2. Integrated business platform
As of December 31, 2006
This integrated business platform gives us superior performance
Synergies:
cost reduction
cross selling
bargaining power
182 agencies
in 9 countries
6,730 cars
26 points of sale
79% sold to final
consumer
145 agencies
31,373 cars
1,000,000 individuals and
14,000 corporations
15,265 cars
(635 managed)
350 clients
1.688 employees
156 employees
15 employees 350 employees
Overhead = 124 employees
3. 2
CoreBusinessesSupport
Increase market leadership maintaining high return
Create value taking advantage of the synergies of the
integrated business platform
Add value to the brand by expanding the network in
Brazil and South America
Strategy by segment
Add value to the businesses of the platform as a
competitive advantage, reducing depreciation costs
6. 5
Source: Bacen, Localiza
Accumulated growth rate – car rental
Growth opportunities: GDP
Source: Bacen, Localiza
Localiza – Daily volume GDP
7.7x
The average car rental division volume growth was
7.7 x GDP over the last 3 years
2003 2004 2005 2006
7. 6
Number of travellers has
increased 13% on the last 3
years
Localiza is the absolute leader
in airport branches in Brazil
In 2006 Localiza Car Rental
Division grew 2 times faster
than the number of passengers
Air traffic evolution
(Millions of passengers per year)
CAGR: +13%
Growth opportunities: Air traffic
71
83
96
102
2003 2004 2005 2006
Source: infraero
8. 7
Source: www.abecs.
CAGR: +18%
# of credit cards (million)
Growth opportunities: Credit cards
48
53
68
78
2003 2004 2005 2006
78 million credit cards in Brazil
35.5 million potential Localiza customers
37% of car rental revenues came
through credit cards in 2006
9. 8
Localiza is very well positioned to capture this growth
due to its geographic footprint
Growth opportunities: Replacement market
Replacement is a growing market in Brazil
Brazil has 34 million cars but only 9.2 million
insured
The accident rate is 16.5% / year
The potential market is 10.6 million of daily
rentals (2.5 x the car rental division in 2006)
Source: FENASEG -
10. 9
Growth opportunities: Fleet outsourcing
Focus of corporations on their core businessesFocus of corporations on their core businesses
Fixed asset reduction by companies (increase their asset turnover)Fixed asset reduction by companies (increase their asset turnover)
Renting a fleet is more economic than owning itRenting a fleet is more economic than owning it
Large potential market with low penetration due to lack of habitLarge potential market with low penetration due to lack of habit
11. 10
DTG
11%
Vanguard
20%
Hertz
28%
Avis Budget
32%
Other
2%
Enterprise
7%
All others
19%
Avis Budget
7%
Hertz
9%
Enterprise
65%
US airport segment*
US$10BN
US off-airport segment*
- US$10BN
Source:*Avis presentation nov/06 - local segment share amounts are company estimates
** National/Alamo prospectus, NYSE/SEC, September 20, 2006
USA: 5 companies hold 92% of market share
Europe: 6 companies hold 74% of market share**
US Market share 2005
Growth opportunities: Consolidation
12. 11
Source: ABLA
Growth opportunities: Consolidation
Localiza’s market share – Car and Fleet - Brazil
2004 2005
16% 18%
7% 4% 4%
Local
players
69%
Unidas
Avis Hertz
2006E
20%
Localiza corporation grew 30.2% in 2006.
ABLA estimated the market growth in 12%
Localiza grew more than 2x the market in 2006
13. 12
1960
Unidas
74
Avis
83
Hertz
86
Localiza
203
Hertz
33
Avis
31
Unidas
31
Localiza
76
Others
48
Growth opportunities: Off-airport market
In the airports the market is concentrated in the hands of the networks
Off-airport market is fragmented mainly among 1.960 small car rental companies
Source: 1964 companies as of ABLA’s report
* Localiza as of 12/31/06
**Each company website, 01/07/07
*** Assuming that each local player has one agency
BR on airport segment*
agencies
BR off-airport segment*
agencies
Others***
Airport and off airport market - Brazil
Localiza is the consolidator in a fragmented industry!
