosan’s share capital. This stock option plan was outlined to
attract and retain services rendered by officers and key employees, offering
them the opportunity to become shareholders of Cosan. On September 22, 2005,
Cosan’s board of directors approved the distribution of stock options
corresponding to 4,302,780 common shares to be issued or purchased by Cosan
related to 3.25% of the share capital at the time, authorized by the
annual/extraordinary meeting. The remaining 1.75% remained to be distributed. On
September 22, 2005, the officers and key employees were informed regarding the
key terms and conditions of the share-based compensation
arrangement.
According to the
fair value at the grant date, the exercise price is US$2.64 (two dollars and
sixty four cents) per share which does not include any discount. The exercise
price was calculated before the valuation mentioned above based on an expected
private equity deal which did not occur. Options may be exercised after a
one-year vesting period starting November 18, 2005, at the maximum percentage of
25% per year of the total stock options offered by Cosan. The options for each
25% have a five-year period to be exercised.
On
September 11, 2007, the board of directors approved an additional distribution
of stock options, in connection with the stock option plan mentioned above,
corresponding to 450,000 common shares to be issued or purchased by Cosan
related to 0.24% of the share capital at September 22, 2005. The remaining 1.51%
may still be distributed.
On
August 7, 2009, the board of directors approved an additional distribution of
stock options, in connection with the stock option plan mentioned above,
corresponding to 165,657 common shares to be issued or purchased by Cosan. Such
options were issued without a vesting period, therefore the intrinsic value at
grant date was the basis for calculating the fair value of the options, at
US$9,82 per option, and an expense of US$1,071 was fully recorded by the
company.
The exercise of
options may be settled only through issuance of new common shares or treasury
shares.
The employees that
leave Cosan before the vesting period will forfeit 100% of their rights.
However, if the employment is terminated by Cosan without cause, the employees
will have the right to exercise 100% of their options of that particular year
plus the right to exercise 50% of the options of the following
year.
28
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
12.
|
Share-based compensation
(Continued)
|
The fair value of share-based awards was
estimated using a binominal model with the following
assumptions:
|
Options
granted on September 22, 2005
|
Options
granted on September 11, 2007
|
|||||||
|
Grant price - in U.S.
dollars
|
3.44 | 3.44 | ||||||
|
Expected life (in
years)
|
7.5 | 7.5 | ||||||
|
Interest
rate
|
14.52 | % | 9.34 | % | ||||
|
Volatility
|
34.00 | % | 46.45 | % | ||||
|
Dividend
yield
|
1.25 | % | 1.47 | % | ||||
|
Weighted-average fair value at
grant date - in U.S. dollars
|
6.94 | 10.23 | ||||||
As of September 30, 2009, the amount of
US$ 1,670 related to the unrecognized compensation cost related to stock options
is expected to be recognized in 12 months. Cosan currently has 343,139
common shares in treasury.
As
of September 30, 2009 there were 1,411,670 options outstanding with a
weighted-average exercise price of US$3.44.
|
13.
|
Fair value
measurements
|
Effective
May 1, 2008, Cosan adopted ASC 820, Fair Value Measurements (SFAS 157), for
all financial instruments and non-financial instruments accounted for at fair
value on a recurring basis. ASC 820 establishes a new framework for measuring
fair value and expands related disclosures. Broadly, the ASC 820 framework
requires fair value to be determined based on the exchange price that would be
received for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly
transaction between market participants. ASC 820 establishes market or
observable inputs as the preferred source of values, followed by assumptions
based on hypothetical transactions in the absence of market inputs.
The valuation
techniques required by ASC 820 are based upon observable and unobservable
inputs. Observable inputs reflect market data obtained from independent sources,
while unobservable inputs reflect market assumptions. These two types of inputs
create the following fair value hierarchy:
29
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
13.
|
Fair value
measurements
(Continued)
|
Level 1 - Quoted prices for identical instruments
in active markets.
Level 2 - Quoted prices for similar instruments in
active markets; quoted prices for identical or similar instruments in markets
that are not active; and model-derived valuations whose inputs are observable or
whose significant value drivers are observable.
Level 3 -
Significant inputs to the valuation model are unobservable.
The following
section describes the valuation methodologies Cosan uses to measure different
financial instruments at fair value.
Marketable
securities
When quoted market
prices are unobservable, we use other relevant information including market
interest rate curves. These investments are included in Level 2 and primarily
comprise fixed-income securities,
which are debt securities issued by highly rated financial institutions indexed
in reais with Inter Deposit Rates (CDI).
Derivatives
Cosan uses closing prices for
derivatives included in Level 1, which are traded either on exchanges or liquid
over-the-counter markets.
The remainder of the derivatives
portfolio is valued using internal models, most of which are primarily based on
market observable inputs including interest rate curves and both forward and
spot prices for currencies and commodities. Derivative assets and liabilities
included in Level 2 primarily represent interest rate swaps, foreign currency
swaps and commodity forward contracts.
The following table presents our assets
and liabilities measured at fair value on a recurring basis at September 30,
2009.
|
Level 1
|
Level 2
|
Total
|
||||||||||
|
Assets
|
||||||||||||
|
Derivatives
|
9,351 | 45,442 | 54,793 | |||||||||
|
Total
|
9,351 | 45,442 | 54,793 | |||||||||
|
Liabilities
|
||||||||||||
|
Derivatives
|
82,161 | 38,982 | 121,143 | |||||||||
|
Total
|
82,161 | 38,982 | 121,143 | |||||||||
30
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
14.
|
Segment
information
|
|
a.
|
Segment
information
|
The following
information about segments is based upon information used by Cosan’s senior
management to assess the performance of operating segments and decide on the
allocation of resources. Cosan’s reportable segments are business units in
Brazil that target different industry segments. Each reportable segment is
managed separately because of the need to specifically address customer needs in
these different industries. Cosan has four segments: sugar, ethanol, fuel
distribution and others group. The operations of these segments are based solely
in Brazil.
The sugar segment
mainly operates and produces a broad variety of sugar products, including raw
(also known as very high polarization - VHP sugar), organic, crystal and refined
sugars, and sells these products to a wide range of customers in Brazil and
abroad. Cosan exports the majority of the sugar produced through international
commodity trading companies. Cosan’s domestic customers include wholesale
distributors, food manufacturers and retail supermarkets, through which it sells
its “Da Barra” and “União” branded products.
The ethanol segment
substantially produces and sells fuel ethanol, both hydrous and anhydrous (which
has a lower water content than hydrous ethanol) and industrial ethanol. Cosan’s
principal ethanol product is fuel ethanol, which is used both as an automotive
fuel and as an additive in gasoline, and is mainly sold in the domestic market
by fuel distribution companies. Consumption of hydrous ethanol in Brazil is
increasing as a result of the introduction of flex fuel vehicles that can run on
either gasoline or ethanol (or a combination of both) to the Brazilian market in
2003. In addition, Cosan sells liquid and gel ethanol products used mainly in
the production of paint and cosmetics and alcoholic beverages for industrial
clients in various sectors.
With the acquisition of Cosan CL a new
fuel distribution segment has been created. The fuel distribution segment is
engaged in the distribution in Brazil of oil products, ethanol and lubricants as well as the
operation of convenience stores. The network to which the fuel distribution
segment distributes such products is comprised of more than 1,500 service
stations.
The accounting
policies underlying the financial information provided for the segments are
based on Brazilian GAAP. We
evaluate segment performance based on information generated from the statutory
accounting records.
31
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
14.
|
Segment information
(Continued)
|
|
a.
|
Segment
information (Continued)
|
Others segment is
comprised by selling cogeneration of electricity, diesel and corporate
activities.
No
asset information is provided by reportable segment due to the fact that the
majority of the assets used in production of sugar and ethanol are the
same.
Measurement
of segment profit or loss and segment assets
Cosan S.A.
evaluates performance and allocates resources based on return on capital and
profitable growth. The primary measurement used by management to measure the
financial performance of Cosan S.A. is adjusted EBIT (earnings before interest
and taxes excluding special items such as impairment and restructuring,
integration costs, one-time gains or losses on sales of assets, acquisition, and
other items similar in nature). The accounting policies of the reportable
segments are the same as those described in the summary of significant
accounting policies.
|
September
30,
2009
|
October
31,
2008
|
|||||||
|
Net sales —
Brazilian GAAP
|
||||||||
|
Sugar
|
729,096 | 437,141 | ||||||
|
Ethanol
|
408,267 | 272,337 | ||||||
|
Fuel
distribution
|
2,375,822 | - | ||||||
|
Others
|
120,180 | 67,725 | ||||||
|
Total
|
3,633,365 | 777,203 | ||||||
|
Reconciling
items to U.S. GAAP
|
||||||||
|
Sugar
|
2,950 | 631 | ||||||
|
Fuel
distribution
|
(389 | ) | - | |||||
|
Total
|
2,561 | 631 | ||||||
|
Total net
sales
|
3,635,926 | 777,834 | ||||||
32
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
14.
|
Segment information
(Continued)
|
|
a.
|
Segment
information (Continued)
|
Measurement of
segment profit or loss and segment assets (Continued)
|
September
30,
2009
|
October 31,
2008
|
|||||||
|
Segment
operating income (loss) – Brazilian GAAP
|
||||||||
|
Sugar
|
14,121 | (65,906 | ) | |||||
|
Ethanol
|
8,864 | (41,059 | ) | |||||
|
Fuel
distribution
|
78,571 | - | ||||||
|
Others
|
2,547 | (10,210 | ) | |||||
|
Operating
income (loss) — Brazilian GAAP
|
104,103 | (117,175 | ) | |||||
|
Reconciling
items to U.S. GAAP
|
||||||||
|
Depreciation
and amortization expenses
|
||||||||
|
Sugar
|
(4,031 | ) | 4,443 | |||||
|
Ethanol
|
(2,530 | ) | 2,768 | |||||
|
Fuel
distribution
|
(1,648 | ) | - | |||||
|
Others
|
(727 | ) | 688 | |||||
| (8,936 | ) | 7,899 | ||||||
|
Other
adjustments
|
||||||||
|
Sugar
|
(5,655 | ) | (641 | ) | ||||
|
Ethanol
|
(3,550 | ) | (824 | ) | ||||
|
Fuel
distribution
|
48,319 | - | ||||||
|
Others
|
(1,019 | ) | (204 | ) | ||||
| 38,095 | (1,669 | ) | ||||||
|
Total
sugar
|
4,435 | (62,104 | ) | |||||
|
Total
ethanol
|
2,784 | (39,115 | ) | |||||
|
Fuel
distribution
|
125,242 | - | ||||||
|
Total
others
|
801 | (9,727 | ) | |||||
|
Operating
income (loss) — U.S. GAAP
|
133,262 | (110,946 | ) | |||||
33
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
14.
|
Segment information
(Continued)
|
|
b.
|
Sales
by principal customers
|
Sugar
The following table sets forth the
amount of sugar that we sold to our principal customers during the six-month
period ended September 30, 2009 and October 31, 2008 as a percentage of either
domestic or international sales of sugar:
|
Market
|
Customer
|
September
30, 2009
|
October
31, 2008
|
|||||||
|
International
|
Sucres et Denrées
|
27 | % | 11 | % | |||||
|
Ceval Internacional
Limited
|
13 | % | - | |||||||
|
Cargill Incorporation
Ltd.
|
9 | % | - | |||||||
|
Cargill International
S.A.
|
7 | % | - | |||||||
|
Coimex Trading
Ltd
|
6 | % | 4 | % | ||||||
|
Ableman Trading
Limited
|
4 | % | 4 | % | ||||||
|
Fluxo – Cane Overseas
Ltd
|
3 | % | 35 | % | ||||||
|
Tate & Lyle
International
|
2 | % | 7 | % | ||||||
Ethanol
The following table sets forth the
amount of ethanol that we sold to our principal customers during the six-month
period ended September 30, 2009 and October 31, 2008 as a percentage of either
domestic or international sales of ethanol:
|
Market
|
Customer
|
September
30, 2009
|
October
31, 2008
|
|||||||
|
International
|
Vertical UK
LLP
|
10 | % | 19 | % | |||||
|
Kolmar
Petrochemicals
|
7 | % | - | |||||||
|
Morgan
Stanley Capital Group Inc.
|
6 | % | 6 | % | ||||||
|
Alcotra
S.A.
|
3 | % | 2 | % | ||||||
|
Sekab
Biofuels & Chemicals
|
2 | % | 7 | % | ||||||
|
Vitol
Inc.
|
- | 4 | % | |||||||
|
Bauche Energy
Br Com Imp Exp Ltda.
|
- | 3 | % | |||||||
|
Domestic
|
Shell Brasil
Ltda.
|
17 | % | 17 | % | |||||
|
Petrobrás
Distribuidora S.A.
|
12 | % | 6 | % | ||||||
|
Cia
Brasileira de Petróleo Ipiranga
|
10 | % | - | |||||||
|
Euro Petróleo
do Brasil Ltda.
|
8 | % | 12 | % | ||||||
|
Alesat
Combustíveis S.A.
|
4 | % | 2 | % | ||||||
|
Chevron
Brasil Ltda.
|
1 | % | 4 | % | ||||||
The following table sets forth the
amount of fuel distribution that we sold to our principal customers during the
six-month period ended September 30, 2009 as a percentage of either domestic or
international sales of fuel distribution:
34
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
condensed consolidated financial statements (Continued)
(In thousands of
U.S. dollars, unless otherwise stated)
(Unaudited)
|
14.
|
Segment information
(Continued)
|
|
b.
|
Sales by
principal customers
(Continued)
|
Fuel distribution
|
Market
|
Customer
|
September 30,
2009
|
October 31,
2008
|
|||||||
|
Domestic
|
Mime
Distribuidora de Petróleo Ltda.
|
2 | % | - | ||||||
|
Tam Linhas Aéreas
S.A.
|
1 | % | - | |||||||
|
All – América
Latina Logística Malha Sul S.A.
|
1 | % | - | |||||||
|
Auto Posto
Túlio Ltda.
|
1 | % | - | |||||||
|
Posto Iccar
Ltda.
|
1 | % | - | |||||||
|
15.
|
Subsequent
events
|
Capital
increase
On
October 5, 2009, the Board of Directors approved a capital increase of US$586
through issuance of 169,500 new common shares, with no par value, in connection
with the “Company’s Stock Option Plan” and with the exercise of such options by
the eligible executives, at the issuance price of US$3.46 per share, set on the
terms of the stock option plan.
On
October 29, 2009, the Board of Directors approved a capital increase of
US$217,976 through issuance of 23,753,953 new common shares, with no par value,
at issue price of US$9.17, due to exercise of 39,589,922 subscription warrants
by Cosan Limited.
In
connection with the issuance of the new shares, the Company’s capital comprised
396,733,595 registered uncertificated common shares with no par
value.
PPE - Export Prepayment
Finance
On
October 28, 2009, the Company, through its subsidiary Cosan Alimentos, entered
into a financing, denominated PPE – Export Prepayment Finance, in the amount of
US$230,000, with final maturity in September, 2014. This PPE bears interest at a
rate of 9.0% per annum.
35
Cosan
Limited
Condensed
Consolidated Financial Statements
For the six-month
periods ended September 30, 2009 and October 31, 2008
COSAN
LIMITED
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
CONTENTS
|
Report of
independent registered public accounting firm
|
1
|
|
|
|
|
Condensed
consolidated balance sheets
|
2
|
|
Condensed
consolidated statements of operations
|
4
|
|
Condensed
consolidated statements of shareholders’ equity and comprehensive income
(loss)
|
5
|
|
Condensed
consolidated statements of cash flows
|
6
|
|
Notes to the
condensed consolidated financial statements
|
7
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of
Directors and Shareholders of
Cosan
Limited
We have reviewed the condensed
consolidated balance sheet of Cosan Limited and subsidiaries as of September 30, 2009, the related condensed
consolidated statements of operations and cash flows for the six-month periods ended September 30, 2009 and October 31, 2008 and the condensed consolidated
statement of shareholders’ equity and comprehensive income (loss)
for the six-month period ended September 30, 2009. These financial statements
are the responsibility of the Company's management.
We conducted our
review in accordance with the standards of the Public Company Accounting
Oversight Board (United States). A review of interim financial information
consists principally of applying analytical procedures and making inquiries of
persons responsible for financial and accounting matters. It is substantially
less in scope than an audit conducted in accordance with the standards of the
Public Company Accounting Oversight Board, the objective of which is the
expression of an opinion regarding the financial statements taken as whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of
any material modifications that should be made to the condensed consolidated
financial statements referred to above for them to be in conformity with
U.S. generally accepted accounting
principles.
We have previously audited, in
accordance with the
standards of the Public
Company Accounting Oversight Board (United States), the consolidated balance
sheet of Cosan Limited and subsidiaries as of March 31, 2009, and the related consolidated
statements of operations, shareholders’ equity and cash flows for the
eleven-month
period then ended not
presented herein and in our report dated June 19, 2009, we expressed an unqualified opinion on
those consolidated financial statements. In our opinion, the information set
forth in the accompanying condensed consolidated balance sheet as of
March 31, 2009, is fairly stated, in all material
respects, in relation to the consolidated balance sheet from which it has been
derived.
|
São Paulo,
Brazil
|
ERNST &
YOUNG
|
|
November 12,
2009
|
Auditores
Independentes S.S.
|
|
CRC2SP015199/O-8
|
|
|
Luiz Carlos
Nannini
|
|
|
Accountant
CRC 1SP171638/O-7
|
1
COSAN
LIMITED
Condensed
consolidated balance sheets
September 30, 2009
and March 31, 2009
(In thousands of
U.S. dollars, except share data)
|
(Unaudited)
September 30,
2009
|
March 31,
2009
|
|||||||
|
Assets
|
||||||||
|
Current
assets:
|
||||||||
|
Cash and cash
equivalents
|
769,130 | 508,784 | ||||||
|
Restricted
cash
|
84,097 | 5,078 | ||||||
|
Derivative
financial instruments
|
54,793 | 7,352 | ||||||
|
Trade accounts receivable, less
allowances: September 30, 2009 – $33,672; March 31, 2009 –
$21,241
|
331,628 | 258,863 | ||||||
|
Inventories
|
861,325 | 477,792 | ||||||
|
Advances to
suppliers
|
189,386 | 88,991 | ||||||
|
Taxes
recoverable
|
192,843 | 114,641 | ||||||
|
Other current
assets
|
56,129 | 65,956 | ||||||
| 2,539,331 | 1,527,457 | |||||||
|
Property, plant, and equipment,
net
|
3,554,306 | 2,271,828 | ||||||
|
Goodwill
|
1,592,479 | 888,793 | ||||||
|
Intangible assets,
net
|
256,885 | 230,741 | ||||||
|
Accounts receivable from Federal
Government
|
185,057 | 139,700 | ||||||
|
Judicial
deposits
|
101,851 | 73,975 | ||||||
|
Other non-current
assets
|
478,661 | 288,608 | ||||||
| 6,169,239 | 3,893,645 | |||||||
|
Total
assets
|
8,708,570 | 5,421,102 | ||||||
2
|
(Unaudited)
September 30,
2009
|
March 31,
2009
|
|||||||
|
Liabilities and shareholders’
equity
|
||||||||
|
Current
liabilities:
|
||||||||
|
Trade accounts
payable
|
401,281 | 197,220 | ||||||
|
Taxes
payable
|
125,095 | 69,042 | ||||||
|
Salaries
payable
|
101,740 | 40,237 | ||||||
|
Current portion of long-term
debt
|
672,990 | 781,664 | ||||||
|
Derivative financial
instruments
|
121,143 | 28,894 | ||||||
|
Other
liabilities
|
70,704 | 47,641 | ||||||
| 1,492,953 | 1,164,698 | |||||||
|
Long-term
liabilities:
|
||||||||
|
Long-term
debt
|
2,632,319 | 1,251,095 | ||||||
|
Estimated liability for legal
proceedings and labor claims
|
672,647 | 497,648 | ||||||
|
Taxes
payable
|
178,323 | 151,476 | ||||||
|
Deferred income
taxes
|
118,321 | 40,377 | ||||||
|
Other long-term
liabilities
|
224,625 | 175,043 | ||||||
| 3,826,235 | 2,115,639 | |||||||
|
Shareholders’
equity:
|
||||||||
|
Common shares class A1, $.01 par
value. 1,000,000,000 shares authorized; 174,355,341 shares
issued and outstanding
|
1,743 | 1,743 | ||||||
|
Common shares class B1, $.01 par
value. 96,332,044 shares authorized, issued and
outstanding
|
963 | 963 | ||||||
|
Common shares class B2, $.01 par
value. 92,554,316 shares authorized
|
- | - | ||||||
|
Additional paid-in
capital
|
1,961,819 | 1,926,733 | ||||||
|
Accumulated other comprehensive
income (loss)
|
146,112 | (243,607 | ) | |||||
|
Retained earnings (accumulated
losses)
|
96,943 | (89,595 | ) | |||||
|
Equity attributable to
shareholders of Cosan Ltd
|
2,207,580 | 1,596,237 | ||||||
|
Equity attributable to
noncontrolling interests
|
1,181,802 | 544,528 | ||||||
|
Total shareholders’
equity
|
3,389,382 | 2,140,765 | ||||||
|
Total liabilities and
shareholders’ equity
|
8,708,570 | 5,421,102 | ||||||
See accompanying notes to condensed
consolidated financial statements.
3
COSAN LIMITED
Condensed consolidated statements of
operations
Six-month periods
ended September 30, 2009 and October 31, 2008
(In thousands of U.S. dollars, except
share data)
(Unaudited)
|
September
30,
2009
|
October
31, 2008
|
|||||||
|
Net sales
|
3,635,924 | 777,834 | ||||||
|
Cost of goods
sold
|
(3,216,939 | ) | (719,108 | ) | ||||
|
Gross
profit
|
418,985 | 58,726 | ||||||
|
Selling
expenses
|
(217,156 | ) | (100,948 | ) | ||||
|
General and administrative
expenses
|
(70,713 | ) | (72,337 | ) | ||||
|
Operating income
(loss)
|
131,116 | (114,559 | ) | |||||
|
Other income
(expenses):
|
||||||||
|
Financial
income
|
78,461 | 136,436 | ||||||
|
Financial
expenses
|
201,406 | (338,293 | ) | |||||
|
Other
|
(7,035 | ) | (11,603 | ) | ||||
|
Income (loss) before income taxes
and equity in income (loss) of affiliates
|
403,948 | (328,019 | ) | |||||
|
Income taxes (expense)
benefit
|
(125,959 | ) | 116,011 | |||||
|
Income (loss) before equity in
income of affiliates
|
277,989 | (212,008 | ) | |||||
|
Equity income (loss) of
affiliates
|
(1,698 | ) | 574 | |||||
|
Net income
(loss)
|
276,291 | (211,434 | ) | |||||
|
Less net loss (income)
attributable to noncontrolling interests
|
(89,753 | ) | 68,045 | |||||
|
Net income (loss) attributable to
Cosan Ltd
|
186,538 | (143,389 | ) | |||||
|
Per-share amounts attributable to
Cosan Ltd
|
||||||||
|
Earnings (loss) from continuing
operations
|
||||||||
|
Basic and
diluted
|
0.69 | (0.63 | ) | |||||
|
Weighted number of shares
outstanding
|
||||||||
|
Basic and
diluted
|
270,687,385 | 227,214,321 | ||||||
See accompanying notes to condensed
consolidated financial statements.
4
COSAN LIMITED
Condensed consolidated statements of
shareholders’ equity and comprehensive income
Six-month period ended September 30,
2009
(In thousands of U.S. dollars, except
share data)
(Unaudited)
|
Common
stock
|
||||||||||||||||||||||||||||||||||||
|
Common
number of class A
shares
|
Common
number of class B shares
|
Common
amount of class A shares
|
Common
amount of class B shares
|
Additional
paid-in
capital
|
Retained
earnings
|
Accumulated
other comprehensive income
|
Noncontrolling
interests
|
Total
|
||||||||||||||||||||||||||||
|
Balances
at March 31, 2009
|
174,355,341 | 96,332,044 | 1,743 | 963 | 1,926,733 | (89,595 | ) | (243,607 | ) | 544,528 | 2,140,765 | |||||||||||||||||||||||||
|
Acquisition
of Teaçu
|
- | - | - | - | 41,340 | - | - | 86,954 | 128,294 | |||||||||||||||||||||||||||
|
Issuance
of subsidiary shares to non controlling interest
|
- | - | - | - | 9,840 | - | (1,735 | ) | 246,123 | 254,228 | ||||||||||||||||||||||||||
|
Acquisition
of non-controlling interest in subsidiary
|
- | - | - | - | (14,324 | ) | - | - | (9,273 | ) | (23,597 | ) | ||||||||||||||||||||||||
|
Stock
compensation
|
- | - | - | - | 2,824 | - | - | 1,677 | 4,501 | |||||||||||||||||||||||||||
|
Sale of warrants
in subsidiary
|
(4,594 | ) | 4,594 | - | ||||||||||||||||||||||||||||||||
|
Net
income
|
- | - | - | - | - | 186,538 | - | 89,753 | 276,291 | |||||||||||||||||||||||||||
|
Pension
plan
|
(54 | ) | (31 | ) | (85 | ) | ||||||||||||||||||||||||||||||
|
Unrealized
gain on available-for-sale securities
|
3,445 | - | 3,445 | |||||||||||||||||||||||||||||||||
|
Currency
translation adjustment
|
- | - | - | - | - | - | 388,063 | 217,477 | 605,540 | |||||||||||||||||||||||||||
|
Total
comprehensive loss
|
885,191 | |||||||||||||||||||||||||||||||||||
|
Balances
at September 30, 2009
|
174,355,341 | 96,332,044 | 1,743 | 963 | 1,961,819 | 96,943 | 146,112 | 1,181,802 | 3,389,382 | |||||||||||||||||||||||||||
See accompanying notes to condensed
consolidated financial statements.
5
COSAN
LIMITED
Condensed consolidated statements of
cash flows
Six-month period ended September 30,
2009 and October 31, 2008
(In thousands of U.S.
dollars)
(Unaudited)
|
September
30,
2009
|
October
31, 2008
|
|||||||
|
Cash flow from operating
activities:
|
||||||||
|
Net (loss) income attributable to
Cosan Limited
|
186,538 | (143,389 | ) | |||||
|
Adjustments to reconcile net
income to cash provided by operating activities:
|
||||||||
|
Depreciation and
amortization
|
207,067 | 259,259 | ||||||
|
Deferred income and social
contribution taxes
|
125,959 | (116,011 | ) | |||||
|
Interest, monetary and exchange
variation
|
(204,198 | ) | 313,039 | |||||
|
Net loss (income) attributable to
noncontrolling interests
|
89,753 | (68,045 | ) | |||||
|
Others
|
(35,551 | ) | 15,269 | |||||
|
Decrease/increase in operating
assets and liabilities
|
||||||||
|
Trade accounts receivable,
net
|
48,076 | 260 | ||||||
|
Inventories
|
(90,194 | ) | (411,156 | ) | ||||
|
Advances to
suppliers
|
(31,518 | ) | (28,887 | ) | ||||
|
Trade accounts
payable
|
54,393 | 146,510 | ||||||
|
Derivative financial
instruments
|
41,622 | 6,525 | ||||||
|
Taxes
payable
|
(58,948 | ) | (12,926 | ) | ||||
|
Other
assets and liabilities, net
|
20,931 | (7,368 | ) | |||||
|
Net cash provided by (used in)
operating activities
|
353,930 | (46,920 | ) | |||||
|
Cash flows from investing
activities:
|
||||||||
|
Restricted
cash
|
(77,485 | ) | 37,546 | |||||
|
Marketable
securities
|
- | (460,147 | ) | |||||
|
Acquisitions, net of cash
acquired
|
23,903 | (17,490 | ) | |||||
|
Acquisition of property, plant and
equipment
|
(438,509 | ) | (315,998 | ) | ||||
|
Cash received from sale of
noncurrent assets
|
67,027 | - | ||||||
|
Others
|
(7,383 | ) | - | |||||
|
Net cash used in investing
activities
|
(432,447 | ) | (756,089 | ) | ||||
|
Cash flows from financing
activities:
|
||||||||
|
Related
parties
|
(62,533 | ) | - | |||||
|
Proceeds from issuance of common
stock
|
707 | 196,224 | ||||||
|
Additions of long-term
debts
|
685,371 | 174,501 | ||||||
|
Payments of long-term
debts
|
(420,603 | ) | (66,013 | ) | ||||
|
Net cash provided by (used in) financing
activities
|
202,942 | 304,712 | ||||||
|
Effect of exchange rate changes on
cash and cash equivalents
|
135,921 | 493,621 | ||||||
|
Net increase (decrease) in cash
and cash equivalents
|
260,346 | (4,676 | ) | |||||
|
Cash and cash equivalents at
beginning of year
|
508,784 | 68,377 | ||||||
|
Cash and cash equivalents at end
of year
|
769,130 | 63,701 | ||||||
|
Supplemental cash flow
information
|
||||||||
|
Cash paid during the year
for:
|
||||||||
|
Interest
|
80,303 | 37,302 | ||||||
|
Income tax
|
20,431 | - | ||||||
See accompanying notes to condensed
consolidated financial statements.
6
COSAN
LIMITED
Notes to the condensed
consolidated financial statements
(In thousands of U.S. dollars, unless
otherwise stated)
|
1.
|
Operations
|
Cosan Limited
(“Cosan” and “the Company”) was incorporated in Bermuda as an exempted company
on April 30, 2007. In connection with its incorporation, Cosan Limited issued
1,000 shares of common stock for US$10.00 to Mr. Rubens Ometto Silveira Mello,
who indirectly controls Cosan S.A. Indústria e Comércio and its subsidiaries
(“Cosan S.A.”).
The companies
included in the consolidated financial statements have as their primary activity
the production of ethanol and sugar, and the marketing and distribution of fuel
and lubricants in Brazil. They are constantly pursuing opportunities to
capitalize on the growing demand for ethanol and sugar in the world. They are
focused on increasing production capacity through expansion of existing
facilities, development of greenfield projects and, as opportunities present
themselves, acquisitions.
Cosan S.A. was the
predecessor to Cosan and was the primary operating business in the consolidated
group prior to a reorganization in August, 2007. In contemplation of an initial
public offering on August 1, 2007, Aguassanta Participações S.A. and Usina Costa
Pinto S.A. Açúcar e Álcool, controlling shareholders of Cosan S.A. and both
indirectly controlled by Mr. Rubens Ometto Silveira Mello, the controlling
shareholder, contributed their common shares of Cosan S.A. to Cosan in exchange
for 96,332,044 of our class B1 common shares. The common shares contributed to
the Company by Aguassanta Participações S.A. and Usina Costa Pinto S.A. Açúcar e
Álcool consisted of 96,332,044 common shares of Cosan, representing 51.0% of
Cosan S.A. outstanding common shares. As a result of this reorganization Cosan
Ltd. became the controlling shareholder of Cosan S.A.. The reorganization was
accounted for as a reorganization of companies under common control in a manner
similar to a pooling of interests.
On
August 17, 2007, the Company concluded its global offering of 111,678,000 class
A common shares which resulted in gross proceeds in the amount of US$1,171,027.
As a result of the global offering, Cosan’s shares are traded on the New York
Stock Exchange (NYSE) and on the São Paulo Stock Exchange (Bovespa) by BDR
(Brazilian Depositary Receipts).
The costs directly
attributable to the offering were charged against the gross proceeds of the
offering in a total amount of US$52,594. Therefore the net proceeds related to
the IPO totaled US$1,118,433.
7
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
1.
|
Operations
(Continued)
|
On
April 23, 2008, Cosan S.A. entered into an agreement with ExxonMobil
International Holding B.V., or “Exxon”, for the acquisition of 100% of the
outstanding shares of Esso Brasileira de Petróleo Ltda. and its subsidiaries
(“Essobrás”), a distributor and seller of fuels and producer and seller of
lubricants and specialty petroleum products of ExxonMobil in Brazil. On December
1, 2008 the Company completed the acquisition. On January 16, 2009
the Company changed the corporate name of Essobrás to Cosan Combustíveis e
Lubrificantes S.A. (“Cosan CL”).
On
July 17, 2008, the Board Director’s approved the modification of the end of
fiscal year from April 30 to March 31 of each year. Therefore the income
statement and cash flow information presented in these financial statements lack
comparison to the prior period represented by the six-month period ended October
31, 2008.
On
August 28, 2008, Cosan S.A. announced the incorporation of a new affiliate named
Radar Propriedades Agrícolas S.A. (“Radar”), which engages in farm real estate
investments in Brazil by identifying and acquiring rural properties likely to
experience an increase in value and acquiring them for later leasing and/or
sale. The initial capital contribution was US$185,000, of which US$35,000 was
invested by Cosan (18.92%) and US$150,000 by another shareholder (81.08%). On
August 25, 2009, an additional capital contribution of US$33,262, was approved,
of which US$6,293 (18.92%) was invested by Cosan and the remainder by the other
shareholder.
On
April 09, 2009, the Company entered into an agreement with Rezende Barbosa S.A.
Administração e Participações (“Rezende Barbosa”) to acquire 100% of the
outstanding shares of Teaçu Armazéns Gerais S.A. (“Teaçu”). Teaçu operates a
port terminal concession in the city of Santos. See further discussion regarding this acquisition
at Note 3.
On
June 17, 2009, Cosanpar Participações S.A. (“Cosanpar”), a wholly-owned
subsidiary of Cosan S.A. sold its equity interest in Jacta Participações S.A.
(“Jacta”), a distributor of aviation fuel that was acquired in the Essobrás
acquisition, to Shell Brasil Ltda. for US$59,234 cash. The results of operations
of Jacta were recorded in the fuel distribution segment. The carrying value of
the net assets sold was US$40,084, which resulted in a gain net of taxes of
US$19,150.
8
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
1.
|
Operations
(Continued)
|
On
June 18, 2009, Cosan S.A. entered into an agreement with Rezende Barbosa to
acquire 100% of the outstanding shares of Curupay S.A. Participações
(“Curupay”). The principal investment of Curupay was 100% of the
outstanding shares of Cosan Alimentos S.A. (former Nova América S.A.
Agroenergia). Cosan Alimentos S.A. (“Cosan Alimentos”) is a producer of sugar,
ethanol and energy co-generation which also operates in trading and logistics.
See further discussion regarding
this acquisition at Note 3.
|
2.
|
Presentation
of the consolidated financial
statements
|
|
a.
|
Basis of reporting for
interim financial statements
|
In
the opinion of management, the unaudited condensed consolidated financial
statements reflect all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation of the Company’s results for the
periods presented. Interim results for the six-month period ended September 30,
2009, are not necessarily indicative of the results that may be expected for the
fiscal year.
The unaudited
condensed consolidated financial statements include the accounts of Cosan
Limited and its subsidiaries. All significant intercompany transactions have
been eliminated.
These financial
statements should be read in conjunction with Cosan Ltd`s annual financial
statements for the fiscal year ended March 31, 2009.
The accounts of
Cosan are maintained in U.S. Dollars and the accounts of its subsidiaries are
maintained in Brazilian reais, which have been translated into U.S. dollars in
accordance with Accounting Standards Codification 830 “Foreign Currency
Matters”.
The exchange rate
of the Brazilian real
(R$) to the US$ was R$1.7781=US$ 1.00 at September 30, 2009 and R$2.3152=US$1.00
at March 31, 2009.
9
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
2.
|
Presentation of the
consolidated financial statements
(Continued)
|
|
b.
|
Use of
estimates
|
The preparation of condensed
consolidated financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the amounts reported in
the condensed consolidated financial statements and accompanying notes. Actual
results could differ from these estimates. These estimates and assumptions are
reviewed and updated regularly to reflect recent experience.
|
c.
|
Recently
issued accounting standards
|
FASB Accounting Standards
Codification
In
September 2009, the Accounting Standards Codification (“ASC”) became the
source of authoritative U.S. GAAP recognized by the Financial Accounting
Standards Board (“FASB”) for nongovernmental entities, except for certain FASB
Statements not yet incorporated into ASC. Rules and interpretive releases of the
SEC under federal securities laws are also sources of authoritative U.S. GAAP
for registrants. The authoritative guidance mentioned in these financial
statements includes the applicable ASC reference.
Subsequent
Events
We
adopted ASC 855, Subsequent
Events, which established general accounting standards and disclosure for
subsequent events,during the six-month period ended September 30, 2009. In
accordance with ASC 855, the Company has evaluated subsequent events through
November 12, 2009, the date the financial statements were issued or available to
be issued.
Noncontrolling
Interests
Effective
April 1, 2009, the Company adopted new accounting guidance ASC 810, which
changed the accounting for and the reporting of an entity’s minority
ownership. Such minority ownership, previously referred to as
minority interest, is now referred to as noncontrolling interests. The
adoption of this guidance resulted in the reclassification of amounts previously
attributable to minority interest and classified in the mezzanine outside of
shareholders’ equity, to a separate component of stockholders’ equity titled
“Noncontrolling Interests” in the accompanying condensed consolidated balance
sheets and statement of changes in equity.
10
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
2.
|
Presentation of the
consolidated financial statements
(Continued)
|
|
c.
|
Recently
issued accounting standards
(Continued)
|
Noncontrolling
Interests (Continued)
Additionally, net
income and comprehensive income attributable to noncontrolling interests are
shown separately from consolidated net income and comprehensive income in the
accompanying condensed consolidated statements of operations and statements of
changes in equity. Prior period financial statements have been reclassified to
conform to the current year presentation as required by the authoritative
guidance.
New Accounting
Pronouncements
The following
accounting standards have been issued, but as of September 30, 2009 are not
yet effective and have not been adopted by the Company:
SFAS
No. 166, Accounting for Transfers of Financial Assets – an amendment of
FASB Statement No. 140 (“SFAS No. 166”)
In
June 2009, the FASB issued SFAS No. 166, which removes the concept of a
qualifying special-purpose entity (“QSPE”) from SFAS No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities-a replacement
of FASB Statement No. 125. The QSPE concept had initially been
established to facilitate off-balance sheet treatment for certain
securitizations. SFAS No. 166 also removes the exception from applying FASB
Interpretation (“FIN”) No. 46(R), Consolidation of Variable Interest
Entities (“FIN No. 46(R)”), to QSPEs. SFAS No. 166 has not been
incorporated into ASC and is effective for fiscal years beginning after
November 15, 2009, or April 1, 2010 for Cosan. The Company does not
believe the adoption of SFAS No. 166 will have a material impact on its
financial statements.
11
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
2.
|
Presentation of the
consolidated financial statements
(Continued)
|
|
c.
|
Recently
issued accounting standards
(Continued)
|
New
Accounting Pronouncements (Continued)
SFAS
No. 167, Amendments to FASB Interpretation No. 46(R) (“SFAS
No. 167”)
In
June 2009, the FASB issued SFAS No. 167, which amends FIN 46(R) to among
other things, require an entity to qualitatively rather than quantitatively
assess the determination of the primary beneficiary of a variable interest
entity (“VIE”). This determination should be based on whether the entity has 1)
the power to direct matters that most significantly impact the activities of the
VIE and 2) the obligation to absorb losses or the right to receive benefits of
the VIE that could potentially be significant to the VIE. Other key changes
include: the requirement for an ongoing reconsideration of the primary
beneficiary, the criteria for determining whether service provider or decision
maker contracts are variable interests, the consideration of kick-out and
removal rights in determining whether an entity is a VIE, the types of events
that trigger the reassessment of whether an entity is a VIE and the expansion of
the disclosures previously required under FASB Staff Position (“FSP”) FAS 140-4
and FIN 46(R), Disclosures by
Public Entities (Enterprises) about Transfers of Financial Assets and Interests
in Variable Interest Entities. SFAS No. 167 has not been
incorporated into ASC and is effective for fiscal years beginning after
November 15, 2009, or April 1, 2010 for Cosan. The Company does not
believe the adoption of FAS No. 166 will have a material impact on its
financial statements.
SFAS
No. 168, FASB Codification and the Hierarchy of GAAP (“SFAS
No. 168”)
In
June 2009, the FASB issued SFAS No. 168, which identifies the sources of
accounting principles and the framework for selecting the principles used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with U.S. GAAP. SFAS No. 168 replaces SFAS
No. 162, The Hierarchy of
Generally Accepted Accounting Principles, and establishes the FASB
Accounting Standards Codification (“the Codification”) as the single source of
authoritative guidance recognized by the FASB. Under the Codification, all
guidance carries an equal level of authority. SFAS No. 168 has not been
incorporated into ASC and is effective for interim and annual periods ending
after September 15, 2009, or the quarter ending September 30, 2009 for
the Company. We adopted this guidance effective July 1, 2009, with no impact on
our consolidated results of operations or financial position.
12
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
3.
|
Acquisitions
|
a. Teaçu Armazéns Gerais
S.A.
On
April 9, 2009, Cosan S.A., through its 90% owned subsidiary, Copsapar
Participações S.A., which owns 100% of Novo Rumo Logística S.A. (“Novo Rumo”),
acquired 100% of the outstanding shares of Teaçu Armazéns Gerais S.A. (“Teaçu”)
from Rezende Barbosa S.A. Administração e Participações (“Rezende Barbosa”) for
$52,985 cash and issuance of 90,736,131 shares of Novo Rumo, equivalent to
28.82% of its share capital. Teaçu holds a port concession in the city of Santos
and operates a terminal dedicated to exporting sugar and other agricultural
products. This acquisition combines the Santos port operations previously held
separately by Cosan S.A. and Teaçu.
As
a result of this transaction, Cosan S.A. reduced its indirect share ownership in
Novo Rumo to 64.06%.
The
acquisition-date fair value of the consideration transferred totaled $150,501,
which consisted of the following:
|
Cash
|
52,985 | |||
|
Common stock
at estimated fair value
|
97,516 | |||
|
Total
|
150,501 |
13
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
3.
|
Acquisitions
(Continued)
|
a. Teaçu Armazéns Gerais S.A.
(Continued)
The fair value of
the 90,736,131 common shares issued was provisionally determined at the
acquisition date and is being reviewed in order to finalize the purchase
price.
The following table
summarizes the estimated fair values of the assets acquired and liabilities
assumed at the acquisition date. The company is in the process of obtaining
valuations of certain intangible assets and fixed assets; thus, the provisional
measurements of intangible assets, goodwill and deferred income tax assets are
subject to change.
|
Description
|
||||
|
Property,
plant and equipment
|
40,224 | |||
|
Inventories
|
973 | |||
|
Other
assets
|
29,012 | |||
|
Long-term
debt including current installments
|
(18,780 | ) | ||
|
Trade
accounts payable
|
(361 | ) | ||
|
Estimated
liability for legal proceedings and labor claims
|
(976 | ) | ||
|
Other
liabilities
|
(1,922 | ) | ||
|
Net assets
acquired
|
48,170 | |||
|
Provisional
purchase price, net of cash acquired
|
150,222 | |||
|
Goodwill
|
102,052 | |||
The provisional
goodwill of $102,052 arising from the acquisition, which will be substantially
deductible for tax purposes, consists largely of the synergies and economies of
scale expected from combining the port operations of Cosan S.A. and
Teaçu. The provisional goodwill was assigned to the sugar
segment.
The amounts of
Teaçu’s revenue and earnings included in the consolidated income statement for
the six-month period ended October 31, 2008, and the revenue and earnings of the
combined entity had the acquisition date been May 1, 2008, are:
|
Revenue
|
Earnings
(Loss)
|
|||||||
|
Actual from
April 9, 2009 – September 30, 2009 (*)
|
18,589 | 2,775 | ||||||
|
Supplemental
pro forma from May 1, 2008 – October 31, 2008
|
793,679 | (141,927 | ) | |||||
(*) Revenues and
earning represent the full six-month period ended September 30,
2009.
14
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
3.
|
Acquisitions
(Continued)
|
b.
Curupay S.A. Participações
On
June 18, 2009, Cosan S.A. acquired 100% of the outstanding shares of Curupay
S.A. Participações from Rezende Barbosa, through the issuance of 44,300,389
common shares valued at $7.25 per share (fair value at the acquisition date) and
a total purchase price of US$321,087. The assets acquired include the
non-controlling interest in Novo Rumo representing 28.82% of its outstanding
shares which were issued in the Teaçu acquisition, and 100% of the outstanding
shares of two operating companies, Nova América S.A. Trading and Cosan Alimentos
(collectively referred to as “Nova América”). Nova América is a producer of
sugar, ethanol and energy co-generation and also operates in trading and
logistics.
With the
acquisition of the noncontrolling interest of Novo Rumo, Cosan S.A. increased
its share ownership in Novo Rumo to 92.88%. This transaction was a change in
ownership interest without a loss of control and accounted for as a transaction
in shareholders’ equity of Cosan S.A.
The following table
summarizes the assets acquired and liabilities assumed in relation to Nova
América. These amounts are preliminary as valuations of certain
intangible assets, fixed assets and other assets and liabilities are currently
in process.
|
Description
|
||||
|
Property,
plant and equipment
|
370,651 | |||
|
Noncontrolling
interest in Novo Rumo
|
62,476 | |||
|
Inventories
|
63,572 | |||
|
Account
receivables
|
62,377 | |||
|
Other
assets
|
251,267 | |||
|
Long-term
debt including current installments
|
(606,118 | ) | ||
|
Trade
accounts payable
|
(81,563 | ) | ||
|
Related
parties
|
(16,591 | ) | ||
|
Estimated
liability for legal proceedings and labor claims
|
(7,009 | ) | ||
|
Taxes and
contributions payable
|
(28,821 | ) | ||
|
Other
liabilities
|
(66,155 | ) | ||
|
Net assets
acquired
|
4,086 | |||
|
Purchase
price, net of cash acquired
|
294,605 | |||
|
Goodwill
|
290,519 | |||
The provisional
goodwill of $290,519 arising from the acquisition consists largely of the
synergies and economies of scale expected from combining the ethanol and sugar
operations of Cosan S.A. and Nova America. US$207,285 of the
provisional goodwill was assigned to the sugar segment and US$83,234 was
assigned to the ethanol segment.
15
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
3.
|
Acquisitions
(Continued)
|
b.
Curupay S.A. Participações (Continued)
The amounts of Nova
America’s revenue and earnings included in the consolidated income statement for
the six-month period ended October 31, 2008, and the revenue and earnings of the
combined entity had the acquisition date been May 1, 2008, are:
|
Revenue
|
Earnings
(Loss)
|
|||||||
|
Actual from
June 18, 2009 – September 30, 2009
|
219,290 | 12,988 | ||||||
|
Supplemental
pro forma from April 1, 2009 – September 30, 2009
|
3,728,870 | 259,225 | ||||||
|
Supplemental
pro forma from May 1, 2008 – October 31, 2008
|
1,116,831 | (221,731 | ) | |||||
16
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
4.
|
Derivative financial
instruments
|
Cosan enters into
derivative financial instruments with various counterparties and uses
derivatives to manage the overall exposures related to sugar price variations in
the international market, interest rate and exchange rate variation. The
instruments are commodity futures contracts, forward currency agreements,
interest rate and foreign exchange swap contracts, and option contracts. Cosan
recognizes all derivatives on the balance sheet at fair value.
The following table
summarizes the notional value of derivative financial instruments as well as the
related amounts recorded in balance sheet accounts:
|
Notional
amounts
|
Carrying value asset
(liability)
|
|||||||||||||||
|
September
30, 2009
|
March 31,
2009
|
September
30, 2009
|
March 31,
2009
|
|||||||||||||
|
Commodities
derivatives
|
||||||||||||||||
|
Future
contracts:
|
||||||||||||||||
|
Purchase
commitments - sugar
|
38,194 | 61 | 2,429 | (4 | ) | |||||||||||
|
Purchase
Commitments - oil
|
28,577 | - | 724 | - | ||||||||||||
|
Sell
commitments
|
316,583 | 182,943 | (30,099 | ) | 4,163 | |||||||||||
|
Swap
agreements - sugar
|
56,594 | - | 4,622 | - | ||||||||||||
|
Options:
|
||||||||||||||||
|
Purchased
|
186,599 | - | 9,351 | - | ||||||||||||
|
Written
|
302,227 | 64,366 | (82,161 | ) | (2,906 | ) | ||||||||||
|
Foreign
exchange derivatives
|
||||||||||||||||
|
Forward
contracts:
|
||||||||||||||||
|
Purchase
Commitments
|
417,069 | - | (5,051 | ) | - | |||||||||||
|
Sale
commitments
|
893,220 | 184,653 | 10,876 | (23,035 | ) | |||||||||||
|
Swap
agreements
|
||||||||||||||||
|
Swap
agreements – Senior notes 2009
|
320,961 | 246,501 | (2,515 | ) | (2,949 | ) | ||||||||||
|
Swap
agreements – Note export credit
|
10,012 | - | (1,317 | ) | - | |||||||||||
|
Future
contracts
|
||||||||||||||||
|
Sale
commitments
|
577,779 | 372,230 | 17,865 | 3,189 | ||||||||||||
|
Options
|
||||||||||||||||
|
Purchased
|
263,202 | - | 8,926 | - | ||||||||||||
|
Total
assets
|
54,793 | 7,352 | ||||||||||||||
|
Total
liabilities
|
(121,143 | ) | (28,894 | ) | ||||||||||||
When quoted market prices were not
available, fair values were based on estimates using discounted cash flows or
other valuation techniques.
17
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
5.
|
Inventories
|
|
September
30, 2009
|
March
31, 2009
|
|||||||
|
Finished
goods:
|
||||||||
|
Sugar
|
269,857 | 47,195 | ||||||
|
Ethanol
|
177,371 | 86,809 | ||||||
|
Lubricants
|
40,525 | 38,852 | ||||||
|
Fuel
(Gasoline, Diesel and Ethanol)
|
96,692 | 74,582 | ||||||
|
Valuation
allowance
|
(8,441 | ) | (5,222 | ) | ||||
|
Others
|
12,948 | 11,896 | ||||||
| 588,952 | 254,112 | |||||||
|
Annual
maintenance cost of growing crops
|
181,105 | 167,576 | ||||||
|
Others
|
91,268 | 56,104 | ||||||
| 861,325 | 477,792 | |||||||
|
6.
|
Long-term
debt
|
Long-term debt is summarized as
follows:
|
Index
|
Average annual interest
rate
|
September 30,
2009
|
March 31,
2009
|
||||||||||
|
Resolution No. 2471
(PESA)
|
IGP-M
|
4.0%
|
290,313 | 215,572 | |||||||||
|
Corn price
|
12.50%
|
- | 59 | ||||||||||
|
Senior notes due
2009
|
US Dollar
|
9.0%
|
37,343 | 37,386 | |||||||||
|
Senior notes due
2014
|
US Dollar
|
9.5%
|
354,293 | - | |||||||||
|
Senior notes due
2017
|
US Dollar
|
7.0%
|
404,978 | 405,389 | |||||||||
|
IFC
|
US Dollar
|
7.4%
|
46,572 | 49,362 | |||||||||
|
Perpetual
notes
|
US Dollar
|
8.3%
|
456,602 | 456,463 | |||||||||
|
BNDES
|
TJLP
|
2.6%
|
401,980 | 99,561 | |||||||||
|
Floating rate
notes
|
Libor
|
2.8%
|
- | 151,207 | |||||||||
|
Promissory
notes
|
DI
|
3.00%
|
693,834 | 501,888 | |||||||||
|
Export credit
notes
|
DI
|
3.90%
|
125,374 | - | |||||||||
|
Debentures
|
DI
|
3.30%
|
85,255 | - | |||||||||
|
Credit
Notes
|
DI
|
5.60%
|
122,290 | - | |||||||||
|
Export credit
notes
|
US Dollar
|
2.00%
|
53,475 | - | |||||||||
|
Others
|
Various
|
Various
|
233,000 | 115,872 | |||||||||
| 3,305,309 | 2,032,759 | ||||||||||||
|
Current
liability
|
(672,990 | ) | (781,664 | ) | |||||||||
|
Long-term
debt
|
2,632,319 | 1,251,095 | |||||||||||
18
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
6.
|
Long-term
debt
(Continued)
|
Long-term debt has the following
scheduled maturities:
|
2011
|
643,728 | |||
|
2012
|
119,221 | |||
|
2013
|
70,435 | |||
|
2014
|
395,232 | |||
|
2015
|
43,527 | |||
|
2016
|
40,577 | |||
|
2017
|
439,214 | |||
|
2018 and
thereafter
|
880,385 | |||
| 2,632,319 |
Resolution No. 2471 - Special
Agricultural Financing Program (Programa Especial de Saneamento de Ativos), or
PESA
To
extend the repayment period of debts incurred by Brazilian agricultural
producers, the Brazilian government passed Law 9.138 followed by Central Bank
Resolution 2,471, which, together, formed the PESA program. PESA
offered certain agricultural producers with certain types of debt the
opportunity to acquire Brazilian treasury bills (“CTNs”) in an effort to
restructure their agricultural debt. The face value of the Brazilian treasury
bills was the equivalent of the value of the restructured debt and was for a
term of 20 years.
The acquisition
price was calculated by the present value, discounted at a rate of 12% per year
or at the equivalent of 10.4% of its face value. The CTNs were deposited as a
guarantee with a financial institution and cannot be renegotiated until the
outstanding balance is paid in full. The outstanding balance associated with the
principal is adjusted in accordance with the IGP-M until the expiration of the
restructuring term, which is also 20 years, at which point the debt will be
discharged in exchange for the CTNs. Because the CTNs will have the same face
value as the outstanding balance at the end of the term, it will not be
necessary to incur additional debt to pay PESA debt.
On
July 31, 2003, the Central Bank issued Resolution 3,114, authorizing the
reduction of up to five percentage points of PESA related interest rates,
effectively lowering the above-mentioned rates to 3%, 4% and 5%, respectively.
The CTNs held by Cosan S.A. as of September 30, 2009 and March 31, 2009 amounted
to US$125,043 and US$113,877, respectively, and are classified as Other
non-current assets.
19
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
6.
|
Long-term
debt
(Continued)
|
Senior notes due
2017
On January 26, 2007, Cosan Finance
Limited, an indirect subsidiary of the Company, issued US$400,000 of senior
notes in the international capital markets. These senior notes, listed on the
Luxembourg Stock Exchange, mature in November 2017 and bear interest at a rate
of 7% per annum, payable semi-annually. The senior notes are guaranteed by Cosan
S.A., and its subsidiary, Usina da Barra.
Senior
notes due 2014
On
August 4, 2009, the indirect subsidiary CCL Finance Limited issued US$ 350,000
of senior notes in the international capital markets. These senior
notes, listed on the Luxembourg Stock Exchange, mature in August 2014 and bear
interest at a rate of 9,5% per annum, payable semi-annually in February and
August of each year, from February of 2010.