*
**
*
**
** **
**
**
14. 13
Growth opportunities: On airport and off-airport growth
14,3% 14,0%
1,5% 0,2%
27,2%
20,4%
12,3% 9,8%
1T06 2T06 3T06 4T06
Consolidation is happening mainly on the off-airport agencies
Volume growth Revenue growth
Airport 17.2% 16.0%
Off-airport 49.6% 46.7%
2006 / 2005 Growth (Car rental division)
Elasticity on airport in 2006 was 2 times the growth of domestic deplanements
Domestic deplanements increase x Localiza (rentals on airports)
Daily rental volume on airportsDomestic deplanement
54% 59%
46% 41%
2005 2006
Of f- airport x On - airport share
On-airport agenciesOff-airport agencies
+5 p.p.
-5 p.p.
100% 100%
2006
16. 15
Competitive Advantages: Integrated business platform
Franchising
Car rental Fleet rental
Used Car Sales
This integrated business platform gives us superior performance
18. 17
Competitive Advantages: Largest distribution
279
86
83
74
Localiza Hertz Avis Unidas
243**
279*
Localiza network is larger than
the second, the third and the fourth competitors combined.
(number of agencies in Brazil)
* As of December 31, 2006 ** As of January 29,2007
19. 18
Yield management allows Localiza to be more
competitive and profitable
Month of the yearMonth of the year
Day of the weekDay of the week
EventsEvents
CityCity
Volume per customerVolume per customer
Competitors’ monitoringCompetitors’ monitoring
Localiza adjusts its prices based on supply & demand
Competitive Advantages: Yield management
20. 19
Competitive Advantages: credit with lower interest rate
Global Scale
Localiza Rent a Car S.A. BB / Stable /--
Hertz Corp. BB-/ Stable /--
Vanguard (National / Alamo) B+/ Stable /--
Avis Budget Car Rental BB+/ Stable /--
Enterprise Rent-Car Co. A-/ Stable / A-2
brAA-/ Stable /--Localiza Rent a Car S.A.
brAA/ Positive /brA-1Banco Citibank S.A.
brAA+/ Positive /brA-1Banco Itaú S.A.
brAA+/ Positive /brA-1Banco Bradesco S.A
brA+/ Positive /--CPFL Energia S.A.
brAA+/ Positive /--Gerdau S.A.
brA+/ Stable /--TAM S.A.
Local Currency
Standard & Poor’s as of January 2007
Localiza has the best rating among its international peers
considering the debt currency
21. 20
Deep knowledge of the business
State-of-the-art systems
Operational excellence
Adoption of best practices
Stable management
Competitive Advantages: Know-how
15SeminovosMarco Guimarães
33Vice-presidentAntonio Resende (Founder)
21CFORoberto Mendes
22Total FleetDaltro Barbosa
26Car rentalGina Rafael
33
33
Eugênio Mattar (Founder)
CEO and Chairman of the BoardSalim Mattar (Founder)
Experience in
Localiza
ResponsibilityName
Vice-president
15Investor relationsSilvio Guerra
24Aristides Newton Franchising
We believe this experienced team will run the business for the next ten years
22. 21
Top of mindTop of mind
High quality of services
Customer satisfaction
Strong nationwide presence
International franchising program
High standards of ethical behavior
Competitive Advantages: Brand recognition
23. 22
Speed in transaction time
Better operational control
Customer satisfaction
On-line network
Cost reduction
Competitive Advantages: State of the art IT
24. 23
Localiza enjoys better price and conditions due to its large scale
Localiza purchased more than US$1,2 billion worth of cars from 2003-2006*
Localiza and its Franchisees represented in 2006
3,9% of FIAT internal car sales
2.7% of GM internal car sales
1,8% of the Brazilian internal car sales
*96.9 thousand cars between 2003-2006 calculated on average purchase price of 2006
Competitive Advantages: Bargaining power
15.062
22.182
26.105
33.520
2003 2004 2005 2006
25. 24
When car prices go up more than inflation, depreciaton decreases
% over rental revenue 2000 2001 2002 2003 2004 2005 2006
Localiza (car rental division) 13.8% 11.9% 9.3% 9.2% 1.8% 2.9% 5.2%
Hertz (USA) - - - - 22% 23% 23% *
National / Alamo (USA) - - - - 22% 23% 23% *
Competitive Advantages: Depreciation
Depreciation cost over the car rental revenue
* Until Set/06
Source: National/Alamo prospectus, Sep 20, 2006, p.11 Hertz prospectus, Nov 21,2006, p.12 and 17, Avis 2006 10K
Average depreciation
per car
Real decrease in the
new car price
Real increase in the
new car price
3.617,7
2.142,5
1.656,2
1.752,3
322,9 492,3
939,1
0,9p.p.