Perpetual notes
On January 24 and February 10, 2006,
Cosan S.A. issued perpetual notes which are listed on the Luxembourg Stock
Exchange - EURO MTF. These notes bear interest at a rate of 8.25% per year,
payable quarterly on May 15, August 15, November 15 and February 15 of each
year, beginning May 15, 2006.
These notes may, at the discretion of
Cosan, be redeemed on any interest payment date subsequent to February 15, 2011.
The notes are guaranteed by Cosan S.A. and by Usina da
Barra.
Promissory Notes
On
November 17, 2008, the Company issued one series of 44 registered promissory
notes for US$613,941. The notes which are due in one year, will bear interest,
due at maturity, at the average rates of DI - Interbank Deposits plus
3%.
On
June 25, 2009 the Company signed a Stand-by Facility, which
extended the maturity date from November 12, 2009 to November 12, 2010.
Management intends to pay US$170,000 before November 12,
2009. Therefore, the remaining balance of US$523,834 was reclassified
to long term debt as management intends to utilize the stand by facility to
settle this remaining balance on a long-term basis.
20
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
6.
|
Long-term
debt
(Continued)
|
Promissory
Notes
(continued)
The notes are
secured by a guarantee from Mr. Rubens Ometto Silveira Mello (Controlling
Shareholder) and collateralized by a chattel mortgage to be established for the
units of interest issued by Cosan CL which are or may be held by the
Company.
Covenants
Cosan and its
subsidiaries are subject to certain restrictive covenants related to their
indebtedness, including the following: limitation on transactions with
shareholders and affiliated companies; limitation on payment of dividends and
other payments affecting subsidiaries; and limitation on guarantees granted on
assets.
Also, the Company
and its subsidiaries are subject to other financial restrictive covenants, as
follows:
- net
debt/EBTIDA ratio must be less than 3.5 to 1;
- current
asset/current liability ratio equal or higher than 1.3; and
- long-term
indebtedness/shareholders´ equity ratio must be lower than 1.3.
At
September 30, 2009, Cosan was in compliance with its
debt covenants.
|
7.
|
Related
parties
|
|
September
30, 2009
|
March
31, 2009
|
|||||||
|
Cosan
Alimentos
|
- | 13,123 | ||||||
|
Rezende
Barbosa S.A. Administração e Participações
|
89,519 | - | ||||||
|
Vertical UK
LLP
|
7,297 | 11,597 | ||||||
|
Others
|
723 | - | ||||||
| 97,539 | 24,720 | |||||||
|
Current
(*)
|
(12,155 | ) | (24,720 | ) | ||||
|
Noncurrent
(*)
|
85,384 | - | ||||||
(*) included in
other current and noncurrent assets or liabilities captions.
21
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
7.
|
Related parties
(Continued)
|
The income
statement includes the following amounts resulting from transactions with
related parties:
|
Consolidated
|
||||||||
|
September
30, 2009
|
October
30, 2008
|
|||||||
|
Transactions
involving assets
|
||||||||
|
Remittance of
financial resources, net of receipts, credit assignments and
advances
|
(84,757 | ) | (382 | ) | ||||
|
Sale of
finished goods, materials and services to related parties
|
73,349 | - | ||||||
|
Added through
acquisition of Nova America
|
70,379 | - | ||||||
| 58,971 | (382 | ) | ||||||
The purchase and
sale transactions are carried out at prices and under conditions similar to
those existing in the market.
The receivable from
Rezende Barbosa S.A. Administração e Participações is related to credits assumed
by Rezende Barbosa, in connection with the acquisition of Nova América and
intercompany loans at the interest rate equivalent to 100% of CDI.
The amount
receivable from the affiliate Vertical UK LLP, located in British Virgin
Islands, refers to ethanol trading, with average maturity date of 30
days.
During the quarter
Cosan S.A. executed lease contracts with Radar to formalize land leases that
were already in existence, with an average lease term of 19 years. Total lease
expense in the six-month period was US$7,297.
|
8.
|
Estimated liability for legal
proceedings and labor claims and
commitments
|
|
September 30,
2009
|
March 31,
2009
|
|||||||
|
Tax
contingencies
|
585,848 | 430,342 | ||||||
|
Civil and labor
contingencies
|
86,799 | 67,306 | ||||||
| 672,647 | 497,648 | |||||||
22
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
8.
|
Estimated
liability for legal proceedings and labor claims and commitments
(Continued)
|
Cosan and its
subsidiaries are parties in various ongoing labor claims, civil and tax
proceedings in Brazil arising in the normal course of its business. Respective
provisions for contingencies were recorded considering those cases in which the
likelihood of loss has been rated as probable. Management believes resolution of
these disputes will have no effect significantly different than the estimated
amounts accrued.
Judicial deposits
recorded by Cosan under non-current assets, amounting to US$101,851 at September
30, 2009 (US$73,975 at March 31, 2009) have been made for certain of these
suits. Judicial deposits are restricted assets of Cosan placed on deposit with
the court and held in judicial escrow pending legal resolution of the related
legal proceedings. Judicial deposits include US$66,601 related to exposures of
Cosan CL prior to its acquisition by Cosan. If the Company prevails in the
defense of these exposures, these related judicial deposits must be refunded to
the seller.
The tax
contingencies as of September30, 2009 and March 31, 2009 are described as
follows:
|
September
30, 2009
|
March
31, 2009
|
|||||||
|
Credit
premium – IPI
|
155,628 | 116,256 | ||||||
|
PIS and
Cofins
|
83,181 | 62,556 | ||||||
|
IPI
credits
|
53,445 | 40,049 | ||||||
|
Contribution
to IAA
|
48,599 | 36,672 | ||||||
|
IPI – Federal
VAT
|
53,969 | 23,626 | ||||||
|
ICMS
credits
|
32,178 | 19,966 | ||||||
|
Compensation
with Finsocial
|
94,796 | 70,693 | ||||||
|
Other
|
64,052 | 60,524 | ||||||
| 585,848 | 430,342 | |||||||
On May 27, 2009, the paragraph 1st and 3rd of
Brazilian Law No 9718/98 that regulated the
collection of PIS and Cofins (federal tax contributions) on exchange variation
and other financial income was revoked by Law No 11941/09. The Company is
evaluating its ongoing judicial demands related to the legal obligations not
paid related to the increase in the calculation basis of PIS and Cofins. Once
the absence of errors or flaws in the ongoing demands is confirmed, the Company
will revaluate the maintenance of the provision for the respective legal
obligations in its financial statements.
23
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
8.
|
Estimated
liability for legal proceedings and labor claims and commitments
(Continued)
|
The company is currently evaluating the
options provided by Brazilian Law No 11941/09 to settle tax related
claims (e.g. credit premium
– IPI), as well as the
impacts in its financial statements.
In
addition to the aforementioned claims, Cosan and its subsidiaries are involved
in other contingent liabilities relating to tax, civil and labor claims and
environmental matters, which have not been recorded, considering their current
stage and the likelihood of unfavorable outcomes rated as possible. These claims
are broken down as follows:
|
September
30,
2009
|
March
31, 2009
|
|||||||
|
Withholding
Income Tax
|
92,409 | 69,730 | ||||||
|
ICMS – State
VAT
|
102,700 | 77,052 | ||||||
|
IAA - Sugar
and Ethanol Institute
|
41,554 | 31,610 | ||||||
|
IPI - Federal
Value-added tax
|
169,528 | 100,722 | ||||||
|
INSS
|
1,204 | 795 | ||||||
|
PIS and
COFINS
|
20,635 | 15,529 | ||||||
|
Civil and
labor
|
127,789 | 94,599 | ||||||
|
Other
|
79,636 | 34,851 | ||||||
| 635,455 | 424,888 | |||||||
The subsidiary
Usina da Barra has several indemnification suits filed against the Federal
Government. The suits relate to product prices that did not conform to the
reality of the market, which were mandatorily established at the time the sector
was under the Government‘s control.
In
connection with one of these suits, a final and unappealable decision in the
amount of US$149,121 was rendered in September 2006 in favor of Usina de Barra.
This has been recorded as a gain in the statement of operations. Since the
recorded amount is substantially composed of interest and monetary restatement,
it was recorded in Financial income and in a non-current receivable on the
balance sheet. In connection with the settlement process, the form of payment is
being determined.
The Company is
expecting to finalize the payment terms within three years which will result in
the amount being received over a ten year period. The amount is subject to
interest and inflation adjustment by an official index. Lawyers fees in the
amount of US$18,783 relating to this suit have been recorded in General and
administrative expenses in 2007 and remain unpaid at September 30,
2009.
24
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
8.
|
Estimated
liability for legal proceedings and labor claims and commitments
(Continued)
|
At
September 30, 2009, these amounts totaled US$185,057 and US$22,207 (US$139,700
and US$16,764 at March 31, 2009), corresponding to related suit and lawyers’
fees, respectively.
|
9.
|
Income
taxes
|
Cosan Ltd. is incorporated in
Bermuda which has no income
taxes. The following relates to Brazilian income taxes of Cosan S.A.
and its subsidiaries.
Cosan S.A. and its
subsidiaries file income tax returns in the Brazilian federal jurisdiction.
These subsidiaries are no longer subject to Brazilian federal income tax
examinations by tax authorities for years before December 31, 2003.
Additionally, Cosan S.A. has not been under a Brazilian Internal Revenue Service
(IRS) income tax examination for 2003 through 2008.
Cosan accounts for
unrecognized tax benefits in accordance with ASC 740, Accounting for Uncertainly
in Income Taxes. A reconciliation of the beginning and ending amount of
unrecognized tax benefits in the estimated liability for legal proceedings,and
labor claims, is as follows:
|
Balance at
March 31, 2009
|
53,995 | |||
|
Accrued
interest on unrecognized tax benefit
|
1,968 | |||
|
Effect of
foreign currency translation
|
16,310 | |||
|
Settlements
|
(36 | ) | ||
|
Balance at
September 30, 2009 (*)
|
72,237 |
(*) Recorded as
taxes
payable (non-current)
It
is possible that the amount of unrecognized tax benefits will change in the next
twelve months, however, an estimate of the range of the possible change cannot
be made at this time due to the long time to reach a settlement agreement or
decision with the taxing authorities.
The Company
recognizes interest accrued related to unrecognized tax benefits in interest
expense and penalties in operating expenses.
25
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
10.
|
Shareholders’
equity
|
|
a.
|
Capital
|
As of September, 2009 and March 31, 2009, Cosan Limited’s share capital consists
of:
|
Shareholder
|
Class A shares
and/or BDRs
|
%
|
Class B
shares
|
%
|
||||||||||||
|
Queluz Holding
Limited
|
11,111,111 | 6.37 | 66,321,766 | 68.85 | ||||||||||||
|
Usina Costa Pinto S.A. Açúcar e
Álcool
|
- | - | 30,010,278 | 31.15 | ||||||||||||
|
Aguassanta Participaçơes
S.A.
|
5,000,000 | 2.87 | - | - | ||||||||||||
|
Gávea Funds
|
33,333,333 | 19.12 | - | - | ||||||||||||
|
Others
|
124,910,897 | 71.64 | - | - | ||||||||||||
|
Total
|
174,355,341 | 100.00 | 96,332,044 | 100.0 | ||||||||||||
On
September 19, 2008, Cosan S.A. undertook a capital subscription of 55,000,000
common shares which was completed on October 20, 2008. Since a number
of the noncontrolling interests did not exercise their subscription rights, the
Company acquired 54,993,482 of the shares for US$456,034, and the minority
shareholders acquired the remaining 6,518 shares for US$50. In
connection with this subscription, the shareholders received one Subscription
Warrant (Warrant) for each new share. Each Warrant grants its holder
the right to subscribe 0.6 common shares, with the distribution of fractional
shares not being permitted. Therefore, the Company received Warrants, which are
valid through December 31, 2009, to purchase 32,996,089 additional common shares
of Cosan S.A.. Since Cosan S.A. is a consolidated subsidiary, the
Warrants recorded by Cosan S.A. have been eliminated in
consolidation.
On
September 14, 2009, the Company sold to third parties 10,000,000 of the Warrants
for US$14,362, which resulted in a gain which is recorded as financial
income. The basis of the Warrants which were sold, amounting to
US$4,594, has been reclassified from additional paid-in capital to
noncontrolling interest.
In
connection with the acquisition of Curupay, Cosan S.A. issued 44,300,389 new
common shares (note 3). Since these shares were issued to noncontrolling
interests, this diluted the Company’s ownership interest which resulted in an
increase in additional paid-in capital of US$9,840.
26
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
11.
|
Deferred gain on sale of
investments in subsidiaries
|
Agrícola Ponte Alta
S.A. is a subsidiary whose principal assets are land used for the growing of
sugarcane for Cosan S.A. On December 15, 2008, the shareholders approved a
partial spin-off of the assets of Ponte Alta and created four new
subsidiaries. Agricultural land was then transferred from Ponte Alta
to each of the entities. On December 30, 2008, two of the entities, Nova
Agrícola Ponte Alta S.A. and Terras da Ponte Alta S.A. were sold to Radar, an
affiliate company accounted for by the equity method. The selling price was fair
value, US$123,596, which resulted in a gain of US$47,080. This gain has
previously been deferred since there were no lease contracts executed for the
land, which was being used by Cosan S.A. for a monthly fee. During
the current period the lease contracts were executed, and the gain is being
amortized to profit and loss over the 19 year average term of the
leases.
During the
six-month period ended September 30, 2009, the Company has amortized a gain of
US$1,505 related to this sale-leaseback transaction.
|
12.
|
Share-based
compensation
|
In
the ordinary and extraordinary general meeting held on August 30, 2005, the
guidelines for the outlining and structuring of a stock option plan for Cosan
S.A. officers and employees were approved, thus authorizing the issue of up to
5% of shares comprising Cosan S.A.’s share capital. This stock option plan was
outlined to attract and retain services rendered by officers and key employees,
offering them the opportunity to become shareholders of Cosan S.A. On September
22, 2005, Cosan S.A.’s board of directors approved the distribution of stock
options corresponding to 4,302,780 common shares to be issued or purchased by
Cosan S.A. related to 3.25% of the share capital at the time, authorized by the
annual/extraordinary meeting. The remaining 1.75% remains to be distributed. On
September 22, 2005, the officers and key employees were informed regarding the
key terms and conditions of the share-based compensation
arrangement.
According to the
fair value at the grant date, the exercise price is US$2.64 (two dollars and
sixty four cents) per share which does not include any discount. The exercise
price was calculated before the valuation mentioned above based on an expected
private equity deal which did not occur. Options may be exercised after a
one-year vesting period starting November 18, 2005, at the maximum percentage of
25% per year of the total stock options offered by Cosan S.A. The options for
each 25% have a five-year period to be exercised.
27
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
12.
|
Share-based compensation
(Continued)
|
On
September 11, 2007, the board of directors approved an additional distribution
of stock options, in connection with the stock option plan mentioned above,
corresponding to 450,000 common shares to be issued or purchased by Cosan S.A.
related to 0.24% of
the share capital at September 22, 2005. The remaining 1.51% may still be
distributed.
On
August 7, 2009, the board of directors approved an additional distribution of
stock options, in connection with the stock option plan mentioned above,
corresponding to 165,657 common shares to be issued or purchased by Cosan S.A.
Such options were issued without a vesting period, therefore the intrinsic value
at grant date was the basis for calculating the fair value of the options, at
US$9,82 per option, and an expense of US$1,071 was fully recorded by the
company.
The exercise of
options may be settled only through issuance of new common shares or treasury
shares.
The employees that
leave Cosan S.A. before the vesting period will forfeit 100% of their rights.
However, if the employment is terminated by Cosan S.A. without cause, the
employees will have the right to exercise 100% of their options of that
particular year plus the right to exercise 50% of the options of the following
year.
The fair value of share-based awards was
estimated using a binominal model with the following
assumptions:
|
Options
granted on September 22, 2005
|
Options
granted on September 11, 2007
|
|||||||
|
Grant price - in U.S.
dollars
|
3.44 | 3.44 | ||||||
|
Expected life (in
years)
|
7.5 | 7.5 | ||||||
|
Interest
rate
|
14.52 | % | 9.34 | % | ||||
|
Volatility
|
34.00 | % | 46.45 | % | ||||
|
Dividend
yield
|
1.25 | % | 1.47 | % | ||||
|
Weighted-average fair value at
grant date - in U.S. dollars
|
6.94 | 10.23 | ||||||
As of September 30, 2009, the amount of
US$1,670 related to the unrecognized compensation cost related to stock options
is expected to be recognized in 12 months. Cosan S.A. currently has
343,139 common shares in treasury.
As
of September 30, 2009 there were 1,411,670 options outstanding with a
weighted-average exercise price of US$3.44.
28
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
13.
|
Fair value
measurements
|
Effective
May 1, 2008, Cosan adopted ASC 820, Fair Value Measurements (SFAS 157), for
all financial instruments and non-financial instruments accounted for at fair
value on a recurring basis. ASC 820 establishes a new framework for measuring
fair value and expands related disclosures. Broadly, the ASC 820framework
requires fair value to be determined based on the exchange price that would be
received for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly
transaction between market participants. ASC 820 establishes market or
observable inputs as the preferred source of values, followed by assumptions
based on hypothetical transactions in the absence of market inputs.
The valuation
techniques required by ASC 820 are based upon observable and unobservable
inputs. Observable inputs reflect market data obtained from independent sources,
while unobservable inputs reflect market assumptions. These two types of inputs
create the following fair value hierarchy:
Level 1 - Quoted prices for identical instruments
in active markets.
Level 2 - Quoted prices for similar instruments in
active markets; quoted prices for identical or similar instruments in markets
that are not active; and model-derived valuations whose inputs are observable or
whose significant value drivers are observable.
Level 3 -
Significant inputs to the valuation model are unobservable.
The following
section describes the valuation methodologies Cosan uses to measure different
financial instruments at fair value.
Marketable
securities
When quoted market
prices are unobservable, we use other relevant information including market
interest rate curves. These investments are included in Level 2 and primarily
comprise fixed-income securities,
which are debt securities issued by highly rated financial institutions indexed
in reais with Inter Deposit Rates (CDI).
29
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
13.
|
Fair value
measurements (Continued)
|
Derivatives
Cosan uses closing prices for
derivatives included in Level 1, which are traded either on exchanges or liquid
over-the-counter markets.
The remainder of the derivatives
portfolio is valued using internal models, most of which are primarily based on
market observable inputs including interest rate curves and both forward and
spot prices for currencies and commodities. Derivative assets and liabilities
included in Level 2 primarily represent interest rate swaps, foreign currency
swaps and commodity forward contracts.
The following table presents our assets
and liabilities measured at fair value on a recurring basis at September 30,
2009.
|
Level 1
|
Level 2
|
Total
|
||||||||||
|
Assets
|
||||||||||||
|
Derivatives
|
9,351 | 45,442 | 54,793 | |||||||||
|
Total
|
9,351 | 45,442 | 54,793 | |||||||||
|
Liabilities
|
||||||||||||
|
Derivatives
|
82,161 | 38,982 | 121,143 | |||||||||
|
Total
|
82,161 | 38,982 | 121,143 | |||||||||
|
14.
|
Segment
information
|
a. Segment information
The following
information about segments is based upon information used by Cosan’s senior
management to assess the performance of operating segments and decide on the
allocation of resources. Cosan’s reportable segments are business units in
Brazil that target different industry segments. Each reportable segment is
managed separately because of the need to specifically address customer needs in
these different industries. Cosan has four segments: sugar, ethanol, fuel
distribution and others group. The operations of these segments are based solely
in Brazil.
30
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
14.
|
Segment
information
(Continued)
|
a. Segment
information (Continued)
The sugar segment
mainly operates and produces a broad variety of sugar products, including raw
(also known as very high polarization - VHP sugar), organic, crystal and refined
sugars, and sells these products to a wide range of customers in Brazil and
abroad. Cosan exports the majority of the sugar produced through international
commodity trading companies. Cosan’s domestic customers include wholesale
distributors, food manufacturers and retail supermarkets, through which it sells
its “Da Barra” and “União” branded products.
The ethanol segment
substantially produces and sells fuel ethanol, both hydrous and anhydrous (which
has a lower water content than hydrous ethanol) and industrial ethanol. Cosan’s
principal ethanol product is fuel ethanol, which is used both as an automotive
fuel and as an additive in gasoline, and is mainly sold in the domestic market
by fuel distribution companies. Consumption of hydrous ethanol in Brazil is
increasing as a result of the introduction of flex fuel vehicles that can run on
either gasoline or ethanol (or a combination of both) to the Brazilian market in
2003. In addition, Cosan sells liquid and gel ethanol products used mainly in
the production of paint and cosmetics and alcoholic beverages for industrial
clients in various sectors.
With the acquisition of Cosan CL a new
fuel distribution segment has been created. The fuel distribution segment is
engaged in the distribution in Brazil of oil products, ethanol and lubricants
as well as the operation of convenience stores. The network to which the fuel
distribution segment distributes such products is comprised of more than 1,500
service stations.
The accounting
policies underlying the financial information provided for the segments are
based on Brazilian GAAP. We
evaluate segment performance based on information generated from the statutory
accounting records.
Others segment is
comprised by selling cogeneration of electricity, diesel and corporate
activities.
No
asset information is provided by reportable segment due to the fact that the
majority of the assets used in production of sugar and ethanol are the
same.
31
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
14.
|
Segment
information
(Continued)
|
a. Segment
information (Continued)
Measurement of segment profit or loss
and segment assets
Cosan S.A.
evaluates performance and allocates resources based on return on capital and
profitable growth. The primary measurement used by management to measure the
financial performance of Cosan S.A. is adjusted EBIT (earnings before interest
and taxes excluding special items such as impairment and restructuring,
integration costs, one-time gains or losses on sales of assets, acquisition, and
other items similar in nature). The accounting policies of the reportable
segments are the same as those described in the summary of significant
accounting policies.
|
September
30,
2009
|
October
31, 2008
|
|||||||
|
Net sales —
Brazilian GAAP
|
||||||||
|
Sugar
|
729,096 | 437,141 | ||||||
|
Ethanol
|
408,267 | 272,337 | ||||||
|
Fuel
distribution
|
2,375,822 | - | ||||||
|
Others
|
120,180 | 67,725 | ||||||
|
Total
|
3,633,365 | 777,203 | ||||||
|
Reconciling
items to U.S. GAAP
|
||||||||
|
Sugar
|
2,950 | 631 | ||||||
|
Fuel
distribution
|
(391 | ) | - | |||||
|
Total
|
2,559 | 631 | ||||||
|
Total net
sales
|
3,635,924 | 777,834 | ||||||
32
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
14.
|
Segment
information
(Continued)
|
a. Segment
information (Continued)
Measurement
of segment profit or loss and segment assets (Continued)
|
September
30,
2009
|
October
31, 2008
|
|||||||
|
Segment
operating income (loss) - Brazilian GAAP
|
||||||||
|
Sugar
|
14,052 | (74,304 | ) | |||||
|
Ethanol
|
8,821 | (46,291 | ) | |||||
|
Fuel
distribution
|
78,187 | - | ||||||
|
Others
|
2,535 | (11,512 | ) | |||||
|
Operating
income (loss) — Brazilian GAAP
|
103,595 | (132,107 | ) | |||||
|
Reconciling
items to U.S. GAAP
|
||||||||
|
Depreciation
and amortization expenses
|
||||||||
|
Sugar
|
(4,769 | ) | 4,443 | |||||
|
Ethanol
|
(2,994 | ) | 2,768 | |||||
|
Fuel
distribution
|
(1,950 | ) | - | |||||
|
Others
|
(861 | ) | 688 | |||||
| (10,574 | ) | 7,899 | ||||||
|
Other
adjustments
|
||||||||
|
Sugar
|
(5,655 | ) | 5,725 | |||||
|
Ethanol
|
(3,550 | ) | 3,142 | |||||
|
Fuel
distribution
|
48,319 | - | ||||||
|
Others
|
(1,019 | ) | 782 | |||||
| 38,095 | 9,649 | |||||||
|
Total
sugar
|
3,628 | (64,136 | ) | |||||
|
Total
ethanol
|
2,277 | (40,381 | ) | |||||
|
Fuel
distribution
|
124,556 | - | ||||||
|
Total
others
|
655 | (10,042 | ) | |||||
|
Operating
income (loss) — U.S. GAAP
|
131,116 | (114,559 | ) | |||||
33
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
14.
|
Segment
information
(Continued)
|
b. Sales by principal
customers
Sugar
The following table
sets forth the amount of sugar that we sold to our principal customers during
the six-month period ended September 30, 2009 and October 31, 2008 as a
percentage of either domestic or international sales of sugar:
|
Market
|
Customer
|
September 30,
2009
|
October 31,
2008
|
||||||
|
International
|
Sucres et
Denrées
|
27%
|
11%
|
||||||
|
Ceval
Internacional Limited
|
13%
|
-
|
|||||||
|
Cargill
Incorporation Ltd.
|
9%
|
-
|
|||||||
|
Cargill
International S.A.
|
7%
|
-
|
|||||||
|
Coimex
Trading Ltd
|
6%
|
4%
|
|||||||
|
Ableman
Trading Limited
|
4%
|
4%
|
|||||||
|
Fluxo – Cane
Overseas Ltd
|
3%
|
35%
|
|||||||
|
Tate &
Lyle International
|
2%
|
7%
|
|||||||
Ethanol
The following table sets forth the
amount of ethanol that we sold to our principal customers during the six-month
period ended September 30, 2009 and October 31, 2008 as a percentage of either
domestic or international sales of ethanol:
|
Market
|
Customer
|
September 30,
2009
|
October 31,
2008
|
|||
|
International
|
Vertical UK
LLP
|
10%
|
19%
|
|||
|
Kolmar
Petrochemicals
|
7%
|
-
|
||||
|
Morgan
Stanley Capital Group Inc.
|
6%
|
6%
|
||||
|
Alcotra
S.A.
|
3%
|
2%
|
||||
|
Sekab
Biofuels & Chemicals
|
2%
|
7%
|
||||
|
Vitol
Inc.
|
-
|
4%
|
||||
|
Bauche Energy
Br Com Imp Exp Ltda.
|
-
|
3%
|
||||
|
Domestic
|
Shell Brasil
Ltda.
|
17%
|
17%
|
|||
|
Petrobrás
Distribuidora S.A.
|
12%
|
6%
|
||||
|
Cia
Brasileira de Petróleo Ipiranga
|
10%
|
-
|
||||
|
Euro Petróleo
do Brasil Ltda.
|
8%
|
12%
|
||||
|
Alesat
Combustíveis S.A.
|
4%
|
2%
|
||||
|
Chevron
Brasil Ltda.
|
1%
|
4%
|
The following table sets forth the
amount of fuel distribution that we sold to our principal customers during the
six-month period ended September 30, 2009 as a percentage of either domestic or
international sales of fuel distribution:
34
COSAN
LIMITED
Notes to the condensed
consolidated financial statements (Continued)
(In thousands of U.S. dollars, unless
otherwise stated)
|
14.
|
Segment
information
(Continued)
|
b. Sales
by principal customers
(Continued)
Fuel distribution
|
Market
|
Customer
|
September 30,
2009
|
October 31,
2008
|
|||||||
|
Domestic
|
Mime
Distribuidora de Petróleo Ltda.
|
2%
|
-
|
|||||||
|
Tam Linhas
Aéreas S.A.
|
1%
|
-
|
||||||||
|
All – América
Latina Logística Malha Sul S.A.
|
1%
|
-
|
||||||||
|
Auto Posto
Túlio Ltda.
|
1%
|
-
|
||||||||
|
Posto Iccar
Ltda.
|
1%
|
-
|
||||||||
|
15.
|
Subsequent
events
|
Capital increase at Cosan
S.A.