-4,1p.p.
-1,0p.p.
-5,1p.p.
4,7p.p.
9,8p.p.
3,7p.p.
(2.000,0)
(1.000,0)
-
1.000,0
2.000,0
3.000,0
4.000,0
2000 2001 2002 2003 2004 2005 2006
-6,0%
-2,0%
2,0%
6,0%
10,0%
Avis / Budget (USA) - - - - 26% 29% 31%
Average depreciation per year (R$1 thousand) over average price of purchased car in
2005 and 2006 (R$25 thousand) = 4% depreciation
28. 27
13 13
26
15
2003 2004 2005 2006
2006 highlights: Footprint expansion
Owned car rental agencies Used car points of sales
41%
24%
100%
32*
24% increase in the number of owned car rental agencies
100% increase in the number of used car points of sales
* Until the end of 1H07
17%
71
83
117
145
2003 2004 2005 2006
30. 29
2006 cash generation
Cash and cash
equivalents in
01/01/06:
Cash and cash
equivalents in
12/31/06:
See addendum 2
(R$ million. USGAAP)+313.7
70.8 30.1
Operating
activities
Financing and
other
activities
The cash generation of R$ 957 MM was larger than the needs to renew 23,174 cars
(R$643.3MM) and also to grow 28.8% = 10,346 cars (R$287.0MM)
957.0
60.1
-127.5
Acquisitions
to renew
23,174 cars
Investment in
Liquid securities
in short-term
-643.3
-287.0
Acquisitions
to growth
10,346 cars
-930.3
31. 30
Investment in fleet
(R$ million. USGAAP)
Net investment per car (R$ ‘000)
2004 2005 2006
Average price purchased cars
Average price sold cars
Net
% over purchase price
22,2
19,3
26,4
23,9
27,7
25,4
2,9 2,5 2,3
13.1% 9.5% 8.3%
Fleet growth (thousand)
+10.3+7.3+6.5
2004 2005 2006
690.0
493.1
930.3
448.2
303.0
590.3
2004 2005 2006
22.182
26.105
33.520
15.715
18.763
23.174
2004 2005 2006
Purchases Sales
Number - thousand Net investment - million
190.1
241.8
340.0
Net investment per car to renew the fleet is declining from 13.1% to 8.3% due to
the fact that new car prices are increasing in line with inflation
Net investment per car to renew the fleet is declining from 13.1% to 8.3% due to
the fact that new car prices are increasing in line with inflation
32. 31
Net debt (R$ million) USGAAP
Rating S&P – BrAA- / Stable
(R$ million. USGAAP)
Indebtness
2003 2004 2005 2006
Net debt / fleet market value 22%
27% / 73%
0.57x
Net debt / EBITDA (BRGAAP) 0.61x 1.1x 1.5x 1.0X
46% 60% 36%
Net debt / equity 33% / 67% 50% / 50% 42% / 58%
Net debt / EBITDA (USGAAP) 1.34x 1.89x 1.42x
After the extraordinary dividend, the debt/equity leverage will return
to a level (estimated 53% / 47%) that maximizes value for the shareholders
After the extraordinary dividend, the debt/equity leverage will return
to a level (estimated 53% / 47%) that maximizes value for the shareholders
87
281
539
443
2003 2004 2005 2006
2006 operating
cash flow was
58% of the debt
at the end of
2005
See addendum 3
33. 32
WACC
2003 2004 2005 2006 2007E*
WACC 24.1% 18.4% 15.8% 11.8%
10.7%
12.6%
42% / 58%
11.2%
8.7%
14.0%
53% / 47%
Third party cost of capital 16.6% 11.5% 13.5%
Cost of own capital 26.9% 21.8% 18.1%
Third party’s capital x equity 27% / 73% 33% / 67% 50% / 50%
The 4 p.p. WACC decrease was offset by the reduction of 4 p.p. in ROICThe 4 p.p. WACC decrease was offset by the reduction of 4 p.p. in ROIC
R$ / million
1,8
75,6
44,5
57,4
11,8%
24,1% 18,4%
15,8%
19,8%
24,1%
29,3%
24,6%
-
25,0
50,0
75,0
100,0
2003 2004 2005 2006
-5,0%
5,0%
15,0%
25,0%
35,0%
EVA WACC nominal ROIC
-4 p.p.
* 2007 Estimate considering the R$ 196.7 million extraordinary dividend
34. 33
ROIC
2003 2004 2005 2006
ROIC 24.5% 29.3% 24.1% 19.8%
Average increase in the car price 14,0% 17,4% 9,4% 4,0%
IPCA – inflation index 9.3% 7.6% 5.7% 3.1%
The 4 p.p. decrease in the ROIC in 2006 was mainly due to the slow down of the asset turnover:
• Stable tariffs in the car rental
• 4% increase in the new car prices in 2006
• Impact of inflation in operating costs
The 4 p.p. decrease in the ROIC in 2006 was mainly due to the slow down of the asset turnover:
• Stable tariffs in the car rental
• 4% increase in the new car prices in 2006
• Impact of inflation in operating costs
R$ / million
1,8
75,6
44,5
57,4
11,8%
24,1% 18,4%
15,8%
19,8%
24,1%
29,3%
24,6%
-
25,0
50,0
75,0
100,0
2003 2004 2005 2006
-5,0%
5,0%
15,0%
25,0%
35,0%
EVA WACC nominal ROIC
-4 p.p.
35. 34
1,8
75,6
44,5
57,4
11,8%
24,1% 18,4%
15,8%
19,8%
24,1%
29,3%
24,6%
-
25,0
50,0
75,0
100,0
2003 2004 2005 2006
-5,0%
5,0%
15,0%
25,0%
35,0%
EVA WACC nominal ROIC
Spread and EVA
2003 2004 2005 2006
Average invested capital – R$ million 323.5 410.8 689.4 937.8
Spread (ROIC – WACC) percentage points 0.55 10.83 8.32 8.06
EVA – R$ million 1.8 44.5 57.4 75.6
Localiza continues to present low spread volatility
In 2006 EVA grew 32% in accordance with the 31% growth in rented fleet
Localiza continues to present low spread volatility
In 2006 EVA grew 32% in accordance with the 31% growth in rented fleet
R$ / million
32%
36. 35
Localiza and peers spread
Localiza Hertz* Avis* DTG*
8.0p.p.
-3.4p.p.
-6.9p.p.