On
October 5, 2009, the Board of Directors of Cosan S.A. approved a capital
increase of US$586 through issuance of 169,500 new common shares, with no par
value, in connection with the “Company’s Stock Option Plan” and with the
exercise of such options by the eligible executives, at the issuance price of
US$3.46 per share, set on the terms of the stock option plan.
On
October 29, 2009, the Board of Directors of Cosan S.A. approved a capital
increase of US$217,976 through issuance of 23,753,953 new common shares, with no
par value, at issue price of US$9.17, due to exercise of 39,589,922 subscription
warrants by Cosan Limited.
PPE - Export Prepayment
Finance
On October 28,
2009, the Company, through its subsidiary Cosan Alimentos, entered into a
financing, denominated PPE – Export Prepayment Finance, in the amount of
US$230,000, with final maturity in September, 2014. This PPE bears interest at a
rate of 9.0% per annum.
35
Unconsolidated
and Consolidated Quarterly Financial Information
Cosan S.A. Indústria e
Comércio
September 30,
2009
COSAN
S.A. INDÚSTRIA E COMÉRCIO
UNCONSOLIDATED AND
CONSOLIDATED QUARTERLY FINANCIAL INFORMATION
September 30,
2009
Contents
|
Special
review report of independent auditors
|
1
|
|
Unaudited
quarterly financial information
|
|
|
Unaudited
balance sheets
|
3
|
|
Unaudited
statements of operations
|
5
|
|
Unaudited
statements of cash flows
|
7
|
|
Unaudited
statement of changes in shareholders’ equity
|
11
|
|
Notes to the
unaudited quarterly financial information
|
12
|
A
free translation from Portuguese into English of Special Review Report of
Independent Auditors on Quarterly Financial Information prepared in Brazilian
currency in accordance with the accounting practices adopted in
Brazil
Special
review report of independent auditors
The Board of
Directors and Shareholders of
Cosan
S.A. Indústria e Comércio
|
1.
|
We have
performed a special review of the accompanying Quarterly Financial
Information of Cosan S.A. Indústria e Comércio (parent company and
consolidated) for the quarter and six-month period ended September 30,
2009, including the balance sheets, statements of operations and cash
flows, report on the Company’s performance and explanatory notes, prepared
under the management’s
responsibility.
|
|
2.
|
Our review
was conducted in accordance with the specific procedures determined by the
Brazilian Institute of Independent Auditors (IBRACON) and the Federal
Board of Accountancy (CFC), which comprised principally: (a) inquiries of
and discussions with the management responsible for the Company’s
accounting, financial and operational areas about the criteria adopted for
the preparation of the Quarterly Financial Information; and (b) review of
information and subsequent events which have, or could have, significant
effects on the Company’s operations and financial
position.
|
|
3.
|
Based on our
special review, we are not aware of any material modification that should
be made to the Quarterly Financial Information referred to above for it to
comply with specific standards established by the Brazilian Securities and
Exchange Commission (CVM) applicable to the preparation of the Quarterly
Financial Information.
|
1
|
4.
|
As mentioned
in Note 2, the accounting practices adopted in Brazil were modified during
2008 and the effects of its first time adoption were only recorded by the
Company and its subsidiaries during the fourth quarter of the previous
year and disclosed in the March 31, 2009 financial statements. The
statements of operations and cash flows, for the quarter and six-month
period ended October 31, 2009, presented in conjunction with the
information for the current quarter, were not adjusted for comparative
purposes, as permitted by Ofício-Circular/CVM/SNC/SEP nº
02/2009.
|
São Paulo, November
12, 2009
ERNST &
YOUNG
Auditores
Independentes S.S.
CRC
2SP015199/O-6
Luiz Carlos
Nannini
Accountant CRC
1SP171638/O-7
2
A
free translation from Portuguese into English of financial statements prepared
in Brazilian currency in accordance with accounting practices adopted in Brazil
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Unaudited Balance
sheets
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
Parent
Company
|
Consolidated
|
||||||||||||||||
|
September
30, 2009
|
June
30,
2009
|
September
30, 2009
|
June
30,
2009
|
||||||||||||||
|
Assets
|
|||||||||||||||||
|
Current
assets
|
|||||||||||||||||
|
Cash and cash
equivalents
|
Note 4
|
177,599 | 307,907 | 948,647 | 932,920 | ||||||||||||
|
Restricted
cash
|
145,837 | 35,804 | 149,533 | 40,086 | |||||||||||||
|
Trade
accounts receivable
|
Note 5
|
78,995 | 120,515 | 589,668 | 585,636 | ||||||||||||
|
Derivative
financial instruments
|
Note
19
|
97,427 | 86,591 | 97,427 | 86,591 | ||||||||||||
|
Inventories
|
Note 6
|
453,717 | 314,292 | 1,531,522 | 1,149,923 | ||||||||||||
|
Advances to
suppliers
|
102,204 | 95,164 | 336,748 | 386,088 | |||||||||||||
|
Related
parties
|
Note 7
|
637,178 | 371,713 | 21,613 | 36,121 | ||||||||||||
|
Deferred
income and social contribution taxes
|
Note
12.b
|
- | - | 48,108 | 53,502 | ||||||||||||
|
Recoverable
taxes
|
117,075 | 98,155 | 342,894 | 299,046 | |||||||||||||
|
Other
assets
|
7,775 | 6,874 | 41,691 | 32,674 | |||||||||||||
| 1,817,807 | 1,437,015 | 4,107,851 | 3,602,587 | ||||||||||||||
|
Noncurrent
assets
|
|||||||||||||||||
|
Long-term
receivables
|
|||||||||||||||||
|
Accounts
receivable from federal government
|
Note
14
|
- | - | 329,049 | 326,439 | ||||||||||||
|
CTNs-Restricted
Brazilian Treasury Bills
|
Note
13
|
28,755 | 28,050 | 189,342 | 184,698 | ||||||||||||
|
Deferred
income and social contribution taxes
|
Note
12.b
|
98,360 | 123,391 | 551,487 | 644,591 | ||||||||||||
|
Advances to
suppliers
|
18,214 | 6,175 | 85,130 | 55,477 | |||||||||||||
|
Related
parties
|
Note
7
|
- | - | 151,821 | 153,167 | ||||||||||||
|
Other
assets
|
4,972 | 5,660 | 190,150 | 185,385 | |||||||||||||
|
Permanent
assets
|
|||||||||||||||||
|
Investments
|
Note 8
|
5,377,928 | 5,216,142 | 196,497 | 181,291 | ||||||||||||
|
Property,
plant and equipment
|
Note 9
|
761,425 | 796,814 | 4,671,373 | 4,516,362 | ||||||||||||
|
Intangible
|
Note
10
|
395,637 | 395,637 | 2,737,464 | 2,724,336 | ||||||||||||
| 6,534,990 | 6,571,869 | 9,102,313 | 8,971,746 | ||||||||||||||
|
Total
assets
|
8,503,098 | 8,008,884 | 13,210,164 | 12,574,333 | |||||||||||||
3
|
Parent
Company
|
Consolidated
|
||||||||||||||||
|
September
30, 2009
|
June
30,
2009
|
September
30, 2009
|
June
30,
2009
|
||||||||||||||
|
Liabilities
and shareholders’ equity
|
|||||||||||||||||
|
Current
liabilities
|
|||||||||||||||||
|
Loans and
financing
|
Note
13
|
444,697 | 504,744 | 1,184,658 | 1,127,356 | ||||||||||||
|
Derivative
financial instruments
|
215,142 | 97,977 | 215,405 | 98,855 | |||||||||||||
|
Trade
accounts payable
|
172,149 | 131,945 | 712,502 | 662,751 | |||||||||||||
|
Salaries
payable
|
61,413 | 52,609 | 180,904 | 152,303 | |||||||||||||
|
Taxes and
social contributions payable
|
Note
11
|
44,832 | 41,276 | 230,925 | 189,792 | ||||||||||||
|
Related
parties
|
Note 7
|
124,286 | 112,602 | 3,838 | 4,475 | ||||||||||||
|
Other
liabilities
|
25,215 | 28,504 | 100,728 | 134,142 | |||||||||||||
|
Total current
liabilities
|
1,087,734 | 969,657 | 2,628,960 | 2,369,674 | |||||||||||||
|
Noncurrent
liabilities
|
|||||||||||||||||
|
Loans and
financing
|
Note
13
|
1,903,754 | 1,947,733 | 4,667,395 | 4,091,447 | ||||||||||||
|
Taxes and
social contributions payable
|
Note
11
|
48,478 | 54,016 | 288,850 | 335,510 | ||||||||||||
|
Related
parties
|
Note 7
|
966,397 | 719,151 | - | 341,530 | ||||||||||||
|
Provision for
judicial demands
|
Note
14
|
239,778 | 239,900 | 1,143,377 | 1,135,460 | ||||||||||||
|
Actuarial
liability
|
- | - | 62,287 | 60,971 | |||||||||||||
|
Other
liabilities
|
36,485 | 37,760 | 168,394 | 169,224 | |||||||||||||
|
Total
noncurrent liabilities
|
3,194,892 | 2,998,560 | 6,330,303 | 6,134,142 | |||||||||||||
|
Minority
shareholders’ interest
|
- | - | 30,429 | 29,850 | |||||||||||||
|
Shareholders’
equity
|
Note
15
|
||||||||||||||||
|
Capital
|
4,155,316 | 4,153,942 | 4,155,316 | 4,153,942 | |||||||||||||
|
Treasury
stock
|
(4,186 | ) | (4,186 | ) | (4,186 | ) | (4,186 | ) | |||||||||
|
Recognized
granted shares
|
54,384 | 49,320 | 54,384 | 49,320 | |||||||||||||
|
Accumulated
losses
|
14,958 | (158,409 | ) | 14,958 | (158,409 | ) | |||||||||||
|
Total
shareholders’ equity
|
4,220,472 | 4,040,667 | 4,220,472 | 4,040,667 | |||||||||||||
|
Total
liabilities and shareholders’ equity
|
8,503,098 | 8,008,884 | 13,210,164 | 12,574,333 | |||||||||||||
See accompanying
notes.
4
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Unaudited
statements of operations
Quarters ended
September 30, 2009 and October 31, 2008
(In thousands of
reais, except for the earnings (loss) per share)
|
Parent
Company
|
Consolidated
|
||||||||||||||||
|
September
30, 2009
|
October
31, 2008
|
September
30, 2009
|
October
31, 2008
|
||||||||||||||
|
Gross
operating revenue
|
|||||||||||||||||
|
Sales of
goods and services
|
560,989 | 385,614 | 3,907,236 | 760,101 | |||||||||||||
|
Taxes and
sales deductions
|
(21,482 | ) | (18,488 | ) | (331,900 | ) | (45,025 | ) | |||||||||
|
Net operating
revenue
|
539,507 | 367,126 | 3,575,336 | 715,076 | |||||||||||||
|
Cost of goods
sold and services rendered
|
(443,386 | ) | (317,626 | ) | (3,051,504 | ) | (547,135 | ) | |||||||||
|
Gross
profit
|
96,121 | 49,500 | 523,832 | 167,941 | |||||||||||||
|
Operating
income (expenses)
|
|||||||||||||||||
|
Selling
expenses
|
(32,919 | ) | (29,242 | ) | (211,317 | ) | (88,606 | ) | |||||||||
|
General and
administrative expenses
|
(59,739 | ) | (42,012 | ) | (113,776 | ) | (65,118 | ) | |||||||||
|
Management
fees
|
Note
17
|
(2,414 | ) | (1,397 | ) | (2,414 | ) | (1,397 | ) | ||||||||
|
Financial
income (expenses), net
|
Note
18
|
43,629 | (515,208 | ) | 78,889 | (540,768 | ) | ||||||||||
|
Earnings
(losses) on equity investments
|
Note 9
|
150,551 | (19,664 | ) | 29 | 1,234 | |||||||||||
|
Goodwill
amortization
|
- | (16,488 | ) | - | (40,405 | ) | |||||||||||
|
Other
operating income (expenses), net
|
3,169 | 1,169 | 2,520 | (30,022 | ) | ||||||||||||
| 102,277 | (622,842 | ) | (246,069 | ) | (765,082 | ) | |||||||||||
|
Income (loss)
before income and social contribution taxes
|
198,398 | (573,342 | ) | 277,763 | (597,141 | ) | |||||||||||
|
Income and
social contribution taxes
|
Note
13
|
(25,031 | ) | 192,671 | (103,817 | ) | 209,960 | ||||||||||
|
Minority
shareholders’ interest
|
- | - | (579 | ) | 6,510 | ||||||||||||
|
Net income
(loss) for the period
|
173,367 | (380,671 | ) | 173,367 | (380,671 | ) | |||||||||||
|
Earnings
(loss) per share – in Reais
|
0.47 | (1.16 | ) | ||||||||||||||
See accompanying
notes.
5
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Unaudited
statements of operations
Six-month periods
ended September 30, 2009 and October 31, 2008
(In thousands of
reais, except for the earnings (loss) per share)
|
Parent
Company
|
Consolidated
|
||||||||||||||||
|
September
30, 2009
|
October
31, 2008
|
September
30, 2009
|
October
31, 2008
|
||||||||||||||
|
Gross
operating revenue
|
|||||||||||||||||
|
Sales of
goods and services
|
1,226,985 | 745,378 | 7,750,741 | 1,452,770 | |||||||||||||
|
Taxes and
sales deductions
|
(58,210 | ) | (43,107 | ) | (609,302 | ) | (98,104 | ) | |||||||||
|
Net operating
revenue
|
1,168,775 | 702,271 | 7,141,439 | 1,354,666 | |||||||||||||
|
Cost of goods
sold and services rendered
|
(986,056 | ) | (648,818 | ) | (6,249,922 | ) | (1,173,162 | ) | |||||||||
|
Gross
profit
|
182,719 | 53,453 | 891,517 | 181,504 | |||||||||||||
|
Operating
income (expenses)
|
|||||||||||||||||
|
Selling
expenses
|
(80,387 | ) | (64,397 | ) | (420,887 | ) | (174,314 | ) | |||||||||
|
General and
administrative expenses
|
(102,886 | ) | (77,219 | ) | (201,750 | ) | (123,394 | ) | |||||||||
|
Management
fees
|
Note
17
|
(3,725 | ) | (2,849 | ) | (3,725 | ) | (2,849 | ) | ||||||||
|
Financial
income (expenses), net
|
Note
18
|
386,938 | (377,938 | ) | 512,322 | (453,831 | ) | ||||||||||
|
Earnings
(losses) on equity investments
|
Note 9
|
259,543 | (109,546 | ) | (3,525 | ) | 1,394 | ||||||||||
|
Goodwill
amortization
|
- | (32,977 | ) | - | (80,790 | ) | |||||||||||
|
Realization
of goodwill on sale
|
- | - | (85,589 | ) | - | ||||||||||||
|
Other
operating income (expenses), net
|
6,784 | 1,718 | 75,004 | (26,158 | ) | ||||||||||||
| 466,267 | (663,208 | ) | (128,150 | ) | (859,942 | ) | |||||||||||
|
Income (loss)
before income and social contribution taxes
|
648,986 | (609,755 | ) | 763,367 | (678,438 | ) | |||||||||||
|
Income and
social contribution taxes
|
Note
13
|
(138,350 | ) | 170,941 | (261,716 | ) | 232,364 | ||||||||||
|
Minority
shareholders’ interest
|
- | - | 8,985 | 7,260 | |||||||||||||
|
Net income
(loss) for the period
|
510,636 | (438,814 | ) | 510,636 | (438,814 | ) | |||||||||||
|
Earnings
(loss) per share – in Reais
|
1.37 | (1.34 | ) | ||||||||||||||
See accompanying
notes.
6
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Unaudited
statements of cash flows – indirect method
Quarters ended
September 30, 2009 and October 31, 2008
(In thousands of
reais)
|
Parent
Company
|
Consolidated
|
|||||||||||||||
|
September
30, 2009
|
October
31, 2008
|
September
30, 2009
|
October
31, 2008
|
|||||||||||||
|
Cash flows
from operating activities
|
||||||||||||||||
|
Net income
(loss) for the period
|
173,367 | (380,671 | ) | 173,367 | (380,671 | ) | ||||||||||
|
Adjustments
to reconcile net income (loss) for the period to cash provided by (used
in) operating activities
|
||||||||||||||||
|
Losses
(earnings) on equity investments
|
(150,551 | ) | 19,664 | (29 | ) | (1,234 | ) | |||||||||
|
Depreciation
and amortization
|
54,259 | 69,123 | 156,805 | 176,818 | ||||||||||||
|
Net book
value of permanent assets disposed of
|
124 | 77 | 831 | 2,742 | ||||||||||||
|
Goodwill
amortization
|
- | 16,488 | - | 40,405 | ||||||||||||
|
Deferred
income and social contribution taxes
|
25,031 | (170,296 | ) | 75,925 | (187,775 | ) | ||||||||||
|
Set-up
(reversal) of provision for legal claims, net
|
(2,089 | ) | 3,372 | 492 | 15,230 | |||||||||||
|
Minority
interest
|
- | - | 579 | (6,510 | ) | |||||||||||
|
Recognition
of options granted
|
5,064 | - | 5,064 | - | ||||||||||||
|
Interest,
monetary and exchange variation, net
|
(87,392 | ) | 526,827 | (83,988 | ) | 571,968 | ||||||||||
|
Others
|
(5,535 | ) | (3,342 | ) | (8,081 | ) | (2,811 | ) | ||||||||
|
Variation in
assets and liabilities
|
||||||||||||||||
|
Trade
accounts receivables
|
28,011 | (55,589 | ) | (24,861 | ) | (82,346 | ) | |||||||||
|
Inventories
|
(123,807 | ) | (255,554 | ) | (328,087 | ) | (533,497 | ) | ||||||||
|
Recoverable
taxes
|
(18,920 | ) | (30,827 | ) | (43,389 | ) | (39,337 | ) | ||||||||
|
Advances to
suppliers
|
(19,079 | ) | (14,941 | ) | 19,687 | (40,090 | ) | |||||||||
|
Trade
accounts payables
|
40,204 | 59,636 | 49,751 | 160,440 | ||||||||||||
|
Salaries
payable
|
8,804 | 10,382 | 28,601 | 23,998 | ||||||||||||
|
Taxes and
social contributions payables
|
2,690 | (9,140 | ) | 3,511 | (14,864 | ) | ||||||||||
|
Derivative
financial instruments and restricted cash
|
(3,704 | ) | 171,864 | (3,733 | ) | 171,864 | ||||||||||
|
Other assets
and liabilities, net
|
(1,698 | ) | 8,150 | (13,779 | ) | (33,551 | ) | |||||||||
|
Net cash
provided by (used in) operating activities
|
(75,221 | ) | (34,777 | ) | 8,666 | (159,221 | ) | |||||||||
|
Cash flows
from investments activities
|
||||||||||||||||
|
Application
in investments, net of cash received
|
(15,344 | ) | (821,824 | ) | (16,037 | ) | (3,754 | ) | ||||||||
|
Cash received
on sale of investment
|
23 | 103 | 1,450 | 106 | ||||||||||||
|
Application
in property, plant and equipment
|
(30,312 | ) | (43,994 | ) | (359,095 | ) | (320,151 | ) | ||||||||
|
Others
|
- | - | (13,128 | ) | (660 | ) | ||||||||||
|
Net cash used
in investments activities
|
(45,633 | ) | (865,715 | ) | (386,810 | ) | (324,459 | ) | ||||||||
7
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Unaudited
statements of cash flows – indirect method (Continued)
Quarters ended
September 30, 2009 and October 31, 2008
(In thousands of
reais)
|
Parent
Company
|
Consolidated
|
|||||||||||||||
|
September
30, 2009
|
October
31, 2008
|
September
30, 2009
|
October
31, 2008
|
|||||||||||||
|
Cash flows
from financial activities
|
||||||||||||||||
|
Capital
increase
|
1,374 | 880,000 | 1,374 | 880,000 | ||||||||||||
|
Capital
increase in subsidiaries by minority shareholders
|
- | - | - | 247,675 | ||||||||||||
|
Purchase of
treasury stocks
|
- | (4,186 | ) | - | (4,186 | ) | ||||||||||
|
Loans and
financing
|
49,555 | 123,275 | 1,045,760 | 315,808 | ||||||||||||
|
Amortization
of principal and interest on loans and financing
|
(119,489 | ) | (21,435 | ) | (317,836 | ) | (26,723 | ) | ||||||||
|
Related
parties
|
59,106 | (272,023 | ) | (335,427 | ) | - | ||||||||||
|
Net cash
provide by (used in) financing activities
|
(9,454 | ) | 705,631 | 393,871 | 1,412,574 | |||||||||||
|
Net cash
increase (decrease) in cash and cash equivalents
|
(130,308 | ) | (194,861 | ) | 15,727 | 928,894 | ||||||||||
|
Cash and cash
equivalents at the beginning of the period
|
307,907 | 514,077 | 932,920 | 633,627 | ||||||||||||
|
Cash and cash
equivalents at the end of the period
|
177,599 | 319,216 | 948,647 | 1,562,821 | ||||||||||||
See accompanying
notes.
8
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Unaudited
statements of cash flows – indirect method
Six-month periods
ended September 30, 2009 and October 31, 2008
(In thousands of
reais)
|
Parent
Company
|
Consolidated
|
|||||||||||||||
|
September
30, 2009
|
October
31, 2008
|
September
30, 2009
|
October
31, 2008
|
|||||||||||||
|
Cash flows
from operating activities
|
||||||||||||||||
|
Net income
(loss) for the period
|
510,636 | (438,814 | ) | 510,636 | (438,814 | ) | ||||||||||
|
Adjustments
to reconcile net income (loss) for the period to cash provided by (used
in) operating activities
|
||||||||||||||||
|
Losses
(earnings) on equity investments
|
(259,543 | ) | 109,546 | 3,525 | (1,394 | ) | ||||||||||
|
Depreciation
and amortization
|
116,816 | 135,586 | 326,722 | 334,044 | ||||||||||||
|
Net book
value of permanent assets disposed of
|
(127 | ) | 1,185 | (102,337 | ) | 4,677 | ||||||||||
|
Goodwill
amortization
|
- | 32,977 | - | 80,790 | ||||||||||||
|
Realization
of goodwill on sale
|
- | - | 85,589 | - | ||||||||||||
|
Deferred
income and social contribution taxes
|
138,350 | (162,244 | ) | 210,512 | (223,856 | ) | ||||||||||
|
Set-up
(reversal) of provision for legal claims, net
|
(1,497 | ) | 5,484 | 3,382 | 25,859 | |||||||||||
|
Minority
interest
|
- | - | (8,985 | ) | (7,260 | ) | ||||||||||
|
Recognition
of options granted
|
8,543 | - | 8,543 | - | ||||||||||||
|
Interest,
monetary and exchange variation, net
|
(331,001 | ) | 451,822 | (371,797 | ) | 545,746 | ||||||||||
|
Others
|
(10,637 | ) | (7,925 | ) | (1,499 | ) | (8,833 | ) | ||||||||
|
Variation in
assets and liabilities
|
||||||||||||||||
|
Trade
accounts receivables
|
4,970 | (59,076 | ) | 85,484 | 8,133 | |||||||||||
|
Inventories
|
(86,471 | ) | (381,443 | ) | (160,374 | ) | (860,813 | ) | ||||||||
|
Recoverable
taxes
|
(27,312 | ) | (18,085 | ) | (32,995 | ) | (30,880 | ) | ||||||||
|
Advances to
suppliers
|
(42,098 | ) | (34,988 | ) | (56,043 | ) | (77,126 | ) | ||||||||
|
Trade
accounts payables
|
79,275 | 136,969 | 96,717 | 301,017 | ||||||||||||
|
Salaries
payable
|
31,700 | 27,683 | 69,955 | 62,262 | ||||||||||||
|
Taxes and
social contributions payables
|
5,942 | (14,432 | ) | (53,612 | ) | (27,927 | ) | |||||||||
|
Derivative
financial instruments and restricted cash
|
(66,238 | ) | 141,229 | (63,768 | ) | 141,229 | ||||||||||
|
Other assets
and liabilities, net
|
(5,938 | ) | 2,438 | (6,768 | ) | (32,728 | ) | |||||||||
|
Net cash
provided by (used in) operating activities
|
65,370 | (72,088 | ) | 542,887 | (205,874 | ) | ||||||||||
|
Cash flows
from investments activities
|
||||||||||||||||
|
Application
in investments, net of cash received
|
(19,244 | ) | (867,229 | ) | 42,502 | (7,507 | ) | |||||||||
|
Cash received
on sale of investment
|
309 | 324 | 119,181 | 971 | ||||||||||||
|
Application
in property, plant and equipment
|
(85,450 | ) | (94,262 | ) | (779,713 | ) | (584,974 | ) | ||||||||
|
Others
|
- | - | (13,128 | ) | 2,344 | |||||||||||
|
Net cash used
in investments activities
|
(104,385 | ) | (961,167 | ) | (631,158 | ) | (589,166 | ) | ||||||||
9
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Unaudited
statements of cash flows – indirect method (Continued)
Six-month periods
ended September 30, 2009 and October 31, 2008
(In thousands of
reais)
|
Parent
Company
|
Consolidated
|
|||||||||||||||
|
September
30, 2009
|
October
31, 2008
|
September
30, 2009
|
October
31, 2008
|
|||||||||||||
|
Cash flows
from financial activities
|
||||||||||||||||
|
Capital
increase
|
1,374 | 880,000 | 1,374 | 880,000 | ||||||||||||
|
Capital
increase in subsidiaries by minority shareholders
|
- | - | - | 247,675 | ||||||||||||
|
Purchase of
treasury stocks
|
- | (4,186 | ) | - | (4,186 | ) | ||||||||||
|
Loans and
financing
|
52,239 | 123,826 | 1,218,659 | 318,776 | ||||||||||||
|
Amortization
of principal and interest on loans and financing
|
(180,906 | ) | (61,185 | ) | (445,685 | ) | (94,492 | ) | ||||||||
|
Related
parties
|
(44,819 | ) | (511,141 | ) | (456,786 | ) | - | |||||||||
|
Net cash
provided by (used in) financing activities
|
(172,112 | ) | 427,314 | 317,562 | 1,347,773 | |||||||||||
|
Net cash
increase (decrease) in cash and cash equivalents
|
(211,127 | ) | (605,941 | ) | 229,291 | 552,733 | ||||||||||
|
Cash and cash
equivalents at the beginning of the period
|
388,726 | 925,157 | 719,356 | 1,010,088 | ||||||||||||
|
Cash and cash
equivalents at the end of the period
|
177,599 | 319,216 | 948,647 | 1,562,821 | ||||||||||||
See accompanying
notes.