-2.2p.p
2006
*Source: Morgan Stanley reports - Hertz 12/26/2006, Avis 09/05/2006 and DTG 09/28/2006
37. 36
ROE – return on equity
OBS: ROE was calculated dividing net income by average equity of the year. excluding the income of the year
In 2006 Localiza equity grew R$ 156 MM due to the follow-on
Localiza was the 13th among the largest 500 companies in Brasil
with consistent ROE in the last 5 years, by 2006 FGV ranking
Localiza was the 13th among the largest 500 companies in Brasil
with consistent ROE in the last 5 years, by 2006 FGV ranking
39% 39% 37%
29%
2003 2004 2005 2006
39. 38
2007 perspectives
74% 74%
67%
63% 61% 59%
66%
70%
2000 2001 2002 2003 2004 2005 2006 2007
minimum 25% growth in volume
minimum 25 new agencies
EBITDA margin of 42%
utilization rate of 70%
Utilization rate - car rental division
Increasing the utilization rate will allow the increase of the asset turnover
minimum 15% growth in volume
EBITDA margin of 65%
40. 39
2007 perspectives: Management proposals for RENT3
Extraordinary distribution of dividends
R$ 196.7 million that added to the sum already distributed of R$ 35.2 million (as of
interests over own capital) reach R$ 3.45 per share or 12% over RENT3 quote beginning
2006
Split of the shares
Each one will be converted into 3 for the increase of the negotiability index
41. 40
2007 perspectives: Localiza’s strategies to add value
ROIC – WACC = SPREAD
Gains of scale:
• Organic growth
Increase revenue:
• Increase volume
• Keep flat rates
Reduce assets:
• Increase utilization rate
Capital structure optimization:
• Optimize capital structure
(own vs third parties capital)
• To maintain proper leverage for fast growth
Margin x Asset
turnover Low volatility
Operating income x (1- taxes) / revenue
Revenue / asset
Reduce income tax:
• Quarterly payment of interest on own capital
42. 41
Strategies
Short-term:
To maintain fast growth volume
To increase our geographical footprint
To maintain profitability through scale and productivity
Long-term:
To expand business scale mainly through organic growth
To add value to the shareholders through new dividend policy
Localiza’s compensation system is aligned with the short-term (variable
remuneration) and long-term strategies (stock option with 3 to 11 years vesting)
44. 43
Recognition
Standard & Poor’s rating upgraded to ‘brAA-’ in national scale and ‘BB’
in global scale. same as sovereign risk. with stable outlook
Included in IBrX (between the 100 most traded shares)
Included in ISE – Corporate Sustainability Index (34 companies)
“Best Company for Shareholders” by Capital Aberto magazine. between
Companies of up to R$ 5 BI market share
The best subsequent public offer among the listed companies by
Infomoney, in a survey among the brokers registered in BOVESPA
46. 45
RENT3 performance
Localiza was the Best Company for Shareholders in 2006
(companies up to R$ 5 bi market cap)
Research by Economática. Stern & Stewart, IBGC, FEA/USP and Capital Aberto Magazine
Localiza was the Best Company for Shareholders in 2006
(companies up to R$ 5 bi market cap)
Research by Economática. Stern & Stewart, IBGC, FEA/USP and Capital Aberto Magazine
Source: Capital Aberto magazine
Average daily traded volume (R$ million)
4,6
10,6
19,2
9,1
2005 2006 jan/07 feb/07
+130%
+111%
48. 47
Disclaimer - Forward looking statements
The material that follows is a presentation of general background information about LOCALIZA as of the date of the
presentation. It is information in summary form and does not purport to be complete. It is not intended to be relied upon as advice to
potential investors. This presentation is strictly confidential and may not be disclosed to any other person. No representation or
warranty, express or implied, is made concerning, and no reliance should be placed on, the accuracy, fairness, or completeness of
the information presented herein.
This presentation contains statements that are forward-looking within the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are only predictions and are not
guarantees of future performance. Investors are cautioned that any such forward-looking statements are and will be, as the case
may be, subject to many risks, uncertainties and factors relating to the operations and business environments of LOCALIZA and its
subsidiaries that may cause the actual results of the companies to be materially different from any future results expressed or
implied in such forward-looking statements.
Although LOCALIZA believes that the expectations and assumptions reflected in the forward-looking statements are
reasonable based on information currently available to LOCALIZA’s management, LOCALIZA cannot guarantee future results or
events. LOCALIZA expressly disclaims a duty to update any of the forward-looking statement.
Securities may not be offered or sold in the United States unless they are registered or exempt from registration under the
Securities Act of 1933. Any offering of securities to be made in the United States will be made by means of an offering
memorandum that may be obtained from the underwriters. Such offering memorandum will contain, or incorporate by reference,
detailed information about LOCALIZA and its business and financial results, as well as its financial statements.