10
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Unaudited statement
of changes in shareholders’ equity
Quarter and
Six-month period ended September 30, 2009
(In thousands of
reais)
|
Capital
|
Treasury
shares
|
Recognized
granted shares
|
Accumulated
losses
|
Total
|
||||||||||||||||
|
Balances as
of June 30, 2009
|
4,153,942 | (4,186 | ) | 49,320 | (158,409 | ) | 4,040,667 | |||||||||||||
|
Capital
increase
|
1,374 | - | - | - | 1,374 | |||||||||||||||
|
Recognized
granted shares
|
- | - | 5,064 | - | 5,064 | |||||||||||||||
|
Net income
for the period
|
- | - | - | 173,367 | 173,367 | |||||||||||||||
|
Balances as
of September 30, 2009
|
4,155,316 | (4,186 | ) | 54,384 | 14,958 | 4,220,472 | ||||||||||||||
|
Capital
|
Treasury
shares
|
Recognized
granted shares
|
Accumulated
losses
|
Total
|
||||||||||||||||
|
Balances as
of March 31, 2009
|
3,819,770 | (4,186 | ) | 45,841 | (495,678 | ) | 3,365,747 | |||||||||||||
|
Capital
increase
|
335,546 | - | - | - | 335,546 | |||||||||||||||
|
Recognized
granted shares
|
- | - | 8,543 | - | 8,543 | |||||||||||||||
|
Net income
for the period
|
- | - | - | 510,636 | 510,636 | |||||||||||||||
|
Balances as
of September 30, 2009
|
4,155,316 | (4,186 | ) | 54,384 | 14,958 | 4,220,472 | ||||||||||||||
See accompanying
notes.
11
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
1.
|
Operations
|
The primary activity of Cosan S.A.
Indústria e Comércio (“Company” or “Cosan”), with principal place of business in
the city of Barra Bonita, São Paulo, and its subsidiaries is the manufacturing
and trading of sugar, ethanol and co-generation of electricity from sugarcane
both of their own plantations and third parties. The Company has 23 producing
units, located in the São
Paulo, Goiás and Mato
Grosso do Sul States, with a nominal capacity of milling 60 million tons of
sugarcane per year, producing varied qualities of raw and refined sugar,
anhydrous and hydrated ethanol. The Company activities are also linked with
those of its subsidiary Cosan Operadora Portuária S.A. and affiliate TEAS -
Terminal Exportador de Álcool de Santos S.A., which consist mainly in the
Company’s logistic support to export of sugar and ethanol.
The Company,
through its subsidiary Cosan Combustíveis e Lubrificantes S.A. (“Cosan CL”),
operates in 40 fuel distribution bases in Brazil and ranks as one of the four
biggest fuel distributors in Brazil, with a distribution network of nearly 1,500
gas stations across Brazil, which sell 5 billion liters of fuels, 160 million
cubic meters of NGV and 127 thousand cubic meters of lubricants. Accordingly,
the Company expanded its business model and became the first integrated
renewable energy company, acting from the plantation of sugar cane to the
distribution and retail sale of fuels.
In
the Annual and Special Meeting held on August 29, 2008, the Company’s
shareholders changed year end to March 31 of each year. As a consequence, the
statements of operations and of cash flows for the quarter and the six-month
period of the previous year relate to the quarter and six-month period ended
October 31, 2008, and not to September 30, 2008, therefore, are not comparable
to those of the current quarter and six-month period ended September 30,
2009.
During the
six-month period ended September 30, 2009, the Company and its subsidiaries
carried out a number of corporate operations, the main of which being the
association among the groups Cosan and Rezende Barbosa, which details are
described in Notes 8 and 15 hereto.
On
July 15 and August 7, 2009, a capital increase of R$1,374 and R$800 (eight
hundred reais), respectively, which details are described in Note
15.
12
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
2.
|
Basis
of preparation and presentation of the quarterly
information
|
The Company’s
quarterly information were prepared based on the accounting practices adopted in
Brazil and on the rules issued by the Brazilian Securities and Exchange
Commission (“CVM”), observing the accounting guidelines set forth in corporation
law (Law Nº 6404/76) which include the new provisions established, amended and
repealed by Law Nº 11638, of December 28, 2007 (“Law 11638/07”) and by Law Nº
11941, of May 27, 2009 (“Law 11941/09”).
The accounting
practices adopted in Brazil were amended during 2008 and the effects of their
first-time adoption were recorded by the Company during the fourth quarter of
2008 and disclosed in the financial statements of March 31, 2009. The quarterly
information for the quarter and six-month periods ended October 31, 2008,
presented in conjunction with the quarterly information for the quarter and
six-month period ended September 30, 2009, was not adjusted for comparison
purposes, as allowed by CVM/SNC/SEP Official Memorandum Nº 02/2009. On October
31, 2008, the impacts of these new accounting practices on the results for the
period are as follows:
|
Parent
Company
|
||||||||
|
Quarter
|
Six-moth
period
|
|||||||
|
Balances
before the amendments from Laws No. 11638/07 and 11941/09
|
(380,671 | ) | (438,814 | ) | ||||
|
Lease
operations – CPC 06
|
(1,572 | ) | 154 | |||||
|
Recognized
granted options – CPC 10
|
(3,647 | ) | (7,293 | ) | ||||
|
Derivative
financial instruments – CPC 14
|
100,262 | 49,102 | ||||||
|
Deferred
income tax and social contribution on temporary
adjustments
|
(33,555 | ) | (16,747 | ) | ||||
|
Equity
investment adjustments effect
|
2,755 | 2,755 | ||||||
| 64,243 | 27,971 | |||||||
|
Balances
adjusted through application of Laws No. 11638/07 and
11941/09
|
(316,428 | ) | (410,843 | ) | ||||
|
Consolidated
|
||||||||
|
Quarter
|
Six-moth
period
|
|||||||
|
Balances
before the amendments from Laws No. 11638/07 and 11941/09
|
(380,671 | ) | (438,814 | ) | ||||
|
Lease
operations – CPC 06
|
(1,572 | ) | 154 | |||||
|
Shares
issuance expenditures – CPC 08
|
22,059 | 22,059 | ||||||
|
Recognized
granted options – CPC 10
|
(3,647 | ) | (7,293 | ) | ||||
|
Derivative
financial instruments – CPC 14
|
100,262 | 49,102 | ||||||
|
Deferred
income tax and social contribution on temporary
adjustments
|
(41,055 | ) | (24,247 | ) | ||||
|
Minority
Shareholders’ portion
|
(11,804 | ) | (11,804 | ) | ||||
| 64,243 | 27,971 | |||||||
|
Balances
adjusted through application of Laws No. 11638/07 and
11941/09
|
(316,428 | ) | (410,843 | ) | ||||
13
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
2.
|
Basis
of preparation and presentation of the quarterly information
(Continued)
|
The quarterly
information for the parent company and consolidated, including accompanying
notes, except as otherwise stated, are presented in thousands of
reais.
The results for the
three-month period ended September 30, 2009 are not necessarily an indication of
results that may be expected for the year ending March 31, 2010.
Non-financial
information presented in these financial statements was not reviewed by
independent auditors.
|
3.
|
Summary
of significant accounting practices
|
The quarterly
information was prepared according to principles, practices and criteria
consistent with those adopted when preparing the financial statements for March
31, 2009 and should be read in conjunction therewith.
Consolidation of quarterly
information
The consolidated
quarterly information was prepared in accordance with the basic principles of
consolidation. The consolidation process includes the following principal
procedures:
|
a)
|
Intercompany
assets and liabilities are
eliminated;
|
|
b)
|
Equity
investments in subsidiaries, proportionate to the parent company interest
in the shareholders’ equity of subsidiaries, are
eliminated;
|
|
c)
|
Intercompany
revenues and expenses are eliminated;
and
|
|
d)
|
Significant
unearned intercompany income is eliminated, when
relevant.
|
The financial year
adopted by the companies included in the consolidation coincides with that of
the Company and accounting policies were consistently applied in the
consolidated companies, in line with those used on March 31, 2009.
14
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
3.
|
Summary
of significant accounting practices (Continued)
|
The main
consolidated companies are listed below:
|
Direct
and indirect interest as of
|
||||||||
|
September
30,
2009
|
June
30,
2009
|
|||||||
|
Administração
de Participações Aguassanta Ltda.
|
91.5 | % | 91.5 | % | ||||
|
Usina da
Barra S.A. Açúcar e Álcool
|
99.6 | % | 99.6 | % | ||||
|
Águas da
Ponte Alta S.A.
|
99.6 | % | 99.6 | % | ||||
|
Vale da Ponte
Alta S.A.
|
99.6 | % | 99.6 | % | ||||
|
Agrícola
Ponte Alta S.A.
|
99.6 | % | 99.6 | % | ||||
|
Cosan
Centroeste S.A. Açúcar e Álcool
|
99.6 | % | 99.6 | % | ||||
|
Barra
Bioenergia S.A.
|
99.6 | % | 99.6 | % | ||||
|
DaBarra
Alimentos Ltda.
|
99.6 | % | 99.6 | % | ||||
|
Bonfim Nova
Tamoio – BNT Agrícola Ltda.
|
99.6 | % | 99.6 | % | ||||
|
Benálcool
Açúcar e Álcool S.A.
|
99.6 | % | 99.6 | % | ||||
|
Barrapar
Participações Ltda.
|
99.6 | % | 99.6 | % | ||||
|
Aliança
Indústria e Comercio de açúcar e Álcool S.A.
|
99.6 | % | 99.6 | % | ||||
|
Cosan
Distribuidora de Combustíveis Ltda.
|
99.9 | % | 99.9 | % | ||||
|
Cosan S.A.
Bioenergia
|
100.0 | % | 100.0 | % | ||||
|
Cosan
International Universal Corporation
|
100.0 | % | 100.0 | % | ||||
|
Cosan Finance
Limited
|
100.0 | % | 100.0 | % | ||||
|
Grançucar
S.A. Refinadora de Açúcar
|
100.0 | % | 100.0 | % | ||||
|
Cosan
Combustíveis e Lubrificantes S.A.
|
100.0 | % | 100.0 | % | ||||
|
Copsapar
Participações S.A.
|
90.0 | % | 90.0 | % | ||||
|
Novo Rumo
Logística S.A.
|
92.9 | % | 92.9 | % | ||||
|
Rumo
Logística S.A.
|
92.9 | % | 92.9 | % | ||||
|
Cosan
Operadora Portuária S.A.
|
92.9 | % | 92.9 | % | ||||
|
Teaçú
Armazéns Gerais S.A.
|
92.9 | % | 92.9 | % | ||||
|
Nova América
S.A. – Trading
|
100.0 | % | 100.0 | % | ||||
|
Cosan
Alimentos S.A. (previously known as Nova América S.A. –
Agroenergia)
|
100.0 | % | 100.0 | % | ||||
|
4.
|
Cash
and cash equivalents
|
|
Parent
Company
|
Consolidated
|
|||||||||||||||
|
09/30/09
|
06/30/09
|
09/30/09
|
06/30/09
|
|||||||||||||
|
Cash
|
144 | 147 | 243 | 260 | ||||||||||||
|
“Overnight” investments
|
- | - | 30,625 | 56,697 | ||||||||||||
|
Bank checking
accounts
|
16,183 | 12,313 | 64,345 | 42,692 | ||||||||||||
|
Amounts
pending foreign exchange closing
|
1,582 | 43,264 | 24,659 | 61,843 | ||||||||||||
|
Marketable
securities
|
159,690 | 252,183 | 828,775 | 771,428 | ||||||||||||
| 177,599 | 307,907 | 948,647 | 932,920 | |||||||||||||
The balance of
Overnight investments refers to financial investments in US dollars made with
highly-rated banks, are remunerated according to the Federal Funds rate and may
be promptly redeemed.
15
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
4.
|
Cash
and cash equivalents
(Continued)
|
Amounts pending
foreign exchange closing refer to receipts of funds in foreign currency from
customers located abroad, whose foreign exchange closing with the applicable
financial institutions had not occurred as of the balance sheet
date.
The balances of
Marketable Securities correspond to investments in Bank Deposit Certificates –
CDB, allowing immediate redemption, are made with highly-rated banks and accrue
in average 100.3% of the Interbank Deposit Certificate - CDI.
|
5.
|
Trade
accounts receivable
|
|
Parent
Company
|
Consolidated
|
|||||||||||||||
|
09/30/09
|
06/30/09
|
09/30/09
|
06/30/09
|
|||||||||||||
|
Domestic
|
26,924 | 30,969 | 577,109 | 506,824 | ||||||||||||
|
International
|
52,913 | 90,322 | 72,432 | 137,235 | ||||||||||||
|
(-) Allowance
for doubtful accounts
|
(842 | ) | (776 | ) | (59,873 | ) | (58,423 | ) | ||||||||
| 78,995 | 120,515 | 589,668 | 585,636 | |||||||||||||
|
6.
|
Inventories
|
|
Parent
Company
|
Consolidated
|
|||||||||||||||
|
09/30/09
|
06/30/09
|
09/30/09
|
06/30/09
|
|||||||||||||
|
Finished
goods:
|
||||||||||||||||
|
Sugar
|
162,676 | 79,740 | 479,833 | 271,875 | ||||||||||||
|
Ethanol
|
114,227 | 49,104 | 315,383 | 148,573 | ||||||||||||
|
Fuels
and lubricants
|
- | - | 243,985 | 224,475 | ||||||||||||
|
Harvest
costs
|
119,052 | 129,114 | 322,022 | 333,174 | ||||||||||||
|
Supplies and
other
|
64,623 | 67,517 | 191,180 | 201,221 | ||||||||||||
|
Provision for
inventory realization and obsolescence
|
(6,861 | ) | (11,183 | ) | (20,881 | ) | (29,395 | ) | ||||||||
| 453,717 | 314,292 | 1,531,522 | 1,149,923 | |||||||||||||
16
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
7.
|
Related
parties
|
|
Assets
|
||||||||||||||||
|
Parent
Company
|
Consolidated
|
|||||||||||||||
|
09/30/09
|
06/30/09
|
09/30/09
|
06/30/09
|
|||||||||||||
|
Usina da
Barra S.A. Açúcar e Álcool
|
219,915 | 191,518 | - | - | ||||||||||||
|
Cosan
Alimentos S.A.
|
400,916 | 159,775 | - | - | ||||||||||||
|
Rezende
Barbosa S.A. Administração e Participações
|
- | - | 159,175 | 160,529 | ||||||||||||
|
Vertical UK
LLP
|
9,801 | 10,306 | 12,974 | 14,965 | ||||||||||||
|
Others
|
6,546 | 10,114 | 1,285 | 13,794 | ||||||||||||
| 637,178 | 371,713 | 173,434 | 189,288 | |||||||||||||
|
Current
|
(637,178 | ) | (371,713 | ) | (21,613 | ) | (36,121 | ) | ||||||||
|
Noncurrent
|
- | - | 151,821 | 153,167 | ||||||||||||
|
Liabilities
|
||||||||||||||||
|
Parent
Company
|
Consolidated
|
|||||||||||||||
|
09/30/09
|
06/30/09
|
09/30/09
|
06/30/09
|
|||||||||||||
|
Cosan Finance
Limited
|
697,829 | 751,139 | - | - | ||||||||||||
|
Cosan
Limited
|
- | - | - | 342,064 | ||||||||||||
|
CCL Finance
Limited
|
315,191 | - | ||||||||||||||
|
Cosan
Combustíveis e Lubrificantes S.A.
|
50,781 | 52,543 | - | - | ||||||||||||
|
Others
|
26,882 | 28,071 | 3,838 | 3,941 | ||||||||||||
| 1,090,683 | 831,753 | 3,838 | 346,005 | |||||||||||||
|
Current
|
(124,286 | ) | (112,602 | ) | (3,838 | ) | (4,475 | ) | ||||||||
|
Noncurrent
|
966,397 | 719,151 | - | 341,530 | ||||||||||||
17
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
7.
|
Related
parties (Continued)
|
|
Parent
Company
|
||||||||||||||||
|
07/01/09
a 09/30/09
|
08/01/08
a 10/31/08
|
04/01/09
a 09/30/09
|
05/01/08
a 10/31/08
|
|||||||||||||
|
Transactions
involving assets
|
||||||||||||||||
|
Remittance of
financial resources. Net of receipts and credit
assignments
|
401,469 | 351,299 | 677,288 | 568,216 | ||||||||||||
|
Sale of
finished goods and services (1)
|
22,594 | 28,674 | 64,011 | 66,870 | ||||||||||||
|
Purchase of
finished goods and services (1)
|
(189,282 | ) | (104,360 | ) | (363,892 | ) | (149,459 | ) | ||||||||
|
Sale of
finished goods and services to related parties
|
24,412 | 21,453 | 55,403 | 44,631 | ||||||||||||
|
Financial
income
|
6,272 | 29,790 | 8,049 | 48,085 | ||||||||||||
| 265,465 | 326,856 | 440,859 | 578,343 | |||||||||||||
|
Transactions
involving liabilities
|
||||||||||||||||
|
Proceeds
received as financial resources, net of payments
|
(2,951 | ) | 11,636 | 69,839 | 11,636 | |||||||||||
|
Proceedings
from export prepayments
|
321,755 | - | 321,755 | - | ||||||||||||
|
Financial
expenses (income)
|
(59,874 | ) | 233,043 | (180,863 | ) | 202,301 | ||||||||||
| 258,930 | 24,679 | 210,731 | 213,937 | |||||||||||||
|
Consolidated
|
||||||||||||||||
|
07/01/09
a 09/30/09
|
08/01/08
a 10/31/08
|
04/01/09
a 09/30/09
|
05/01/08
a 10/31/08
|
|||||||||||||
|
Transactions
involving assets
|
||||||||||||||||
|
Remittance of
financial resources. Net of receipts and credit
assignments
|
(91,330 | ) | (73,426 | ) | (167,015 | ) | (132,018 | ) | ||||||||
|
Sale of
finished goods and services (1)
|
289,990 | 147,086 | 576,848 | 250,907 | ||||||||||||
|
Purchase of
finished goods and services (1)
|
(289,990 | ) | (147,086 | ) | (576,848 | ) | (250,907 | ) | ||||||||
|
Sale of
finished goods and services to related parties
|
75,476 | 98,854 | 144,535 | 142,256 | ||||||||||||
|
Addition by
incorporation
|
- | - | 138,682 | - | ||||||||||||
| (15,854 | ) | 25,428 | 116,202 | 10,238 | ||||||||||||
|
Transactions
involving liabilities
|
||||||||||||||||
|
Payments of
financial resources
|
(2,861 | ) | - | (6,910 | ) | (667 | ) | |||||||||
|
Payment of
Floating Rate Notes
|
(322,333 | ) | - | (322,333 | ) | - | ||||||||||
|
Financial
Income
|
(16,973 | ) | - | (77,248 | ) | - | ||||||||||
| (342,167 | ) | - | (406,491 | ) | (667 | ) | ||||||||||
|
(1)
|
It consists of
operations carried out between Cosan’s direct and indirect subsidiaries
included in the
consolidation.
|
The purchase and
sale transactions are carried out at prices and under conditions similar to
those existing in the market.
18
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
7.
|
Related
parties (Continued)
|
The amount
receivable from Usina da Barra refers to funds remitted to indirect subsidiary
Cosan Centroeste S.A. on behalf of Usina da Barra, which are not subject to
interest.
The amount
receivable from Cosan Alimentos S.A. (“Cosan Alimentos”, previously known as
Nova América S.A. – Agroenergia) refers to an intercompany loan subject to
interest equivalent to 100% of CDI.
The receivable from
Rezende Barbosa S.A. Administração e Participações is related to credits assumed
by Rezende Barbosa, in connection with the acquisition of Cosan Alimentos and
intercompany loans at the interest rate equivalent to 100% of CDI.
The amount
receivable from the affiliate Vertical UK LLP, located in British Virgin
Islands, refers to ethanol trading, whith average maturity date of 30
days.
The balance payable
to Cosan Finance Limited refers to future sugar export prepayment loan
agreements to be settled in 2014, 2015 and 2016, which are subject to the US
dollar exchange variation and Libor annual interest rate, plus spread from 4.75%
to 4.85% per year.
The payable to CCL
Finance Limited refers to prepayment contracts for future sugar exports to be
settled in 2014, which is subject to US Dollar exchange variation and annual
interest of 9.5%.
The payable to
Cosan CL consists mainly to fund remitted to Cosan, with no interest
thereon.
The payable to
Cosan Limited relates to Floating Rate Notes issued by Cosan CL., equivalent to
US$175,000, to fall due in 2018. Such balance bears variable interest equivalent
to the quarterly Libor
rate plus interest of 2.8% p.a., quarterly paid. During the quarter ended
September 30, 2009, Cosan CL fully paid this debt with the resources originated
from the Senior Notes due in 2014 (Note 13).
At
September 30, 2009, the Company and its subsidiary Usina da Barra were lessees
of approximately 35,000 hectares of related companies land ((information not
reviewed) under the same control as Cosan and its affiliate Radar Propriedades
Agrícolas S.A., which is controlled by another shareholder. These operations are
carried out under conditions and prices similar to those prevailing in the
market, calculated based on sugarcane tons per hectare, valued in accordance
with the price established by CONSECANA.
19
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
8.
|
Investments
|
|
Parent
Company
|
||||||||||||||||||||||||||||||||||||||||
|
Investee
|
Investor
|
|||||||||||||||||||||||||||||||||||||||
|
Investor
|
Profit
(loss) of the period
|
Interest
%
|
Investments
|
Earnings
(losses) on equity investments
|
||||||||||||||||||||||||||||||||||||
|
09/30/09
|
04/01/09
a 09/30/09
|
09/30/09
|
06/30/09
|
09/30/09
|
06/30/09
|
07/01/09
a 09/30/09
|
08/01/08
a 10/31/08
|
04/01/09
a 09/30/09
|
05/01/08
a 10/31/08
|
|||||||||||||||||||||||||||||||
|
Administração
de Participações Aguassanta Ltda.
|
130,500 | 2,903 | 91.5 | 91.5 | 119,405 | 116,749 | 2,656 | (2,006 | ) | 3,806 | (11,335 | ) | ||||||||||||||||||||||||||||
|
Usina da Barra
S.A. Açúcar e Álcool
|
2,664,994 | 59,384 | 95.1 | 95.1 | 2,533,796 | 2,477,336 | 56,460 | (19,569 | ) | 80,953 | (110,733 | ) | ||||||||||||||||||||||||||||
|
Copsapar
Participações S.A.
|
188,029 | 3,190 | 90.0 | 90.0 | 169,226 | 166,355 | 2,871 | - | (8,902 | ) | - | |||||||||||||||||||||||||||||
|
Novo Rumo
Logística S.A.
|
263,178 | 4,482 | 28.8 | 28.8 | 75,848 | 74,556 | 1,292 | - | 968 | - | ||||||||||||||||||||||||||||||
|
TEAS -
Terminal Exportador de Álcool de Santos S.A.
|
47,438 | 617 | 40.0 | 40.0 | 18,975 | 18,728 | 247 | 237 | 361 | 397 | ||||||||||||||||||||||||||||||
|
Cosan S.A.
Bioenergia
|
140,093 | 1,842 | 100.0 | 100.0 | 140,093 | 138,251 | 1,842 | (721 | ) | 3,805 | (721 | ) | ||||||||||||||||||||||||||||
|
Radar
Propriedades Agrícolas S.A.
|
798,867 | 8,566 | 18.9 | 18.9 | 151,137 | 140,625 | (218 | ) | (1,487 | ) | 1,064 | - | ||||||||||||||||||||||||||||
|
Cosan
International Universal Corporation
|
8,992 | (1,334 | ) | 100.0 | 100.0 | 8,992 | 11,277 | (1,334 | ) | (191 | ) | (1,216 | ) | 4,586 | ||||||||||||||||||||||||||
|
Cosan Finance
Limited
|
23,211 | 54 | 100.0 | 100.0 | 23,211 | 25,455 | 54 | 2,554 | 1,221 | 6,802 | ||||||||||||||||||||||||||||||
|
Cosanpar
Participações S.A. (1)
|
- | - | - | - | - | - | - | - | 72,212 | - | ||||||||||||||||||||||||||||||
|
Cosan
Combustíveis e Lubrificantes S.A.
|
1,844,046 | 157,959 | 100.0 | 100.0 | 1,844,021 | 1,780,226 | 63,795 | - | 85,688 | - | ||||||||||||||||||||||||||||||
|
Cosan
Alimentos S.A.
|
268,587 | 22,886 | 100.0 | 100.0 | 268,587 | 245,701 | 22,886 | - | 24,537 | - | ||||||||||||||||||||||||||||||
|
Outros
investimentos
|
- | - | - | - | 24,637 | 20,883 | - | 1,519 | (4,954 | ) | 1,458 | |||||||||||||||||||||||||||||
| 5,377,928 | 5,216,142 | 150,551 | (19,664 | ) | 259,543 | (109,546 | ) | |||||||||||||||||||||||||||||||||
(1)
Company merged
into Cosan CL.
20
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
8.
|
Investments
(Continued)
|
|
Parent
Company
|
Consolidated
|
|||||||
|
Opening
balances
|
5,216,142 | 181,291 | ||||||
|
Earnings
(losses) on equity investments
|
150,551 | 29 | ||||||
|
Acquisition
of investments
|
15,344 | 16,037 | ||||||
|
Currency
translation adjustment
|
(3,249 | ) | - | |||||
|
Dividends
receivable
|
(860 | ) | (860 | ) | ||||
|
Closing
balances
|
5,377,928 | 196,497 | ||||||
Business combination with
Grupo Rezende Barbosa
|
a.
|
Rumo Logística
S.A.
|
According to the
shareholders’ agreement executed on April 9, 2008, the port concessions and
assets for sugar export owned by the Company and by Rezende Barbosa S.A.
Administração e Participações (“Rezende Barbosa”) were concentrated on Novo Rumo
Logística S.A. (“Novo Rumo”), which is indirectly controlled by the
Company.
On
April 10, 2009 the Company and Rezende Barbosa, parent company of Grupo Nova
América integrated the port terminals of Cosan and Teaçu Armazéns Gerais S.A.
(“Teaçu”), a subsidiary of Rezende Barbosa. As a consequence of this operation,
which involved the payment of R$121,331 and the issuance of shares of Novo Rumo,
the Company acquired 100% of Teaçu, becoming the indirect holder of a 64.06%
interest of Rumo, and 28.82% remained held by Rezende Barbosa. This operation
resulted in a R$66,968 goodwill classified as Intangible assets.
In
addition, the capital reorganization resulted in a total net capital loss of
R$31,190, recorded in results for the period as Other operating income
(expenses), net.
21
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
8.
|
Investments
(Continued)
|
|
b.
|
Curupay Participações
S.A.
|
In
a Special General Meeting held on June 18, 2009 the Company’s shareholders
approved the acquisition of Curupay S.A. Participações (“Curupay”), then a
subsidiary of Rezende Barbosa, through the issuance of 44,300,389 common shares
for R$334,172.
Beginning that
date, the Company incorporated in its net asset the Curupay’s investments,
comprising (i) 28.82% interest in Novo Rumo, (ii) 100% direct interest in Nova
América S.A. Trading, and (iii) 100% direct and indirect interest in Cosan
Alimentos (previously known as Nova América S.A. – Agroenergia) and
subsidiaries. As a consequence of this transaction, the Company increased to
92.88% its direct and indirect interest in Novo Rumo, generating R$3,052 of
capital gain, recorded in the results for the period as Other operating income
(expenses), net.
At
the end of that operation, the Company recorded R$18,194 goodwill, arising from
the equity variation between the date of net assets calculation at book value
and the date of approval of Curupay’s merger by the Company shareholders on June
18, 2009.
For purposes of
consolidation of Cosan Alimentos and Nova América S.A. Trading, the opening
balance taken into consideration was that of net assets adjusted to the
Company’s accounting practices on June 1, 2009.