This presentation does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any
securities. Neither this presentation nor anything contained herein shall form the basis of any contract or commitment
whatsoever.
50. 49
Revenue per car sold** 102,20
SG&A (7%) (7,15)
Safety Margin (3%) (3,06)
Book value after 12 months 91,99
Car rental financial cycle
115
Financial payment
Financing
100
Car Sales Revenue
102
** Depreciation over list price:
100-(102.2/125)x100 = 18,2%
100
Car acquisition
(List price net of dealers
discount = 125)
Holding cost of cars after tax with 3% margin = depreciation + financial cost.
Either the leverage is through third party financing or shareholder’s capital.
Principal 100,00
Interest (CDI + 1 p.p.) 15,00
Financial payment 115,00
Depreciation = estimated price of selling after one year, net of SG&A and safety
margin minus price of purchase. Depreciation rate: 100-(102.2*0.9) = 8.02%
51. 50
Car rental financial cycle
115
Financial payment
Financing
100
Car Sales Revenue
102
Revenues = 114,58
Expenses = 62,84
100
Car acquisition
(List price net of dealers
discount = 125)
*
Consolidated net margin is 19,3% of car rental revenues (if 100% leveraged).
R$ % R$ % R$ %
Car rental revenue 114,58 100,0% 102,20 100,0% 216,78 100,0%
Costs (46,00) -40,1% (46,00)
SG&A (16,84) -14,7% (7,15) (23,99)
Book value of car resale (91,99) -90,0% (91,99) -3,8%
EBITDA 51,75 45,2% 3,06 3,0% 54,81 25,3%
Depreciation (8,20) -8,0% (8,20) -3,8%
Interest (15,00) -14,7% (15,00) -6,9%
Tax (30%) (15,52) -13,5% 6,04 5,9% (9,48) -4,4%
NET INCOME 36,22 31,6% (14,10) -13,8% 22,12 10,2%
% over car rental revenue
Car Rental Car Resale (Seminovos) Consolidated
31,6% -12,3% 19,3%
Revenue per car sold** 102,20
SG&A (7%) (7,15)
Safety Margin (3%) (3,06)
Book value after 12 months 91,99
** Depreciation over list price:
100-(102.2/125)x100 = 18,2%
Principal 100,00
Interest (CDI + 1 p.p.) 15,00
Financial payment 115,00
52. 51
R$ % R$ % R$ %
Fleet rental Revenue 53,64 100,0% 102,20 100,0% 155,84 100,0%
Costs (14,24) -26,5% (14,24) -9,1%
SG&A (3,97) -7,4% (7,15) (11,12) -7,1%
Book value of car resale (91,99) -90,0% (91,99) -59,0%
EBITDA 35,43 66,0% 3,06 3,0% 38,49 24,7%
Depreciation (8,20) -8,0% (8,20) -5,3%
Interest (15,00) -14,7% (15,00) -9,6%
Tax (30%) (10,63) -19,8% 6,04 5,9% (4,59) -2,9%
NET INCOME 24,80 46,2% (14,10) -13,8% 10,70 6,9%
% over fleet rental revenue
Fleet Rental Car Resale (Seminovos) Consolidated
46,2% -26,3% 20,0%
Fleet rental financial cycle
Financing
100
115
Financial payment
100
Car acquisition
(List price net of dealers
discount = 125)
Revenues = 53,64
Car Sales Revenue
102
Expenses = 18,21
Consolidated net margin is 20% of fleet rental revenues (if 100% leveraged).