Sale of equity interest to
Shell do Brasil Ltda. (“Shell”)
On
June 17, 2009, Cosanpar sold to Shell its equity interest in Jacta Participações
S.A. (“Jacta”), which concentrated the aviation fuel business, for R$115,601. As
a result of this operation, Cosanpar fully wrote off the cost of R$22,504 and
related goodwill of R$85,589, generating a R$7,508 net gain on this transaction,
recorded in the results for the period as Other operating income (expenses), net
and Realization of goodwill on sale, respectively.
22
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
9.
|
Property,
plant and equipment
|
|
Parent
Company
|
||||||||||||||||||||
|
09/30/09
|
06/30/09
|
|||||||||||||||||||
|
Average
annual depreciation rates (%)
|
Cost
|
Accumulated
depreciation/
amortization
|
Net
|
Net
|
||||||||||||||||
|
Land and
rural properties
|
- | 59,591 | - | 59,591 | 59,591 | |||||||||||||||
|
Machinery,
equipment and installations
|
12 | 489,335 | (283,503 | ) | 205,832 | 197,196 | ||||||||||||||
|
Aircraft
|
10 | 13,395 | (12,189 | ) | 1,206 | 1,579 | ||||||||||||||
|
Vehicles
|
22 | 63,912 | (36,632 | ) | 27,280 | 29,024 | ||||||||||||||
|
Furniture,
fixtures and computer equipment
|
18 | 71,705 | (32,850 | ) | 38,855 | 40,192 | ||||||||||||||
|
Buildings and
improvements
|
4 | 168,393 | (31,009 | ) | 137,384 | 131,755 | ||||||||||||||
|
Construction
in progress
|
- | 48,137 | - | 48,137 | 65,773 | |||||||||||||||
|
Sugarcane
planting costs
|
20 | 423,982 | (204,131 | ) | 219,851 | 220,826 | ||||||||||||||
|
Parts and
components to be periodically replaced
|
100 | 52,000 | (28,711 | ) | 23,289 | 50,878 | ||||||||||||||
| 1,390,450 | (629,025 | ) | 761,425 | 796,814 | ||||||||||||||||
|
Consolidated
|
||||||||||||||||||||
|
09/30/09
|
06/30/09
|
|||||||||||||||||||
|
Average
annual depreciation rates (%)
|
Cost
|
Accumulated
depreciation/
amortization
|
Net
|
Net
|
||||||||||||||||
|
Land and
rural properties
|
- | 206,802 | - | 206,802 | 206,526 | |||||||||||||||
|
Machinery,
equipment and installations
|
11 | 2,694,822 | (1,445,001 | ) | 1,249,821 | 1,225,143 | ||||||||||||||
|
Aircraft
|
10 | 14,131 | (12,226 | ) | 1,905 | 2,296 | ||||||||||||||
|
Vehicles
|
19 | 220,969 | (135,854 | ) | 85,115 | 85,124 | ||||||||||||||
|
Furniture,
fixtures and computer equipment
|
18 | 177,230 | (111,120 | ) | 66,110 | 68,976 | ||||||||||||||
|
Buildings and
improvements
|
4 | 1,008,825 | (298,465 | ) | 710,360 | 696,801 | ||||||||||||||
|
Construction
in progress
|
- | 1,402,247 | - | 1,402,247 | 1,208,480 | |||||||||||||||
|
Sugarcane
planting costs
|
20 | 1,304,648 | (600,311 | ) | 704,337 | 689,341 | ||||||||||||||
|
Parts and
components to be periodically replaced
|
100 | 93,404 | (24,040 | ) | 69,364 | 142,732 | ||||||||||||||
|
Advances for
fixed asset purchases
|
- | 158,147 | - | 158,147 | 176,403 | |||||||||||||||
|
Others
|
10 | 28,047 | (10,882 | ) | 17,165 | 14,540 | ||||||||||||||
| 7,309,272 | (2,637,899 | ) | 4,671,373 | 4,516,362 | ||||||||||||||||
The consolidated
balance of construction in progress and advances for fixed asset purchases
corresponds, substantially, to investments in co-generation capacity, upgrading,
expansion e preparation of industrial plants, expanding warehousing capacity,
and advances for machinery and equipment purchases by electric power
co-generation plants.
23
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
10.
|
Intangible
|
|
|
Refers mainly
to goodwill paid for expected future profitability, amortized on a
straight-line basis over 5 to 10 years until March 31, 2009, as set forth
in CPC Technical Pronouncement No. 13, approved by CVM Resolution Nº 565,
of December 17, 2008. At September 30, 2009 and June 30, 2009, the
balances are as follows:
|
|
Parent
Company
|
||||||||||||||||
|
September
30, 2009
|
June
30, 2009
|
|||||||||||||||
|
Cost
|
Accumulated
amortization
|
Net
|
Net
|
|||||||||||||
|
Goodwill on
the acquisition of JVM Participações S.A.
|
63,720 | (53,100 | ) | 10,620 | 10,620 | |||||||||||
|
Goodwill on
the acquisition of Grupo Mundial
|
127,953 | (40,518 | ) | 87,435 | 87,435 | |||||||||||
|
Goodwill on
the payment of capital of Mundial
|
21,142 | (6,342 | ) | 14,800 | 14,800 | |||||||||||
|
Goodwill on
the acquisition of Corona (ABC 125 and ABC 126)
|
267,824 | (84,811 | ) | 183,013 | 183,013 | |||||||||||
|
Goodwill on
the acquisition of Usina Açucareira Bom Retiro S.A.
|
115,165 | (33,590 | ) | 81,575 | 81,575 | |||||||||||
|
Goodwill on
the incorporation of Curupay (Cosan Alimentos)
|
18,194 | - | 18,194 | 18,194 | ||||||||||||
| 613,998 | (218,361 | ) | 395,637 | 395,637 | ||||||||||||
|
Consolidated
|
||||||||||||||||
|
September
30, 2009
|
June
30, 2009
|
|||||||||||||||
|
Cost
|
Accumulated
amortization
|
Net
|
Net
|
|||||||||||||
|
Goodwill on
the acquisition of JVM Participações S.A.
|
63,720 | (53,100 | ) | 10,620 | 10,620 | |||||||||||
|
Goodwill on
the acquisition of Usina da Barra
|
35,242 | (34,684 | ) | 558 | 558 | |||||||||||
|
Goodwill on
the constitution of FBA
|
22,992 | (18,585 | ) | 4,407 | 4,407 | |||||||||||
|
Goodwill on
the acquisition of Univalem S.A. Açúcar e Álcool
|
24,118 | (19,100 | ) | 5,018 | 5,018 | |||||||||||
|
Goodwill on
the acquisition of Grupo Destivale
|
69,918 | (27,424 | ) | 42,494 | 42,494 | |||||||||||
|
Goodwill on
the acquisition of Grupo Mundial
|
127,953 | (40,518 | ) | 87,435 | 87,435 | |||||||||||
|
Goodwill on
the payment of capital of Mundial
|
21,142 | (6,342 | ) | 14,800 | 14,800 | |||||||||||
|
Goodwill on
the acquisition of Corona
|
818,831 | (255,815 | ) | 563,016 | 563,016 | |||||||||||
|
Goodwill on
the acquisition of Usina Açucareira Bom Retiro S.A.
|
115,165 | (33,590 | ) | 81,575 | 81,575 | |||||||||||
|
Goodwill on
the acquisition of Usina Santa Luiza
|
47,053 | (4,705 | ) | 42,348 | 42,348 | |||||||||||
|
Goodwill on
the acquisition of Benálcool
|
167,300 | (18,053 | ) | 149,247 | 149,247 | |||||||||||
|
Goodwill on
the acquisition of Aliança
|
1,860 | - | 1,860 | 1,860 | ||||||||||||
|
Goodwill on
the acquisition of Cosan CL (1)
|
1,477,309 | (134,395 | ) | 1,342,914 | 1,329,786 | |||||||||||
|
Goodwill on
the acquisition of Teaçú (2)
|
66,968 | - | 66,968 | 66,968 | ||||||||||||
|
Goodwill on
the incorporation of Curupay (Cosan Alimentos) (3)
|
18,194 | - | 18,194 | 18,194 | ||||||||||||
|
Goodwill on
the acquisition of Açúcar União trade mark (4)
|
74,832 | (57,371 | ) | 17,461 | 17,461 | |||||||||||
|
Goodwill on
the acquisition of Destilaria Paraguaçu (4)
|
166,656 | - | 166,656 | 166,656 | ||||||||||||
|
Goodwill on
the subscription of shares of Nova América (4)
|
121,893 | - | 121,893 | 121,893 | ||||||||||||
| 3,441,146 | (703,682 | ) | 2,737,464 | 2,724,336 | ||||||||||||
|
|
(1)
|
As mentioned
in Note 8, on June 17, 2009 Cosanpar sold to Shell its equity interest in
Jacta, fully realizing the R$85,589 goodwill on that
investment.
|
|
|
(2)
|
Goodwill
generated in the ports integration of groups Cosan and Rezende Barbosa,
described in note 8.
|
|
|
(3)
|
As mentioned
in Note 8, in the business combination between groups Cosan and Rezende
Barbosa, through the incorporation of Curupay, the Company recorded a
R$18,194 goodwill.
|
|
|
(4)
|
As mentioned
in Note 8, goodwill incorporated on business
combination.
|
24
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
11.
|
Taxes
and social contributions payable
|
|
Parent
Company
|
Consolidated
|
|||||||||||||||
|
09/30/09
|
06/30/09
|
09/30/09
|
06/30/09
|
|||||||||||||
|
ICMS – State
VAT
|
15,875 | 5,193 | 63,920 | 29,590 | ||||||||||||
|
IPI
|
486 | 57 | 29,339 | 24,571 | ||||||||||||
|
INSS – Social
Security
|
5,969 | 7,578 | 19,950 | 22,824 | ||||||||||||
|
PIS – Social
Integration Program
|
364 | 2,556 | 4,229 | 6,269 | ||||||||||||
|
COFINS –
Social Security Financing
|
1,675 | 11,574 | 20,667 | 29,981 | ||||||||||||
|
Installment
payments – Law 11.941/09
|
10,675 | - | 25,803 | - | ||||||||||||
|
Tax Recovery
Program – REFIS
|
- | - | 222,462 | 272,776 | ||||||||||||
|
Special Tax
Payment Program – PAES
|
50,427 | 50,671 | 82,028 | 83,419 | ||||||||||||
|
Income and
social contribution taxes payable
|
1,965 | 4,110 | 34,627 | 30,043 | ||||||||||||
|
Other
|
5,874 | 13,553 | 16,750 | 25,829 | ||||||||||||
| 93,310 | 95,292 | 519,775 | 525,302 | |||||||||||||
|
Current
liabilities
|
(44,832 | ) | (41,276 | ) | (230,925 | ) | (189,792 | ) | ||||||||
|
Noncurrent
liabilities
|
48,478 | 54,016 | 288,850 | 335,510 | ||||||||||||
Noncurrent amounts
will become due as follows:
|
Parent
Company
|
Consolidated
|
|||||||||||||||
|
09/30/09
|
06/30/09
|
09/30/09
|
06/30/09
|
|||||||||||||
|
13 to 24
months
|
15,004 | 16,089 | 56,958 | 53,450 | ||||||||||||
|
25 to 36
months
|
14,232 | 15,583 | 55,865 | 52,524 | ||||||||||||
|
37 to 48
months
|
10,422 | 13,575 | 49,356 | 49,633 | ||||||||||||
|
49 to 60
months
|
4,188 | 4,184 | 36,851 | 32,615 | ||||||||||||
|
61 to 72
months
|
1,026 | 1,015 | 33,109 | 28,256 | ||||||||||||
|
73 to 84
months
|
1,026 | 1,015 | 31,791 | 27,726 | ||||||||||||
|
85 to 96
months
|
1,026 | 1,015 | 16,163 | 27,268 | ||||||||||||
|
Thereafter
|
1,554 | 1,540 | 8,757 | 64,038 | ||||||||||||
| 48,478 | 54,016 | 288,850 | 335,510 | |||||||||||||
General
considerations
The Company and its
subsidiaries must comply with several conditions to continue benefiting from the
installment payment programs mentioned above, particularly with the regular
payment of the installments as required by law and of the taxes becoming
due.
At
March 31, 2009, the Company formally documented its option for the installment
payment program established in Law 11941/09 (previously issued as Provisional
Measure 449/08) involving debts to the Brazilian IRS (SRF) previously included
in the prior installment program (PAES) and debts related to usage of IPI
credits from raw material, packaging and intermediate material acquisition with
tax rate 0 (zero) or not taxed.
25
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
11.
|
Taxes
and social contributions payable
(Continued)
|
General
considerations (Continued)
On
September 30, 2009, the Company and its indirect controlled subsidiary Bomfim
Nova Tamoio – BNT Agrícola Ltda. opted by the installment program provided by
Law No 11941/09, related to: (i) remaining balance of its regular installment
payments; and, (ii) remaining installments balance previously included in the
REFIS program, respectively. The related amounts totaled R$10,675 and R$25,803
in September 30, 2009, parent company and consolidated, respectively and the
gain obtained on this operation were recognized on financial, net account,
R$5,041 and R$12.649, parent and consolidated respectively.
The company is
currently evaluating the option to enter in the installment program provided by
Law No 11941/09 for the other type of debt permitted by the law, as well as the
impacts in its financial statements.
Under the
self-assessment tax system adopted in Brazil, income tax returns filed may be
audited by tax authorities for a period of five years from their
filling.
|
12.
|
Income
and social contribution taxes
|
|
a)
|
Reconciliation of
income and social contribution tax
expenses:
|
|
Parent
Company
|
||||||||||||||||
|
07/01/09
a 09/30/09
|
08/01/08
a 10/31/08
|
04/01/09
a 09/30/09
|
05/01/08
a 10/31/08
|
|||||||||||||
|
Income (loss)
before income and social contribution taxes
|
198,398 | (573,342 | ) | 648,986 | (609,755 | ) | ||||||||||
|
Income and
Social Contribution taxes at nominal rate (34%)
|
(67,455 | ) | 194,936 | (220,655 | ) | 207,316 | ||||||||||
|
Adjustments
to calculate effective rate:
|
||||||||||||||||
|
Earnings
(losses) on equity investments
|
51,187 | (6,686 | ) | 88,244 | (37,246 | ) | ||||||||||
|
Non-deductible
goodwill amortization
|
(4,992 | ) | (569 | ) | - | (1,138 | ) | |||||||||
|
Non-deductible
donations and contributions
|
(487 | ) | (1,015 | ) | (875 | ) | (1,595 | ) | ||||||||
|
Recognized
granted shares
|
(1,722 | ) | - | (2,905 | ) | - | ||||||||||
|
Inventory
loss and differences
|
(156 | ) | 3,174 | (280 | ) | 424 | ||||||||||
|
Other
|
(1,406 | ) | 2,831 | (1,879 | ) | 3,180 | ||||||||||
|
Total current
and deferred taxes
|
(25,031 | ) | 192,671 | (138,350 | ) | 170,941 | ||||||||||
|
Effective
rate
|
12.62 | % | - | 21.32 | % | - | ||||||||||
26
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
12.
|
Income
and social contribution taxes
(Continued)
|
|
b)
|
Reconciliation of
income and social contribution tax expenses:
(Continued)
|
|
Consolidated
|
||||||||||||||||
|
07/01/09
a 09/30/09
|
08/01/08
a 10/31/08
|
04/01/09
a 09/30/09
|
05/01/08
a 10/31/08
|
|||||||||||||
|
Income (loss)
before income and social contribution taxes
|
277,763 | (597,141 | ) | 763,367 | (678,438 | ) | ||||||||||
|
Income and
Social Contribution taxes at nominal rate (34%)
|
(94,439 | ) | 203,027 | (259,545 | ) | 230,668 | ||||||||||
|
Adjustments
to calculate effective rate:
|
||||||||||||||||
|
Earnings
(losses) on equity investments
|
10 | 420 | (1,199 | ) | 474 | |||||||||||
|
Non-deductible
goodwill amortization
|
(11,653 | ) | (1,415 | ) | - | (2,830 | ) | |||||||||
|
Non-deductible
donations and contributions
|
(820 | ) | (1,220 | ) | (1,309 | ) | (2,283 | ) | ||||||||
|
Recognized
granted shares
|
(1,722 | ) | - | (2,905 | ) | - | ||||||||||
|
Inventory
loss and differences
|
(1,039 | ) | 4,199 | (1,333 | ) | 789 | ||||||||||
|
Other
|
5,846 | 4,949 | 4,575 | 5,546 | ||||||||||||
|
Total current
and deferred taxes
|
(103,817 | ) | 209,960 | (261,716 | ) | 232,364 | ||||||||||
|
Effective
rate
|
37.38 | % | - | 34.28 | % | - | ||||||||||
|
b)
|
Deferred income and
social contribution tax
assets:
|
|
Parent
Company
|
||||||||||||||||||||
|
09/30/09
|
06/30/09
|
|||||||||||||||||||
|
Base
|
IRPJ
25%
|
CSSL
9%
|
Total
|
Total
|
||||||||||||||||
|
Provision for
judicial demands and other temporary differences (1)
|
350,223 | 87,555 | 31,520 | 119,075 | 80,990 | |||||||||||||||
|
Foreign
exchange variation
|
(500,722 | ) | (125,181 | ) | (45,065 | ) | (170,246 | ) | (114,658 | ) | ||||||||||
|
Income tax
losses
|
439,766 | 109,942 | - | 109,942 | 115,478 | |||||||||||||||
|
Social
contribution tax losses
|
439,868 | - | 39,589 | 39,589 | 41,581 | |||||||||||||||
|
Deferred
taxes - noncurrent assets
|
72,316 | 26,044 | 98,360 | 123,391 | ||||||||||||||||
|
Consolidated
|
||||||||||||||||||||
|
09/30/09
|
06/30/09
|
|||||||||||||||||||
|
Base
|
IRPJ
25%
|
CSSL
9%
|
Total
|
Total
|
||||||||||||||||
|
Provision for
judicial demands and other temporary differences (1)
|
1,428,581 | 357,145 | 128,573 | 485,718 | 470,300 | |||||||||||||||
|
Foreign
exchange variation
|
(602,396 | ) | (150,599 | ) | (54,216 | ) | (204,815 | ) | (114,658 | ) | ||||||||||
|
Income tax
losses
|
934,031 | 233,508 | - | 233,508 | 250,986 | |||||||||||||||
|
Social
contribution tax losses
|
946,500 | - | 85,184 | 85,184 | 91,465 | |||||||||||||||
|
Deferred
taxes
|
440,054 | 159,541 | 599,595 | 698,093 | ||||||||||||||||
|
Current
assets
|
(48,108 | ) | (53,502 | ) | ||||||||||||||||
|
Noncurrent
assets
|
551,487 | 644,591 | ||||||||||||||||||
(1) Presented net of deferred income
and social contribution tax liabilities.
27
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
12.
|
Income
and social contribution taxes
(Continued)
|
|
b)
|
Deferred income and
social contribution tax assets:
(Continued)
|
Deferred income and
social contribution tax on accumulated loss must be realized within 10 years,
according to the Company’s and its subsidiaries’ expected profitability shown in
financial projections prepared by management, which were examined by the
Company’s supervisory board and submitted to the Board of Directors in the
Annual General Shareholders Meeting for the year ended March 31,
2009.
Recovery of such
tax credits is estimated to occur in the following years:
|
Parent
Company
|
Consolidated
|
|||||||||||||||
|
09/30/09
|
06/30/09
|
09/30/09
|
06/30/09
|
|||||||||||||
|
2011
|
901 | 1,130 | 27,233 | 30,832 | ||||||||||||
|
2012
|
10,580 | 13,273 | 59,868 | 70,089 | ||||||||||||
|
2013
|
22,395 | 28,094 | 102,496 | 119,995 | ||||||||||||
|
2014
|
31,281 | 39,242 | 137,635 | 161,133 | ||||||||||||
|
From 2015 to
2017
|
26,929 | 33,782 | 151,502 | 177,368 | ||||||||||||
|
From 2018 to
2019
|
6,274 | 7,870 | 72,753 | 85,174 | ||||||||||||
| 98,360 | 123,391 | 551,487 | 644,591 | |||||||||||||
The tax credit
recovery estimates were based on taxable profit projections, taking into
consideration several financial and business assumptions on the balance sheet
preparation date. During the quarter ended September 30, 2009, the estimated
deadline for realization of deferred taxes did not change in relation to that
disclosed in the financial statements at March 31, 2009.
In
addition, the Company estimates to use part of the income and social
contribution tax loss balances during the year ending March 31, 2010, as
provided for in Law No 11941/09, to amortize fines and interest imposed on tax
installments.
28
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
13.
|
Loans
and financing
|
|
Financial
charges (1)
|
Parent
company
|
Consolidated
|
Collaterals
(2)
|
||||||
|
Purpose
|
Index
|
Annual
average
interest rate |
09/30/09
|
06/30/09
|
09/30/09
|
06/30/09
|
Final
maturity |
09/30/09
|
06/30/09
|
|
Senior Notes
Due 2009
|
Dollar
(US)
|
9.0%
interest
|
66,399
|
71,081
|
66,399
|
71,081
|
November/2009
|
-
|
-
|
|
|
|||||||||
|
Senior Notes
Due 2014
|
Dollar
(US)
|
9,5%
interest
|
-
|
-
|
629,969
|
-
|
August/2014
|
-
|
-
|
|
|
|||||||||
|
Senior Notes
Due 2017
|
Dollar
(US)
|
7.0%
interest
|
-
|
-
|
719,400
|
803,257
|
February/2017
|
-
|
-
|
|
|
|||||||||
|
Perpetual
bonuses
IFC
|
Dollar
(US)
Dollar
(US)
|
8.3%
interest
7.4%
interest
|
809,575
82,957
|
888,570
98,823
|
809,575
82,957
|
888,570
98,823
|
-
January/2013
|
-
Chattel
mortgage
|
-
Chattel
mortgage
|
|
|
|||||||||
|
Pre-shipment
export finance (ACC)
|
Dollar
(US)
|
7.6%
interest
|
53,492
|
91,729
|
90,982
|
152,085
|
March/2010
|
-
|
-
|
|
Commercial
promissory notes
|
DI – Interbank
Deposits
|
3.0%
interest
|
1,233,706
|
1,198,167
|
1,233,706
|
1,198,167
|
November/2009
|
Chattel
mortgage
|
Chattel
mortgage
|
|
Resolution No.
2471
|
IGP-M
Change in the
price of corn
|
4.0%
interest
12.5%
interest
|
96,262
129
|
97,895
129
|
593,583
129
|
594,251
129
|
December/2020
October/2025
|
National
Treasury Certificates and mortgage on land
|
National
Treasury Certificates and mortgage on land
|
|
BNDES
(3)
|
Long-term
interest rate (TJLP)
|
2.6% interest
|
-
|
-
|
714,760
|
360,112
|
January/2022
|
Credit rights
from energy sale agreements
|
Credit rights
from energy sale agreements
|
|
Bank Credit
Certificate
|
DI – Interbank
deposits
|
3.9%
interest
|
-
|
-
|
217,443
|
216,806
|
November/2009
|
-
|
-
|
|
|
|
||||||||
|
(Subordinated)
debentures
|
DI – Interbank
deposits
|
3.3%
interest
|
-
|
-
|
152,556
|
157,769
|
August/2010
|
-
|
-
|
|
Credit
notes
|
DI – Interbank
deposits – dollar (US)
|
2.4%
interest
8.8%
interest
|
-
-
|
-
-
|
134,151
88,776
|
231,130
112,096
|
September/2011
January/2010
|
-
-
|
-
-
|
|
Prepayments
|
DI – Interbank
deposits – dollar (US)
|
0.6%
interest
2.6%
interest
|
-
-
|
-
-
|
3,041
92,043
|
7,672
113,662
|
December/2011
November/2010
|
-
-
|
-
-
|
|
Others
|
Sundry
|
Sundry
|
22,770
|
23,482
|
267,773
|
247,392
|
Sundry
|
Mortgage,
inventories and chattel mortgage of financed assets
|
Mortgage,
inventories and chattel mortgage of financed assets
|
|
Expenses with
placement of securities
|
(16,839)
|
(17,399)
|
(45,190)
|
(34,199)
|
-
|
-
|
-
|
||
|
2,348,451
|
2,452,477
|
5,852,053
|
5,218,803
|
||||||
|
Current
|
(444,697)
|
(504,744)
|
(1,184,658)
|
(1,127,356)
|
|||||
|
Non-current
|
1,903,754
|
1,947,733
|
4,667,395
|
4,091,447
|
|||||
|
|
(1)
|
Financial
charges at September, 2009, except as otherwise
stated;
|
|
|
(2)
|
All loans and
financing are backed by promissory notes and guarantees
provided by the Company and its subsidiaries and by majority shareholders,
plus the aforesaid security interest;
and,
|
|
|
(3)
|
It comprises
funds raised by the subsidiary Cosan S.A. Bioenergia and indirect
controlled subsidiary Cosan Centroeste S.A. Açúcar e Álcool earmarked for
the financing of co-generation projects and
Greenfields.
|
29
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
13.
|
Loans
and financing
(Continued)
|
Noncurrent loans,
deducted the transaction costs amortization, have the following scheduled
maturities:
|
Parent
Company
|
Consolidated
|
|||||||||||||||
|
09/30/09
|
06/30/09
|
09/30/09
|
06/30/09
|
|||||||||||||
|
13 to 24
months
|
945,416 | 899,822 | 1,143,290 | 1,289,822 | ||||||||||||
|
25 to 36
months
|
17,331 | 21,554 | 158,933 | 147,679 | ||||||||||||
|
37 to 48
months
|
44,002 | 50,827 | 127,260 | 111,508 | ||||||||||||
|
49 to 60
months
|
1,251 | 1,328 | 705,295 | 50,156 | ||||||||||||
|
61 to 72
months
|
8 | 8 | 74,686 | 44,476 | ||||||||||||
|
73 to 84
months
|
8 | 8 | 69,444 | 33,990 | ||||||||||||
|
85 to 96
months
|
8 | 8 | 779,817 | 814,795 | ||||||||||||
|
Thereafter
|
895,730 | 974,178 | 1,608,670 | 1,599,021 | ||||||||||||
| 1,903,754 | 1,947,733 | 4,667,395 | 4,091,447 | |||||||||||||
Resolution No.
2471
From 1998 to 2000,
the Company and its subsidiaries renegotiated their debt related to agricultural
funding with several financial institutions, thereby reducing their financial
cost to annual interest rates below 10% and guaranteeing the amortization of the
updated principal amount with the assignment and transfer of CTNs - Restricted
Brazilian Treasury Bills redeemable on the debt maturity dates, using the tax
incentive introduced by Resolution No. 2471, issued by the Central Bank of
Brazil on February 26, 1998. On September 30, 2009, these certificates,
classified as noncurrent assets, amounted to R$28,755 (R$28,050 at June 30,
2009), at the Company and R$189,342 (R$184,698 at June 30, 2009) at
consolidated. Payments pursuant to such certificates are remunerated based on
the IGP-M variation plus annual interest of 12%. Upon payment of the debt, the
redemption value should be similar to the amount of the renegotiated debt.
Interest referring to these financings is paid annually and principal is to be
entirely settled in 2020 at the Company, and in 2025 at
consolidated.
Senior Notes due in
2017
On
January 26, 2007, the wholly-owned subsidiary Cosan Finance Limited issued
Senior Notes in the international capital markets under Rule 144A and Regulation
S of the U.S. Securities Act of 1933, in the amount of US$400 million. These
Senior Notes bear interest at a rate of 7% per annum, payable semi-annually in
February and August of each year.
30
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
13.
|
Loans
and financing
(Continued)
|
Senior Notes due in
2014
On
August 4, 2009, the indirect subsidiary CCL Finance Limited issued US$350,000 of
Senior Notes in the international capital markets according to Regulations S and
144A that bear interest at a rate of 9.5% per annum, payable semi-annually in
February and August of each year, from February 2010.
Perpetual
Notes
On January, 24 and February 10, 2006,
the Company issued perpetual notes in the international market in accordance with Regulations S
and Rule 144A, in the amount of US$450 million for qualified
institutional investors. Perpetual notes are listed in the Luxemburg
Stock Exchange - EURO MTF and bear interest of 8.25% per year, payable quarterly
on the 15th of May, August, November and February of each year, beginning May
15, 2006. These notes may, at the discretion of the Company, be redeemed as from
February 15, 2011 on any interest payment date, for their face value. Perpetual notes are secured
by the Company and Usina da Barra.
Commercial Promissory
Notes
On
November 17, 2008, the Company issued 44 nominal promissory notes of a single
series at the price of R$25,000 each, whose offering reached R$1,100,000. The
nominal amount of promissory notes will not be updated. The promissory notes are
subject to conventional interest consisting of the accumulated change in average
daily rates of Interfinancial Deposits (DI), extra group overnight interbank
deposit rate daily calculated and capitalized at a surcharge of 3% a.a., payable
in a sole installment on November 12, 2009, together with the principal amount
of promissory notes. The promissory notes are secured by: (i) guarantee of the
controlled shareholder; and (ii) chattel mortgage of shares of Cosan
CL.
On
June 25, 2009 the Company contracted a reserve for line of credit named Stand-by
Facility, thus being able to reset the date of maturity on November 12, 2009 for
one more year as from that date, considering management’s intention to pay
R$302,277, equivalent to US$170 million, the remaining balance of R$931,429 was
reclassified to long term debt.
31
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
13.
|
Loans
and financing
(Continued)
|
Debentures
(subordinated)
On
August 13, 2008 the controlled Nova América S.A. – Agroenergia issued 1 simple
debenture, subordinated, nominative, book entry and non-convertible into shares,
with nominal value at the issuance date of R$150,000, which was subscribed and
fully-paid in August 21, 2008. The nominal value will be updated based on the
variation of 100% of CDI, plus a 3,3% spread per year. Interest will be paid
semi-annually from the issuance date. The nominal amount will be fully paid on
August 15, 2010.
Restrictive covenants in the
loan and financing agreements
The Company and its
subsidiaries are subject to certain restrictive covenants contained in loan and
financing agreements, the most significant being: (i) limitation of transactions
with shareholders and affiliates; (ii) limitation in payment of dividends and
other payment restrictions which affect subsidiaries; and (iii) limitation of
concession of warranty on assets.
Also, the Company
and its subsidiaries are subject to certain restrictive covenants concerning
financial indexes, determined during 2005 and calculated in a quarterly basis,
the most significant being as follows: (i) limitation of indebtedness by
complying with current assets/current liabilities ratio equal or greater than
1.3; (ii) limitation of indebtedness by complying with the net debt ratio/EBITDA
lower than 3.5 to 1; and (iii) limitation of indebtedness by complying with the
long term debt/net assets lower than 1.3.
All restrictive
covenants have been fully met or are in process of renegotiation by the Company
and its subsidiaries.
Expenses with issuance of
Notes
Expenses incurred with the issuance of
Senior (2009, 2014 and 2017), Commercial Promissory and Perpetual Notes are
recorded net in the respective financings, in current and noncurrent
liabilities, and amortized up to the respective maturity date of the notes.
Specifically for Perpetual Notes, amortization is calculated through their
redemption date, namely February 15, 2011, at the Company’s
option.
32
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
14.
|
Provision
for judicial demands
|
|
Parent
Company
|
Consolidated
|
|||||||||||||||
|
09/30/09
|
06/30/09
|
09/30/09
|
06/30/09
|
|||||||||||||
|
Tax
|
232,609 | 229,618 | 1,170,140 | 1,156,017 | ||||||||||||
|
Civil and
labor
|
20,441 | 23,925 | 154,337 | 156,538 | ||||||||||||
| 253,050 | 253,543 | 1,324,477 | 1,312,555 | |||||||||||||
|
Judicial
deposits
|
(13,272 | ) | (13,643 | ) | (181,100 | ) | (177,095 | ) | ||||||||
| 239,778 | 239,900 | 1,143,377 | 1,135,460 | |||||||||||||
The Company and its
subsidiaries are party to various ongoing labor claims, civil and tax
proceedings arising from the normal course of their business.
Respective
provisions for judicial demands were recorded considering those cases in which
the likelihood of loss has been rated as probable based on the opinion of legal
advisors. Management believes resolution of these disputes will have no effect
significantly different than the estimated amounts accrued.
The main tax judicial demands at
September 30, 2009 have not presented significant changes in comparison with
June 30, 2009 and are as follows:
|
Parent
Company
|
Consolidated
|
|||||||||||||||
|
Description
|
09/30/09
|
06/30/09
|
09/30/09
|
06/30/09
|
||||||||||||
|
Premium
credit – IPI
|
150,752 | 148,951 | 276,722 | 273,201 | ||||||||||||
|
PIS and
Cofins
|
17,704 | 17,532 | 147,905 | 146,474 | ||||||||||||
|
IPI credits
(NT)
|
- | - | 95,031 | 93,808 | ||||||||||||
|
Contribution
to IAA
|
- | - | 86,413 | 85,664 | ||||||||||||
|
IPC-89
|
- | - | 84,154 | 82,908 | ||||||||||||
|
Finsocial
|
- | - | 168,556 | 166,219 | ||||||||||||
|
IPI – Federal
VAT
|
9,711 | 9,628 | 61,201 | 55,324 | ||||||||||||
|
ICMS
credits
|
15,697 | 15,160 | 57,216 | 47,829 | ||||||||||||
|
Income tax
and social contribution
|
5,377 | 5,432 | 44,291 | 43,958 | ||||||||||||
|
Others
|
33,368 | 32,915 | 148,651 | 160,632 | ||||||||||||
| 232,609 | 229,618 | 1,170,140 | 1,156,017 | |||||||||||||
In May 27, 2009, the paragraph 1st and
3rd of Law No 9718/98 that regulated the collection of PIS and Cofins (federal
tax contributions) on exchange variation and other financial income was revoked
by Lei No 11941/09. The Company is in process of evaluation of its ongoing
judicial demands related to the legal obligations not paid related to the
increase of calculation basis of PIS and Cofins. Once confirmed the absence of
errors or flaws in the ongoing demands, the Company will revaluate the
maintenance of the accounting records of the respective legal obligations in its
financial statements.
33
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
14.
|
Provision
for judicial demands
(Continued)
|
The company is
currently evaluating the options provided by Law No 11941/09 to settle tax
related claims (e.g. credit premium – IPI), as well as the impacts in its
financial statements.
As
regards tax, labor and civil claims whose likelihood of unfavorable outcome is
rated as possible, the main balances that have not changed significantly as of
September 30, 2009 comparing to June 30, 2009 are as follows:
|
Parent
Company
|
Consolidated
|
|||||||||||||||
|
Description
|
09/30/09
|
06/30/09
|
09/30/09
|
06/30/09
|
||||||||||||
|
ICMS – State
VAT
|
26,986 | 23,984 | 182,610 | 179,675 | ||||||||||||
|
IAA – Sugar
and Ethanol Institute
|
- | - | 73,887 | 73,560 | ||||||||||||
|
Withholding
income tax
|
164,267 | 162,954 | 164,313 | 162,999 | ||||||||||||
|
IPI – Federal
VAT
|
15,842 | 15,687 | 301,438 | 299,079 | ||||||||||||
|
INSS
|
11 | 11 | 2,140 | 2,099 | ||||||||||||
|
PIS/Cofins
|
11,385 | 11 | 36,691 | 56,780 | ||||||||||||
|
Civil and
labor
|
38,841 | 39,649 | 240,221 | 233,411 | ||||||||||||
|
Others
|
38,571 | 47,093 | 141,601 | 114,445 | ||||||||||||
| 295,903 | 289,389 | 1,142,901 | 1,122,048 | |||||||||||||
Contingent
credits
|
|
i)
|
Accounts
receivable from Federal Government
|
On
February 28, 2007, subsidiary Usina da Barra recognized gain of R$318,358,
corresponding to a lawsuit filed against federal government claiming
indemnification for damages since prices of its products, at the time the sector
was subject to government control, were imposed not observing the prevailing
reality of the sector created by government control itself. A final decision in
favor of the subsidiary was handed down. The referred to gain was recorded in
the statement of income for the year, the contra entry being to noncurrent
assets of the Company, in receivables from lawsuit for damages.
34
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
14.
|
Provision
for judicial demands
(Continued)
|
Contingent credits
(Continued)
|
|
i)
|
Accounts
receivable from Federal Government
(Continued)
|
The Company is
awaiting the final decision on the form of payment, which will probably be
through government securities issued in connection with court ordered debts, to
be received in 10 years, after a final decision is handed down. Based on the
opinion of its legal advisors, the Company estimates that this litigation will
last 3 years.
In
2008, there was review of the criteria for determining monetary restatement in
the Federal Court Calculations Manual, which did not consider interest
restatement as from January 2003. In view of this, subsidiary reversed at March
31, 2009, the amount of R$18,768 from its noncurrent assets, debited to the
statement of income for the year, in financial income (expense), net account.
Consequently, lawyers’ fees calculated in proportion to the assets, recorded in
noncurrent liabilities, in other liabilities account, were reduced by R$2,253,
credited to the same account in the statement of operations.
At
September 30, 2009, these amounts totaled R$329,049 and R$39,486 (R$326,439 and
R$39,173 at June 30, 2009), corresponding to the referred to case and lawyers’
fees, respectively.
The subsidiary
Usina da Barra has other claims for damages of this nature filed against the
Federal Government, which are not recognized in accounting due to the procedural
progress of such suits.
35
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
15.
|
Shareholders’
equity
|
a) Capital
On
July 15, 2009, the Board of Directors approved a capital increase of R$1,374
through issuance of 224,819 new common shares, with no par value, for purposes
of meeting the needs of the share-based plan, due to exercise of such options by
qualifying executives at the exercise price of R$6.11 per share, according to
the plan terms. With the issuance of new shares, the Company’s capital
corresponds to R$4,155,316, represented by 372,810,092 registered common shares,
nominated and with no par value.
On
August 7, 2009, the Board of Directors approved a capital increase at R$800
through issuance of 50 new common shares, with no par value, at issue price of
R$16, due to exercise of subscription warrants by the holders. With the issuance
of new shares, the Company’s capital corresponds to R$4,155,316 below the limit
of authorized capital, as described on article 6 of the Company’s bylaws,
represented by 372,810,142 registered common shares.
As
of September 30, 2009, the Company’s capital is represented by 372,810,142
registered common shares (372,585,273 at June 30, 2009), nominated, fully-paid
and with no par value.
b) Treasury
shares
On
September 30, 2009 and June 30, 2009, the Company held in treasury 343,139 book
entry common registered shares with no par value, whose market value per share,
as of that date, amounted to R$19.56 and R$14.40, respectively.
|
c)
|
Recognized granted
shares
|
These consist of
the accounting record of the share-based plan (Note 22), in compliance with
Brazilian FASB (CPC) Technical Pronouncement Nº 10 – Share-based payment,
approved by Brazilian SEC (CVM) Resolution Nº 562/08.
36
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
15.
|
Shareholders’
equity (Continued)
|
|
d)
|
Stock purchase
warrants
|
According to the
meeting of the Board of Directors held on September 19, 2008, 1 (one) stock
purchase warrant issued by the Company was assigned as an additional advantage
to the subscribers for a new share, which shall entitle the holder to subscribe
for Cosan’s shares through certain conditions. A total of 55,000,000 stock
purchase single series warrants without part value will be issued. The holder
will be entitled to subscribe for 0.6 (zero point six) of a common share, the
delivery of fractional shares being voided. The stock purchase warrant will be
valid from its issuance until December 31, 2009, and may be exercised at the
holder’s discretion, except for the days a Company’s General Meeting is held,
who shall express its intention through a request for exercise to be delivered
in writing to Cosan. The price of exercise of each quantity of stock purchase
warrants totaling 1 (one) share is R$16.00. During the quarter ended September
30, 2009, 84 warrants were exercised, equivalent to 50 common shares with no par
value, as mentioned in note 15.a.
|
16.
|
Management
compensation
|
Management
compensation is made solely through the payment of management fees, which are
separately disclosed in the statements of operations.
37
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
17.
|
Financial
income (expenses), net
|
|
Parent
Company
|
||||||||||||||||
|
07/01/09
a 09/30/09
|
08/01/08
a 10/31/08
|
04/01/09
a 09/30/09
|
05/01/08
a 10/31/08
|
|||||||||||||
|
Financial
expenses
|
||||||||||||||||
|
Interest
(1)
|
(70,098 | ) | (57,260 | ) | (163,212 | ) | (107,857 | ) | ||||||||
|
Monetary
variation losses
|
(16,461 | ) | (784 | ) | (16,128 | ) | (5,755 | ) | ||||||||
|
Exchange
variation losses
|
186,157 | (522,441 | ) | 538,935 | (410,299 | ) | ||||||||||
|
Results from
derivatives (3)
|
(53,418 | ) | (67,643 | ) | 44,405 | (103,102 | ) | |||||||||
|
Others
|
(48 | ) | (147 | ) | (196 | ) | (229 | ) | ||||||||
| 46,132 | (648,275 | ) | 403,804 | (627,242 | ) | |||||||||||
|
Financial
income
|
||||||||||||||||
|
Interest
(1)
|
9,733 | 33,714 | 15,811 | 54,636 | ||||||||||||
|
Exchange
variation gains
|
(666 | ) | 200 | (754 | ) | 1,485 | ||||||||||
|
Monetary
variation gains
(2)
|
(20,525 | ) | 12,692 | (45,332 | ) | 7,443 | ||||||||||
|
Results from
derivatives (3)
|
- | 72,344 | - | 153,027 | ||||||||||||
|
Earnings from
marketable securities
|
8,906 | 14,094 | 13,105 | 32,628 | ||||||||||||
|
Others
|
49 | 23 | 304 | 85 | ||||||||||||
| (2,503 | ) | 133,067 | (16,866 | ) | 249,304 | |||||||||||
| 43,629 | (515,208 | ) | 386,938 | (377,938 | ) | |||||||||||
|
Consolidated
|
||||||||||||||||
|
07/01/09
a 09/30/09
|
08/01/08
a 10/31/08
|
04/01/09
a 09/30/09
|
05/01/08
a 10/31/08
|
|||||||||||||
|
Financial
expenses
|
||||||||||||||||
|
Interest
(1)
|
(125,810 | ) | (76,656 | ) | (258,954 | ) | (145,593 | ) | ||||||||
|
Monetary
variation losses
|
(19,684 | ) | (4,756 | ) | (24,648 | ) | (34,704 | ) | ||||||||
|
Exchange
variation losses
|
153,946 | (527,302 | ) | 509,740 | (414,055 | ) | ||||||||||
|
Results from
derivatives (3)
|
(16,615 | ) | (69,378 | ) | 144,202 | (104,837 | ) | |||||||||
|
Others
|
(536 | ) | (461 | ) | (1,440 | ) | (952 | ) | ||||||||
| (8,699 | ) | 137,785 | 368,900 | (700,141 | ) | |||||||||||
|
Financial
income
|
||||||||||||||||
|
Interest
(1)
|
24,087 | 11,128 | 43,856 | 22,274 | ||||||||||||
|
Exchange
variation gains
|
1,141 | 1,296 | 3,280 | 9,639 | ||||||||||||
|
Monetary
variation gains
(2)
|
46,270 | 25,942 | 69,013 | 14,228 | ||||||||||||
|
Results from
derivatives (3)
|
- | 72,344 | - | 153,027 | ||||||||||||
|
Earnings from
marketable securities
|
16,959 | 27,018 | 27,571 | 46,963 | ||||||||||||
|
Others
|
(869 | ) | 57 | (298 | ) | 179 | ||||||||||
| 87,588 | (678,553 | ) | 143,422 | 246,310 | ||||||||||||
| 78,889 | (540,768 | ) | 512,322 | (453,831 | ) | |||||||||||
|
(1)
|
Included in
the quarter and six-month period ended October 31, 2008 the results from
currency and interest rate swap
contracts;
|
|
(2)
|
Includes
foreign exchange gains (losses) on assets and liabilities denominated in
foreign currency; and.
|
|
(3)
|
Includes
results from transactions in futures, options swaps and
NDF.
|
38
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
18.
|
Other
operating income (expenses)
|
|
Parent
Company
|
||||||||||||||||
|
07/01/09
a 09/30/09
|
08/01/08
a 10/31/08
|
04/01/09
a 09/30/09
|
05/01/08
a 10/31/08
|
|||||||||||||
|
Reversal
(Set-up) of provision for legal claims
|
2,089 | (3,372 | ) | 1,497 | (5,484 | ) | ||||||||||
|
Gain on sale
of investment interest (Note 8)
|
- | - | 3,052 | - | ||||||||||||
|
Reversal
(Set-up) of provision for devaluation of permanent equity
interest
|
- | 3,342 | - | 3,342 | ||||||||||||
|
Scrap sales
revenue
|
360 | 844 | 805 | 1,219 | ||||||||||||
|
Rent and
lease income
|
1,055 | 666 | 1,459 | 1,357 | ||||||||||||
|
Others
|
(335 | ) | (311 | ) | (29 | ) | 1,284 | |||||||||
| 3,169 | 1,169 | 6,784 | 1,718 | |||||||||||||
|
Consolidated
|
||||||||||||||||
|
07/01/09
a 09/30/09
|
08/01/08
a 10/31/08
|
04/01/09
a 09/30/09
|
05/01/08
a 10/31/08
|
|||||||||||||
|
Reversal
(Set-up) of provision for legal claims
|
(492 | ) | (15,230 | ) | (3,382 | ) | (25,859 | ) | ||||||||
|
Gain on sale
of investment interest (Note 8)
|
- | - | 93,097 | - | ||||||||||||
|
Loss on
business combination, net (Note 8)
|
- | - | (28,138 | ) | - | |||||||||||
|
Rent and
lease income
|
1,322 | 1,883 | 3,856 | 3,599 | ||||||||||||
|
Share
issuance expense
|
- | (22,059 | ) | - | (22,059 | ) | ||||||||||
|
Reversal
(Set-up) of provision for devaluation of permanent equity
interest
|
- | 3,342 | - | 3,342 | ||||||||||||
|
Scrap sales
revenue
|
1,300 | 1,636 | 2,659 | 4,772 | ||||||||||||
|
Others
|
390 | 406 | 6,912 | 10,047 | ||||||||||||
| 2,520 | (30,022 | ) | 75,004 | (26,158 | ) | |||||||||||
39
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
19.
|
Financial
instruments
|
|
a)
|
Risk
management
|
The Company and its
subsidiaries are exposed to market risks, especially: (i) volatility in the
price of sugar, and; (ii) volatility in foreign exchange rates. In order to
manage these risks, the Company adopts policies and procedures approved by
Management through its Risk Committee. These documents establish limits,
continuous monitoring of exposures, counterparties and financial instruments
approved for trading. Financial instruments and risks are managed through the
definition of strategies, establishment of control systems and determination of
foreign exchange, interest rate and price exposure limits.
40
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
19.
|
Financial
instruments
(continued)
|
|
a)
|
Risk management
(Continued)
|
As
of September 30, 2009 and June 30, 2009, the fair values of transactions
involving derivative financial instruments are as follows:
|
Parent
Company
|
Consolidated
|
|||||||||||||||||||||||||||||||||||||||
|
Notional
value
|
Fair
value
|
Notional
value
|
Fair
value
|
|||||||||||||||||||||||||||||||||||||
|
09/30/09
|
06/30/09
|
09/30/09
|
06/30/09
|
Gain/loss
(*)
|
09/30/09
|
06/30/09
|
09/30/09
|
06/30/09
|
Gain/loss
(*)
|
|||||||||||||||||||||||||||||||
|
Price
risk
|
||||||||||||||||||||||||||||||||||||||||
|
Commodity
derivatives
|
||||||||||||||||||||||||||||||||||||||||
|
Futures
contracts:
|
||||||||||||||||||||||||||||||||||||||||
|
Sale commitments (Sugar price
hedge)
|
562,916 | 239,875 | (53,519 | ) | (26,926 | ) | (53,519 | ) | 562,916 | 258,739 | (53,519 | ) | (27,804 | ) | (53,519 | ) | ||||||||||||||||||||||||
|
Sugar purchase commitments
(Increase in average price)
|
67,912 | 40,226 | 4,319 | 3,871 | 4,319 | 67,912 | 40,226 | 4,319 | 3,871 | 4,319 | ||||||||||||||||||||||||||||||
|
HO purchase commitments
(Increase in average price)
|
50,813 | - | 1,288 | - | 1,288 | 50,813 | - | 1,288 | - | 1,288 | ||||||||||||||||||||||||||||||
|
Options:
|
||||||||||||||||||||||||||||||||||||||||
|
Call (Increase in average
price)
|
537,390 | 494,743 | (146,090 | ) | (68,502 | ) | (106,901 | ) | 537,390 | 494,743 | (146,090 | ) | (68,502 | ) | (106,901 | ) | ||||||||||||||||||||||||
|
Put
(Sugar price hedge)
|
331,792 | 261,389 | 16,627 | 28,935 | (31,182 | ) | 331,792 | 261,389 | 16,627 | 28,935 | (31,182 | ) | ||||||||||||||||||||||||||||
|
Swap
contracts:
|
||||||||||||||||||||||||||||||||||||||||
|
Ethanol
Swap(Ethanol price hedge)
|
- | 11,648 | - | 1,174 | - | - | 11,648 | - | 1,174 | - | ||||||||||||||||||||||||||||||
|
Sugar
Swap (Sugar price hedge)
|
100,630 | - | 8,219 | - | 8,219 | 100,630 | - | 8,219 | - | 8,219 | ||||||||||||||||||||||||||||||
| (169,156 | ) | (61,448 | ) | (177,776 | ) | (169,156 | ) | (62,326 | ) | (177,776 | ) | |||||||||||||||||||||||||||||
|
Foreign
exchange risk
|
||||||||||||||||||||||||||||||||||||||||
|
Foreign
exchange derivatives
|
||||||||||||||||||||||||||||||||||||||||
|
Futures
contracts:
|
||||||||||||||||||||||||||||||||||||||||
|
Sale commitments (Cash flow
hedge)
|
1,588,234 | 1,415,530 | 19,338 | 4,525 | 19,338 | 1,588,234 | 1,415,530 | 19,338 | 4,525 | 19,338 | ||||||||||||||||||||||||||||||
|
Purchase commitments (Increase
in cash flow)
|
741,591 | 98,220 | (8,982 | ) | 320 | (8,982 | ) | 741,591 | 98,220 | (8,982 | ) | 320 | (8,982 | ) | ||||||||||||||||||||||||||
|
Forward
contracts:
|
||||||||||||||||||||||||||||||||||||||||
|
Sale
commitments (Cash flow hedge)
|
1,027,349 | 237,010 | 31,765 | 15,395 | 31,765 | 1,027,349 | 237,010 | 31,765 | 15,395 | 31,765 | ||||||||||||||||||||||||||||||
|
Options:
|
||||||||||||||||||||||||||||||||||||||||
|
Put (Cash flow
hedge)
|
468,000 | 538,125 | 15,871 | 32,371 | 6,966 | 468,000 | 538,125 | 15,871 | 32,371 | 6,966 | ||||||||||||||||||||||||||||||
|
Swap
contracts:
|
||||||||||||||||||||||||||||||||||||||||
|
Senior Notes
2009 (Cash flow hedge)
|
570,700 | 570,700 | (4,472 | ) | (2,549 | ) | (5,328 | ) | 570,700 | 570,700 | (4,472 | ) | (2,549 | ) | (5,328 | ) | ||||||||||||||||||||||||
|
Export credit
note (Cash flow hedge)
|
- | - | - | - | - | 17,802 | - | (2,342 | ) | - | 1,384 | |||||||||||||||||||||||||||||
|
Currency
translation risk transference (Cash flow hedge)
|
322,023 | - | (2,079 | ) | - | (2,079 | ) | 322,023 | - | - | - | - | ||||||||||||||||||||||||||||
| 51,441 | 50,062 | 41,680 | 51,178 | 50,062 | 45,143 | |||||||||||||||||||||||||||||||||||
| (117,715 | ) | (11,386 | ) | (136,096 | ) | (117,978 | ) | (12,264 | ) | (132,633 | ) | |||||||||||||||||||||||||||||
|
Total
assets
|
97,427 | 86,591 | 97,427 | 86,591 | ||||||||||||||||||||||||||||||||||||
|
Total
liabilities
|
(215,142 | ) | (97,977 | ) | (215,405 | ) | (98,855 | ) | ||||||||||||||||||||||||||||||||
(*)
Amount calculated in the six-month period ended September 30, 2009, only related
to the derivatives with open balance at that date.,
41
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
19.
|
Financial
instruments
(continued)
|
|
a)
|
Risk management
(Continued)
|
Counterparties – The Company
operates commodity derivatives in futures and options markets on the New York
Board of Trade (NYBOT) and the London International Financial Futures and
Options Exchange (LIFFE). The Company operates foreign exchange derivatives on
BM&FBovespa and OTC contracts registered with CETIP with banks Unibanco -
União de Bancos Brasileiros S.A, Banco Bradesco S.A., Banco UBS Pactual S.A.,
Banco Barclays S.A. and Banco Morgan Stanley Witter S.A.
Guarantee margins – The
Company’s derivative operations on commodity exchanges (NYBOT, LIFFE and BM&FBovespa)
require an initial guarantee margin. The brokers with which the Company operates
on these commodity exchanges offer credit limits for these margins. At September
30, 2009, the credit limit for the initial margin totals R$102,164 (R$39,316 at
June 30, 2009). For operations with BM&FBovespa, at September 30, 2009, the
Company had R$169,005 (R$158,711 at June 30, 2009) in Bank Deposit Certificates
(CDB) offered in guarantee. The Company’s OTC derivative operations do not
require guarantee margins.
The results of
operations involving derivative financial instruments settled during the period
and included in the statement of income for the quarter and six-month periods
ended September 30, 2009 and October 31, 2008 were as follows:
|
Parent
Company
|
||||||||||||||||
|
07/01/09
a 09/30/09
|
08/01/08
a 10/31/08
|
04/01/09
a 09/30/09
|
05/01/08
a 10/31/08
|
|||||||||||||
|
Commodity
derivatives
|
(204,230 | ) | 17,504 | (312,693 | ) | 25,360 | ||||||||||
|
Foreign
exchange derivatives
|
150,812 | (12,803 | ) | 357,098 | 24,565 | |||||||||||
| (53,418 | ) | 4,701 | 44,405 | 49,925 | ||||||||||||
|
Financial
income (Note 17)
|
- | 72,344 | - | 153,027 | ||||||||||||
|
Financial
expenses (Note 17)
|
(53,418 | ) | (67,643 | ) | 44,405 | (103,102 | ) | |||||||||
|
Consolidated
|
||||||||||||||||
|
07/01/09
a 09/30/09
|
08/01/08
a 10/31/08
|
04/01/09
a 09/30/09
|
05/01/08
a 10/31/08
|
|||||||||||||
|
Commodity
derivatives
|
(244,997 | ) | 17,504 | (370,093 | ) | 25,360 | ||||||||||
|
Foreign
exchange derivatives
|
228,382 | (14,538 | ) | 514,295 | 22,830 | |||||||||||
| (16,615 | ) | 2,966 | 144,202 | 48,190 | ||||||||||||
|
Financial
income (Note 17)
|
- | 72,344 | - | 153,027 | ||||||||||||
|
Financial
expenses (Note 17)
|
(16,615 | ) | (69,378 | ) | 144,202 | (104,837 | ) | |||||||||
42
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
19.
|
Financial
instruments
(Continued)
|
|
b)
|
Price
risk
|
The Company has
derivatives with the objective of mitigating its exposure to sugar price
oscillation in the international market. Derivative operations allow ensuring
minimum average profit for future production. The Company actively manages the
contracted positions, also the result of these activities is monitored daily.
through effective mark-to-market controls and price impact simulations in order
to allow adjusting targets and strategies due to changes in market
conditions.