Revenue per car sold** 102,20
SG&A (7%) (7,15)
Safety Margin (3%) (3,06)
Book value after 12 months 91,99
** Depreciation over list price:
100-(102.2/125)x100 = 18,2%
Principal 100,00
Interest (CDI + 1 p.p.) 15,00
Financial payment 115,00
*
54. 53
Pro-forma cash flow: net cash provided by operating activities
Year Ended Year Ended Year Ended Variation Variation
2.004 2.005 2.006 Acum 2006-2005 %
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 90.568 106.519 138.233 31.714 29,8%
Adjustments to reconcile net income to net cash
provided by ( used in ) operating activities:
Depreciation and amortization (including goodwill) 23.353 42.969 56.989 14.020 32,6%
Vehicles written off as a result of theft 2.609 4.275 5.159 884 20,7%
Cost of used car sales 248.651 361.171 530.439 169.268 46,9%
Deferred income taxes (179) 11.275 7.950 (3.325) -29,5%
Provision for doubtful accounts (236) 578 (446) (1.024) -177,2%
Provision for contingencies 8.414 284 (2.012) (2.296) -808,5%
Realized gains on derivatives 25 1.706 - (1.706) -100,0%
Exchange variation, net (17.428) (31.987) (8.153) 23.834 -74,5%
Unrealized (gain) loss on derivatives 49.030 504 23.016 22.512 4466,7%
Compensation expense - Stock Options 12.404 7.828 1.704 (6.124) -78,2%
Other 1.198 (2.465) (117) 2.348 -95,2%
418.409 502.657 752.762 250.105 49,8%
(Increase) decrease in operating assets:
Accounts receivable (7.579) (39.091) (35.572) 3.519 -9,0%
Escrow deposits (996) (3.498) (670) 2.828 -80,8%
Accrued interest income on marketable securities - - (4.531) (4.531)
Recoverable taxes (1.830) (8.986) (2.019) 6.967 -77,5%
Other 6.169 (5.554) (7.879) (2.325) 41,9%
(4.236) (57.129) (50.671) 6.458 -11,3%
Increase (decrease) in operating liabilities:
Accounts payable (22.917) (18.817) 220.256 239.073 -1270,5%
Payroll and related charges 1.753 1.176 4.605 3.429 291,6%
Income tax and social contribution 2.108 (134) 5.343 5.477 -4087,3%
Taxes, other than on income (2.210) 481 387 (94) -19,5%
Advances from customers 732 1.740 (1.109) (2.849) -163,7%
Reserve for contingencies (483) (803) (334) 469 -58,4%
Loans and debt and debentures - accrued interest expense, net 1.690 12.645 (6.766) (19.411) -153,5%
Deffered revenues - - 22.008 22.008
Other 403 1.273 10.528 9.255 727,0%
(18.924) (2.439) 254.918 257.357 -10551,7%
Net cash provided by operating activities 395.249 443.089 957.009 513.920 116,0%
55. 54
Pro-forma cash flow: investment and financing activities
Year Ended Year Ended Year Ended Variation Variation
2.004 2.005 2.006 Acum 2006-2005 %
CASH FLOWS FROM ( USED IN ) INVESTING ACTIVITIES:
Purchases of marketable securities - - (140.674) (140.674)
Proceeds from sales of marketable securities - - 13.146
Sub-total (127.528)
Car purchase (493.109) (690.040) (930.318) (240.278) 34,8%
Close out of derivatives contracts - - -
Additions to property and equipment, net (10.209) (27.974) (31.185) (3.211) 11,5%
Cash paid on settlement of derivatives contracts (4.034) (66.160) (3.074) 63.086 -95,4%
Acquisitions of former franchisees - - (1.502) (1.502)
Net cash provided by investing activities (507.352) (784.174) (1.093.607) (309.433) 39,5%
CASH FLOWS FROM ( USED IN ) FINANCING ACTIVITIES:
Long-term debt:
Proceeds 2.954 139.000 (139.000) -100,0%
Short-term loans: -
Proceeds 332.791 971.945 361.425 (610.520) -62,8%
Repayments (200.732) (1.177.803) (371.346) 806.457 -68,5%
Debentures: -
Captações 350.000 (350.000) -100,0%
Transaction with related parties: -
Capital increase 16.030 15.372 150.126 134.754 876,6%
Dividends (cash) (50.000) (4.000) (5.595) (1.595) 39,9%