At
September 30, 2009, the Company had: (i) 588,931 sugar tons (321,723 tons at
June 30, 2009), hedged by futures contracts, with a negative adjustment to
market value estimated at R$49,200 (negative adjustment of R$23,933 at June 30,
2009); (ii) 504,163 sugar tons (365,117 tons at June 30, 2009) hedged by
derivative contracts in the collars structure (put and call), which fair value
is negative adjusted in R$63,268 (negative adjustment of R$3,103 at June 30,
2009); (iii) 201,686 sugar tons (251,218 tons at June 30, 2009), linked to
purchase options sold, with a negative adjustment to market value estimated at
R$66,194 (negative adjustment of R$36,464 at June 30, 2009); (iv) 15,876 HO
gallons, hedged by future contracts which fair value is positive adjusted in
R$1,288; and, (v) no ethanol hedge operations (13,022 ethanol cubic meters at
June 30, 2009, hedged by swap contracts which fair value was estimated in
R$1,174 at June 30, 2009).
43
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
19.
|
Financial
instruments
(Continued)
|
|
b)
|
Price risk
(Continued)
|
|
Price risk:
Commodity derivatives outstanding as of September 30,
2009
|
|||||||||||||||||||||||||
|
Derivatives
|
Put /
Call
|
Market
|
Contract
|
Expity
date
|
Number of
contracts
|
Strike
|
Average
price
|
Fair
price
|
Notional
|
Notional
|
Fair
value
|
||||||||||||||
|
(units)
|
(R$)
|
(R$)
|
|||||||||||||||||||||||
|
Future
contract
|
Call
|
LIFFE
|
White
Sugar
|
Dec-09
|
280
|
-
|
¢T
|
573.70
|
¢T
|
618.00
|
14,000T
|
14,281
|
(1,103)
|
||||||||||||
|
Future
contract
|
Call
|
NYBOT
|
#11
|
Jul-09
|
87
|
-
|
¢lb
|
15.12
|
¢lb
|
23.08
|
4,420T
|
2,619
|
(1,380)
|
||||||||||||
|
Future
contract
|
Call
|
NYBOT
|
#11
|
Mar-10
|
5,480
|
-
|
¢lb
|
23.09
|
¢lb
|
25.39
|
278,397T
|
251,991
|
(25,097)
|
||||||||||||
|
Future
contract
|
Call
|
NYBOT
|
#11
|
Mai-10
|
600
|
-
|
¢lb
|
23.00
|
¢lb
|
24.18
|
30,481T
|
27,480
|
(1,412)
|
||||||||||||
|
Future
contract
|
Call
|
NYBOT
|
#11
|
Jul-10
|
4,175
|
-
|
¢lb
|
20.09
|
¢lb
|
22.57
|
212,100T
|
167,017
|
(20,639)
|
||||||||||||
|
Future
contract
|
NYBOT
|
#11
|
Oct-10
|
2,423
|
-
|
¢lb
|
20.63
|
¢lb
|
21.44
|
123,094T
|
99,528
|
(3,888)
|
|||||||||||||
|
Subtotal
of future contracts - sales
|
662,493T
|
562,916
|
(53,519)
|
||||||||||||||||||||||
|
Future
contract
|
Put
|
NYBOT
|
#11
|
Mar-10
|
1,338
|
-
|
¢lb
|
23.80
|
¢lb
|
25.39
|
(67,974T)
|
(63,418)
|
4,236
|
||||||||||||
|
Future
contract
|
Put
|
NYBOT
|
#11
|
Jul-10
|
10
|
-
|
¢lb
|
21.18
|
¢lb
|
22.57
|
(508T)
|
(422)
|
28
|
||||||||||||
|
Future
contract
|
Put
|
NYBOT
|
#11
|
Mar-11
|
100
|
-
|
¢lb
|
20.45
|
¢lb
|
20.73
|
(5,080T)
|
(4,073)
|
55
|
||||||||||||
|
Subtotal
of future contracts - purchase
|
(73,562T)
|
(67,912)
|
4,319
|
||||||||||||||||||||||
|
Future
contract
|
Call
|
NYMEX
|
HOX9
|
Nov-09
|
190
|
-
|
¢gln
|
177.73
|
¢gln
|
183.24
|
7,980
gln
|
25,218
|
782
|
||||||||||||
|
Future
contract
|
Call
|
NYMEX
|
HO29
|
Dec-09
|
188
|
-
|
¢gln
|
182.30
|
¢gln
|
185.90
|
7,896
gln
|
25,595
|
506
|
||||||||||||
|
Subtotal
of future contracts - purchase
|
15,876
gln
|
50,813
|
1,288
|
||||||||||||||||||||||
|
Subtotal
of future contracts
|
545,816
|
(47,912)
|
|||||||||||||||||||||||
|
Call
|
Call
|
NYBOT
|
#11
|
Mar-10
|
985
|
16.00
|
¢lb
|
1.39
|
¢lb
|
9.49
|
50,040T
|
31,386
|
(18,616)
|
||||||||||||
|
Call
|
Call
|
NYBOT
|
#11
|
Mar-10
|
985
|
17.00
|
¢lb
|
1.14
|
¢lb
|
8.58
|
50,040T
|
33,347
|
(16,831)
|
||||||||||||
|
Call
|
Call
|
NYBOT
|
#11
|
Mar-10
|
2,000
|
18.00
|
¢lb
|
1.13
|
¢lb
|
7.72
|
101,605T
|
71,693
|
(30,748)
|
||||||||||||
|
Call
|
Call
|
NYBOT
|
#11
|
Jul-10
|
5,987
|
20.00
|
¢lb
|
1.30
|
¢lb
|
4.41
|
304,154T
|
238,459
|
(52,580)
|
||||||||||||
|
Call
|
Call
|
NYBOT
|
#11
|
Oct-10
|
2,153
|
20.50
|
¢lb
|
1.78
|
¢lb
|
3.57
|
109,378T
|
87,897
|
(15,307)
|
||||||||||||
|
Call
|
Call
|
NYBOT
|
#11
|
Oct-10
|
1,784
|
21.00
|
¢lb
|
1.87
|
¢lb
|
3.38
|
90,631T
|
74,609
|
(12,008)
|
||||||||||||
|
Subtotal
of calls
|
705,849T
|
537,390
|
(146,090)
|
||||||||||||||||||||||
|
Put
|
Put
|
NYBOT
|
#11
|
Jul-10
|
5,987
|
16.50
|
¢lb
|
2.33
|
¢lb
|
0.66
|
304,154T
|
196,729
|
7,869
|
||||||||||||
|
Put
|
Put
|
NYBOT
|
#11
|
Oct-10
|
2,153
|
17.00
|
¢lb
|
2.42
|
¢lb
|
1.04
|
109,378T
|
72,890
|
4,459
|
||||||||||||
|
Put
|
Put
|
NYBOT
|
#11
|
Oct-10
|
1,784
|
17.50
|
¢lb
|
2.71
|
¢lb
|
1.21
|
90,631T
|
62,174
|
4,299
|
||||||||||||
|
Subtotal
of puts
|
504,163T
|
331,792
|
16,627
|
||||||||||||||||||||||
|
Subtotal
of options - collars
|
504,163T
|
400,964
|
(63,268)
|
||||||||||||||||||||||
|
Subtotal
of options - calls
|
201,686T
|
136,426
|
(66,194)
|
||||||||||||||||||||||
|
Swap
|
Call
|
OTC
|
#11
|
Oct-10
|
985
|
-
|
¢lb
|
25.50
|
¢lb
|
2.10
|
50,040T
|
50,021
|
4,110
|
||||||||||||
|
Swap
|
Call
|
OTC
|
#11
|
Oct-10
|
985
|
-
|
¢lb
|
25.80
|
¢lb
|
2.10
|
50,040T
|
50,609
|
4,110
|
||||||||||||
|
Subtotal
of swaps
|
100,081T
|
100,630
|
8,219
|
||||||||||||||||||||||
|
Total
commodities
|
1,183,836
|
(169,156)
|
|||||||||||||||||||||||
The Company
estimates that is annual production of sugar, its current installed capacity, is
3,600,000 tons. As a consequence, the Company estimates to have, at September
30, 2009, 3.64 months (2.29 months at June 30, 2009) of its future production at
prices hedged by derivative financial instruments. Also at that date, the
Company estimates to have 0.67 months (0.84 months at June 30, 2009) of its
future production committed to put options contracts.
44
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
19.
|
Financial
instruments
(Continued)
|
|
c)
|
Foreign exchange
risk
|
The Company has
derivatives in order to mitigate its exposure to the effect of foreign exchange
rate fluctuations on its revenue from exports. The exchange rate derivatives
together with the commodity price derivatives allow ensuring minimum average
profit from future production. The Company actively manages contracted
positions, and the result of such activities is monitored daily. through
effective mark-to-market controls and price impact simulations in order to allow
adjusting targets and strategies due to changes in market conditions. The fair
value of these derivatives was measured based on estimates that use discounted
cash flows based on market curves.
At
September 30, 2009, the Company had US$1,360,600 thousand (US$1,034,650 thousand
at June 30, 2009) hedged by future, forward and option contracts traded in
BM&F Bovespa and OTC, with a positive adjustment to market value estimated
at R$51,178 (positive adjustment of R$52,612 at June 30, 2009).
45
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
19.
|
Financial
instruments
(Continued)
|
|
c)
|
Foreign exchange
risk (Continued)
|
The Company
estimates that its annual revenues from export, in light of its current
installed capacity and expected prices of sugar and ethanol, according to its
internal budget, is US$1,250,000 thousand. As a consequence, the Company
estimates to have, at September 30, 2009, 12.10 months (9.93 months at June 30,
2009) of its billings from future exports at exchange rate hedged by derivative
financial instruments.
The Company does
not use derivative financial instruments to hedge foreign exchange exposure from
balance sheet. At September 30, 2009 and June 30, 2009, the Company and its
subsidiaries presented the following net balance sheet exposure to US
dollar:
|
Consolidated
|
||||||||||||||||
|
09/30/09
|
06/30/09
|
|||||||||||||||
|
R$
|
US$
(thousand)
|
R$
|
US$
(thousand)
|
|||||||||||||
|
Amounts
pending foreign exchange closing
|
24,659 | 13,868 | 61,843 | 31,688 | ||||||||||||
|
Overnight
|
30,625 | 17,223 | 56,697 | 29,052 | ||||||||||||
|
Trade notes
receivable - foreign
|
72,432 | 40,736 | 137,235 | 70,319 | ||||||||||||
|
Related
parties
|
- | - | (342,064 | ) | (175,274 | ) | ||||||||||
|
Foreign
currency-denominated loans
|
(262,715 | ) | (147,750 | ) | (363,004 | ) | (186,003 | ) | ||||||||
|
Advances from
customers
|
(92,043 | ) | (51,765 | ) | (113,662 | ) | (58,240 | ) | ||||||||
|
Senior Notes
due in 2009
|
(66,399 | ) | (37,343 | ) | (71,081 | ) | (36,422 | ) | ||||||||
|
Senior Notes
due in 2014
|
(629,969 | ) | (354,293 | ) | - | - | ||||||||||
|
Senior Notes
due in 2017
|
(719,400 | ) | (404,589 | ) | (803,257 | ) | (411,589 | ) | ||||||||
|
Perpetual
bonds
|
(809,575 | ) | (455,303 | ) | (888,570 | ) | (455,303 | ) | ||||||||
|
Derivative
financial instruments, net
|
31,555 | 17,746 | 27,822 | 14,256 | ||||||||||||
|
Foreign
exchange exposure, net
|
(2,420,830 | ) | (1,361,470 | ) | (2,298,041 | ) | (1,177,516 | ) | ||||||||
|
d)
|
Interest rate
risk
|
The Company
monitors fluctuations of the several interest rates to which its assets and
liabilities are pegged and, in the event of increased volatility of such rates,
it may engage in transactions with derivatives so as to minimize such risks. At
September 30, 2009, the Company was not in possession of any interest rate
derivative contracts.
46
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
19.
|
Financial
instruments
(Continued)
|
|
e)
|
Credit
risk
|
A
significant portion of sales made by the Company and its subsidiaries is for a
selected group of best-in-class counterparts, i.e. trading companies, fuel
distribution companies and large supermarket chains. In the fuel distribution
activity, the diversity of the receivables, the selected clients and the follow
up of financing terms of sales by business segment and individual position
limits are procedures adopted to minimize eventual default in the accounts
receivable. Credit risk is managed through specific rules of client acceptance,
credit rating and setting of limits for customer exposure, including the
requirement of a letter of credit from major banks and obtaining actual
warranties on given credit, when applicable. Management believes that the risk
of credit is substantially covered by the allowance for doubtful
accounts.
The Company and its
subsidiaries historically have not recorded material losses on trade accounts
receivable.
|
|
f)
|
Debt acceleration
risk
|
As
of September 30, 2009, the Company was a party to loan and financing agreements
with covenants generally applicable to these operations, including requirements
related to cash generation, debt to equity ratio and others. These covenants are
being fully complied with by the Company or are in process of renegotiation and
do not place any restrictions on its operations.
|
g)
|
Market
values
|
As
of September 30, 2009 and June 30, 2009, the fair values of cash, marketable
securities and trade accounts receivable and payable approximate the respective
amounts recorded in the consolidated financial statements, due to their
short-term nature.
The fair value of
the Senior Notes maturing in 2014 and 2017, as described in Note 13, according
to their market value, were 106.25% and 98.75%, respectively, of their face
value at September 30, 2009.
The fair value of
Perpetual Notes as described in Note 13, according to its market value, was
92,00% of its face value at September 30, 2009.
47
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
19.
|
Financial
instruments
(Continued)
|
|
g)
|
Market values
(Continued)
|
As
for the other loan and financing arrangements, their respective fair values
substantially approximate the amounts recorded in the quarterly information
considering that such instruments are subject to variable interest
rates.
|
h)
|
Sensitivity
analysis
|
Pursuant to CVM
Rule No. 475 issued on December 17, 2008, following is the sensitivity analysis
of the fair value of financial instruments, in accordance with the types of
risks deemed to be significant by the Company:
Assumptions
for the Sensitivity Analysis
For the analysis,
the Company adopted three scenarios, being one probable and two that may have
effects from impairment of the fair value of the Company’s derivative financial
instruments. Impacts on operations were not considered, but only on the variable
that impacts the value of derivative financial instruments. The definition of
the probable scenario included the market data at September 30, 2009, the same
one which determine the fair value of the derivatives at that date and therefore
there are no differences in relation to the fair value of the derivative
financial instruments. The possible adverse and remote scenarios were
established in view of adverse impacts of 25% and 50% on the curves in the
prices of the U.S. dollar and sugar:
|
Sugar
#11
|
Sugar
#5
|
Heating
Oil
|
Dollar
|
||||
|
Source:
|
NYBOT
|
LIFFE
|
NYMEX
|
BM&FBovespa
|
|||
|
Unit:
|
¢US$/lb
|
US$/ton
|
US$/gallon
|
R$/US$
|
|||
|
Jul-09
|
23.08
|
1.7781
|
|||||
|
Oct-09
|
24.12
|
-
|
179.60
|
1.7781
|
|||
|
Nov-09
|
-
|
-
|
183.24
|
1.7802
|
|||
|
Dec-09
|
-
|
618.00
|
185.90
|
1.7896
|
|||
|
Jan-10
|
24.76
|
-
|
188.82
|
1.7996
|
|||
|
Fev-10
|
-
|
-
|
191.09
|
1.8090
|
|||
|
Mar-10
|
25.39
|
637.50
|
192.64
|
1.8174
|
|||
|
Abr-10
|
-
|
-
|
193.57
|
1.8282
|
|||
|
Mai-10
|
24.18
|
618.50
|
194.67
|
1.8385
|
|||
|
Jun-10
|
-
|
-
|
195.82
|
1.8494
|
|||
|
Jul-10
|
22.57
|
-
|
197.57
|
1.8604
|
|||
|
Aug-10
|
-
|
588.00
|
199.67
|
1.8725
|
|||
|
Sep-10
|
-
|
-
|
201.97
|
1.8847
|
|||
|
Oct-10
|
21.44
|
-
|
204.27
|
1.8937
|
|||
|
Nov-10
|
-
|
-
|
206.57
|
1.9093
|
|||
|
Dec-10
|
-
|
543.00
|
208.87
|
1.9222
|
|||
|
Jan-11
|
-
|
-
|
211.12
|
1.9373
|
|||
|
Fev-11
|
-
|
-
|
212.17
|
1.9523
|
|||
|
Mar-11
|
20.73
|
527.00
|
212.67
|
1.9658
|
|||
|
Apr-11
|
-
|
-
|
-
|
1.9808
|
48
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
19.
|
Financial
instruments
(Continued)
|
|
h)
|
Sensitivity
analysis (Continued)
|
Sensitivity
Exhibit
Following is the
sensitivity exhibit on the change in the fair value of the Company’s financial
instruments:
|
Impacts
in P&L (*)
|
|||||||||||||
|
Risk
factor
|
Probable
Scenario
|
Possible
Scenario (25%)
|
Remote
Scenario (50%)
|
||||||||||
|
Price
risk
|
|||||||||||||
|
Goods
derivatives
|
|||||||||||||
|
Futures contracts:
|
|||||||||||||
|
Sale commitments
|
Sugar price
spike
|
(1,860 | ) | (161,632 | ) | (321,405 | ) | ||||||
|
Purchase commitments
|
Sugar price
decline
|
101 | (18,445 | ) | (36,991 | ) | |||||||
|
Purchase commitments
|
HO price
decline
|
4 | (13,071 | ) | (26,146 | ) | |||||||
|
Options:
|
|||||||||||||
|
Put
|
Sugar price
spike
|
42,340 | (124,099 | ) | (290,539 | ) | |||||||
|
Call
|
Sugar price
spike
|
(16,627 | ) | (16,627 | ) | (16,627 | ) | ||||||
|
Swap
contracts
|
Sugar price
spike
|
(25,810 | ) | (48,205 | ) | (70,601 | ) | ||||||
|
Sugar exports
(1)
|
Sugar price
spike
|
2,419 | 299,733 | 597,049 | |||||||||
|
Lubricant
cost
|
HO price
spike
|
(4 | ) | 13,071 | 26,146 | ||||||||
|
Exchange rate
risk
|
|||||||||||||
|
Exchange
rate derivatives
|
|||||||||||||
|
Futures contracts:
|
|||||||||||||
|
Sale commitments
|
R$/US$
exchange rate appreciation
|
- | (392,224 | ) | (784,448 | ) | |||||||
|
Purchase commitments
|
R$/US$
exchange rate depreciation
|
- | (183,152 | ) | (366,305 | ) | |||||||
|
Forward contract:
|
|||||||||||||
|
Sale commitments
|
R$/US$
exchange rate appreciation
|
(1,221 | ) | (250,423 | ) | (499,624 | ) | ||||||
|
Option:
|
|||||||||||||
|
Call
|
R$/US$
exchange rate appreciation
|
(15,776 | ) | (15,871 | ) | (15,871 | ) | ||||||
|
Swap
contracts
|
R$/US$
exchange rate depreciation
|
- | (8,808 | ) | (17,615 | ) | |||||||
|
Exports
(2)
|
R$/US$
exchange rate appreciation
|
16,997 | 841,671 | 1,666,248 | |||||||||
|
Net foreign
exchange exposure (3)
|
R$/US$
exchange rate appreciation
|
(157,386 | ) | (801,940 | ) | (1,446,494 | ) | ||||||
| (156,823 | ) | (880,022 | ) | (1,603,223 | ) | ||||||||
(*)
Projected results to occur up to 12 months from September 30, 2009.
|
|
(1)
|
The
sensitivity on sugar exports reflects the 25% and 50% increase scenarios
(versus the scenarios for reduction in the underlying derivative financial
instruments) on the price of sugar in relation to the volume of sugar
equivalent to notional in derivative financial instruments contracted in
order to hedge the Company against such
variations;
|
|
(2)
|
The
sensitivity on exports reflects the 25% and 50% increase scenarios (versus
the scenarios for reduction in the underlying derivative financial
instruments) on the R$ : US$ exchange rate in the future in
relation to the volume of U.S. dollars equivalent to notional in
derivative financial instruments contracted in order to hedge the Company
against such variations.
|
|
(3)
|
Net
foreign exchange exposure of R$2,420,830, equivalent to US$1.61,470
thousand. The probable scenario considers the maintenance of total net
exposure basis in the balance sheet for the following 12 months, and the
projected exchange rate for October 31, 2010, related to its value in
September 30, 2009, that was
R$1,7781/US$.
|
49
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
20.
|
Insurance
|
At
September 30, 2009, the Company and its subsidiaries maintain insurance coverage
against fire, thunderbolts and explosions of any nature for the whole sugar and
ethanol inventory and for buildings, equipment and installations at
plants.
The Company does
not foresee any difficulties to renew its insurance policies and believes that
the coverage established is reasonable in terms of amounts and consistent with
Brazilian industry standards.
The scope of our
audit work did not include a review of the sufficiency of the insurance
coverage, which, as determined by the Company management, was considered
sufficient to cover any claims.
|
21.
|
Stock
option plan
|
At
the Annual and Extraordinary General Meeting held on August 30, 2005, the
Guidelines for the Outlining and Structuring of a Stock Option Plan for
Company’s officers and employees were approved, thus authorizing the issue of up
to 5% of the Company’s share capital. The stock option plan was designed to
obtain and retain the services rendered by senior officers and employees,
offering them the opportunity to become shareholders of the Company. On
September 22, 2005, the Board of Directors approved the distribution of stock
options corresponding to 4.302.780 common shares to be issued or purchased by
the Company related to 3.25% of the share capital at the time, authorized by the
Annual/Extraordinary General Meeting. On that same date, eligible officers were
informed of the material terms and conditions of the share-based compensation
agreement.
On
September 11, 2007, the Board of Directors approved the distribution of stock
options, corresponding to 450,000 common shares to be issued or purchased by the
Company related to 0.24% of the share capital at the time, authorized by the
Annual/Extraordinary General Meeting. On that same date, the eligible officer
was informed of the material terms and conditions of the share-based
compensation agreement. The remaining 1.51% may still be
distributed.
On
August 7, 2009, the Board of Directors approved an additional distribution of
stock options, with no vesting period, corresponding to 165,657 common shares to
be issued or purchased by the Company, following a change in the management
members.
50
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
21.
|
Stock
option plan
(Continued)
|
Based on the fair
value at the issue date, exercise price is R$6.11 (six reais and eleven cents)
per share, without discount. The exercise price was calculated before the above
evaluation based on an expected private equity agreement based on that
eventually was not made. The options are exercisable over a 3-year period,
considering a maximum percentage of 25% p.a. of total stock options offered by
the Company, within a period of 5 years.
The options
exercised shall be settled only upon issue of new common or treasury shares that
the Company may have at each relevant date
Should any holder
of stock options cease to be an employee or manager of the Company, by death,
retirement or permanent disability of the beneficiary, any options not
previously vesting shall become extinct on the date that employee or officer
separates from the Company. However, in the case of termination without good
cause, the terminated employees shall be entitled to exercise 100% of their
options referring to that particular year, on top of exercising 50% of their
options in the coming year.
At
September 30, 2009 stock options equivalent to 1,411,670 common shares were not
exercised.
Until September 30,
2009, all stock option exercises were settled through the issuance of new common
shares. Should the remaining options also be exercised through the issuance of
new common shares, the current shareholders’ interest would be reduced by 0,38%
after exercising all remaining options.
At September 30, 2009, R$2,969 regarding
the unrecognized remuneration cost of stock options will be recognized within
nearly 12 months (R$6,499 at June 30, 2009, with a deadline of nearly 15
months).
51
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
22. Pension
plan
The subsidiary
Cosan CL patrocina a Previd Exxon - Sociedade de Previdência Privada, a
closed-ended supplementary pension entity set up on December 23, 1980, engaged
mainly in the supplementation of benefits within certain limits set in its
formation deed, to which all employees of the sponsor and their beneficiaries
are entitled as social security insured workers.
The actuarial
liabilities regarding Previd Exxon were determined in accordance with IBRACON
NPC 26, and is shown in non-current liabilities at September 30, 2009 totaling
R$62,287 (R$60,970 at June 30, 2009).
During the quarter
and six-month periods ended September 30, 2009, the amount of contributions
Cosan CL made to Previd Exxon – Sociedade de Previdência Privada totaled R$1,686
and R$3,546, respectively.
|
23.
|
Subsequent
events
|
Capital
increase
On
October 5, 2009, the Board of Directors approved a capital increase of R$1,036
through issuance of 169,500 new common shares, with no par value, in connection
with the “Company’s Stock Option Plan” and with the exercise of such options by
the eligible executives, at the issuance price of R$6.11 per share, set on the
terms of the stock option plan. After the issuance of the shares, the Company’s
capital amounts to R$4,156,352 and is comprised of 372,979,642 registered common
shares with no par value.
In
addition, on October 29, 2009, the Board of Directors approved a capital
increase of R$380,063 through issuance of 23,753,953 new common shares, with no
par value, at issue price of R$16.00, due to exercise of 39,589,922 subscription
warrants by Cosan Limited, under the Board of Directors deliberation terms in
the September 19, 2008 meeting (note 15.d). After the issuance of the shares,
the Company’s capital amounts to R$4,536,415, below the limit of authorized
capital, as described on article 6 of the Company’s bylaws, represented by
396,733,595 common shares with no par value.
52
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Notes to the
unaudited quarterly financial information (Continued)
September 30, 2009
and June 30, 2009
(In thousands of
reais)
|
23.
|
Subsequent
events (Continued)
|
PPE - Export Prepayment
Finance
On
October 28, 2009, the Company, through its subsidiary Cosan Alimentos, entered
into a financing with first-line banks, denominated PPE – Export Prepayment
Finance, in the amount of R$401,967, equivalent to US$230,000 thousand, with
final maturity in September, 2014. This PPE bears interest at a rate of 9.0% per
annum and is subject to US Dollar exchange variation. The objective of this
operation is to lengthen the current debt position, settling some short-term
transactions.
Approval of the quarterly
financial information
On
November 6, 2009, this quarterly financial information for the quarter ended and
six-month period ended September 30, 2009 was approved by the Company’s Board of
Directors.
53
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
|
COSAN
LIMITED
|
||||||
| Date: November 17, 2009 |
By:
|
/s/
Marcelo Eduardo Martins
|
||||
|
Name:
|
Marcelo
Eduardo Martins
|
|||||
|
Title:
|
Chief
Financial and Investor Relations Officer
|
|||||