Dividends (interest on capital) (18.859) (12.016) (38.665) (26.649) 221,8%
Net cash used in financing activities 82.184 282.498 95.945 (186.553) -66,0%
NET INCREASE IN CASH AND CASH EQUIVALENTS (29.919) (58.587) (40.653) 17.934 -30,6%
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 159.264 129.345 70.758 (58.587) -45,3%
CASH AND CASH EQUIVALENTS AT END OF
YEAR 129.345 70.758 30.105 (40.653) -57,5%
(29.919) (58.587) (40.653) 17.934 -30,6%
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest 24.825 105.167 77.848 (27.319) -26,0%
Income tax and social contribution 34.337 33.613 32.850 (763) -2,3%
59.162 138.780 110.698 (28.082) -20,2%
56. 55
Working capital
WORKING CAPITAL
Year Ended Year Ended Year Ended
2.004 2.005 2.006
ASSETS
Accounts receivable, net 54.821 93.334 134.786
Deferred income tax and social contribution 2.043 2.890 2.173
other 3.363 14.739 12.561
60.227 110.963 149.520
Escrow deposits 18.949 23.267 23.913
Deferred income tax and social contribution 13.865 11.191 11.387
Compulsory loans 83 83 83
other 254 2.820 2.034
33.151 37.361 37.417
subtotal 93.378 148.324 186.937
LIABILITIES
Total accounts payable: 58.753 39.398 264.156
Accounts payable to automakers 48.448 22.853 244.935
Other accounts payable 10.305 16.545 19.221
Payroll and related charges 13.315 14.491 22.397
Deferred revenues - - 1.280
Income tax and social contribution 1.793 1.659 3.633
Deferred income tax and social contribution 15.396 24.338 30.608
Taxes other tha income 2.380 4.693 5.476
Advances from customers 5.579 7.319 6.210
other 1.511 13.171 12.463
98.727 105.069 346.223
Reserve for contingencies 52.371 53.210 47.533
Deferred revenues - - 11.369
Deferred income tax and social contribution 5.734 6.246 7.402
Taxes other tha income 2.680 - 8.020
60.785 59.456 74.324
subtotal 159.512 164.525 420.547
WORKING CAPITAL (66.134) (16.201) (233.610)
% OVER REVENUES -10,4% -1,8% -20,4%
57. 56
Working capital without account payable to automakers
Year Ended Year Ended Year Ended
2.004 2.005 2.006
ASSETS
Accounts receivable, net 54.821 93.334 134.786
Deferred income tax and social contribution 2.043 2.890 2.173
other 3.363 14.739 12.561
60.227 110.963 149.520
Escrow deposits 18.949 23.267 23.913
Deferred income tax and social contribution 13.865 11.191 11.387
Compulsory loans 83 83 83
other 254 2.820 2.034
33.151 37.361 37.417
subtotal 93.378 148.324 186.937
LIABILITIES
Total accounts payable: 58.753 39.398 264.156
Accounts payable excluding payable do automakers 10.305 16.545 19.221
Payroll and related charges 13.315 14.491 22.397
Deferred revenues - - 1.280
Income tax and social contribution 1.793 1.659 3.633
Deferred income tax and social contribution 15.396 24.338 30.608
Taxes other tha income 2.380 4.693 5.476
Advances from customers 5.579 7.319 6.210
other 1.511 13.171 12.463
50.279 82.216 101.288
Reserve for contingencies 52.371 53.210 47.533
Deferred revenues - - 11.369
Deferred income tax and social contribution 5.734 6.246 7.402
Taxes other tha income 2.680 - 8.020
60.785 59.456 74.324
subtotal 111.064 141.672 175.612
WORKING CAPITAL (17.686) 6.652 11.325
% OVER REVENUES -2,8% 0,8% 1,0%
WORKING CAPITAL WITHOUT ACCOUNT PAYABLE TO AUTOMAKERS
59. 58
Cost of third party capital
R$ / million
We estimated that the cost of third party capital will decrease 3 p.p. due to CDI rate decrease
60. 59
Cost of own capital
R$ / million
In 2007 the difference between the cost of own capital and third party capital cost will be 5.3 p.p. .
In 2006 this difference was 1.9 p.p.
