Unconsolidated and consolidated
Interim accounting information
Plascar Participações Industriais S.A.
and subsidiaries
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
UNCONSOLIDATED AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION March 31, 2011
Contents
Independent auditor´s review report ... 1
Unaudited interim accounting information Unaudited balance sheets ... 3
Unaudited statements of income... 5
Unaudited statements of changes in shareholders’ equity ... 6
Unaudited statements of cash flows ... 7
Unaudited statements of value added ... 8
Report on Company's performance ... 9
Notes to unaudited interim accounting information ... 17
A free translation from Portuguese into English of individual interim accounting information prepared in accordance with Technical Pronouncement CPC 21 - Interim Financial Reporting and the consolidated interim accounting information prepared in accordance with CPC 21 - Interim Financial Reporting and with IAS 34 - Interim Financial Reporting.
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Unaudited balance sheets
March 31, 2011 and December 31, 2010 (In thousands of reais)
Parent Company Consolidated 03/31/2011 12/31/2010 03/31/2011 12/31/2010
Assets
Current
Cash and cash equivalents 2 2 2,579 2,143
Trade accounts receivable (Note 4) - - 149,264 150,886
Inventories (Note 5) - - 143,723 138,966
Taxes recoverable (Note 6) - - 24,971 25,851
Related parties (Note 8.c) - - 636 773
Other accounts receivable - - 5,866 3,502
2 2 327,039 322,121
Non-current
Accounts receivable from sale of real estate - - 5,446 5,537
Related parties (Note 8.c) 20,250 20,468 - -
Taxes recoverable (Note 6) - - 7,145 7,443
Judicial deposits - - 2,831 2,462
Deferred income and social contribution taxes
(Notes 7.a and 7.c) - - 56,064 55,950
Recoverable actuarial asset (Note 18) - - 13,501 13,501
Investments (Note 9) 406,827 400,915 - -
Property, plant and equipment (Note 10) 7 7 501,172 476,589
Other non-current assets - - 21,534 22,508
427,084 421,390 607,693 583,990
Parent Company Consolidated 03/31/2011 12/31/2010 03/31/2011 12/31/2010
Liabilities
Current
Loans and financing (Note 11) - - 171,202 147,504
Trade accounts payable - - 83,637 83,168
Taxes payable 10 16 19,474 23,672
Salaries, vacation and social charges payable - - 32,333 30,984
Advances from customers - - 51,795 50,656
Related parties (Note 8.c) - - 1,736 1,712
Other accounts payable - - 3,420 1,330
10 16 363,597 339,026
Non-current
Loans and financing (Note 11) - - 100,977 101,346
Debentures (Note 12) 160,677 155,615 160,677 155,615
Provisions (Note 14) - - 2,848 2,785
Taxes payable in installments (Note 13) - - 11,070 11,071 Deferred income and social contribution taxes
(Notes 7.a and 7.c)
-
- 28,435 29,765
Other accounts payable - - 240 260
160,677 155,615 304,247 300,842
Total liabilities 160,677 157,631 667,844 639,868
Shareholder’s equity (Note 15)
Capital 289,080 289,080 289,080 289,080
Capital reserve (Note 16) 9,641 9,103 9,641 9,103
Equity adjustments 43,494 45,366 43,494 45,366
Cumulative translation adjustment (7,312) (6,123) (7,312) (6,123) Goodwill on capital transactions with entity under
common control (38,140) (38,140) (38,140) (38,140) Accumulated losses (30,364) (33,525) (30,364) (33,525) 266,399 265,761 266,399 265,761
Non-controlling interests - - 489 482
Total shareholder’s equity 266,399 265,761 266,888 266,243 Total liabilities and shareholder’s equity 427,086 421,392 934,732 906,111
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Unaudited statements of income
Quarters ended March 31, 2011 and 2010
(In thousands of reais, except earnings (loss) per share)
Parent Company Consolidated 03/31/2011 03/31/2010 03/31/2011 03/31/2010
Net operating revenue (Note 19) - - 229,893 147,781
Cost of sales (Notes 20 and 21) - - (180,361) (116,426)
Gross profit - - 49,532 31,355
Operating income (expenses)
Selling expenses (Note 21) - - (13,036) (8,321)
Administrative and general expenses (Note 21) (203) (179) (16,404) (14,374) Earnings on equity investment (Note 9) 6,563 166 - -
Other operating income - - (425) 1,450
6,360 (13) (29,865) (21,245) Income (loss) before financial income and expenses 6,360 (13) 19,667 10,110
Financial income (expenses)
Financial expenses (Note 22) (5,071) - (16,133) (10,776)
Financial income (Note 22) - - 526 949
(5,071) - (15,607) (9,827)
Income (loss) before income and social contribution taxes 1,289 (13) 4,060 283
Income and social contribution taxes (Nota 7.b)
Current - - (2,114) -
Deferred - - (649) (295)
- - (2,763) (295)
Net income (loss) for the quarter 1,289 (13) 1,297 (12)
Net income (loss) attributable to:
Controlling shareholder - - 1,289 (13)
Non-controlling shareholders - - 8 1
- - 1,297 (12)
Basic and diluted earnings (loss) per share- R$ (Note 17) 0.00774 (0.00008)
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Unaudited statements of changes in shareholder’s equity Quarters ended March 31, 2011 and 2010
(In thousands of reais)
Capital
reserve Other comprehensive income Parent Company shareholder´s equity Capital Options and shares granted Equity adjustments In subsidiary Cumulative translation adjustment Goodwill on capital transactions Accumulated losses Non-controlling interests Consolidated shareholder´s equity Balances at December 31, 2009 289,080 6,957 52,313 (3,780) - (49,633) 294,937 548 295,485
Realization of deemed cost - - (2,800) - - 2,800 - - -
Deferred taxes on deemed cost - - 952 - - (952) - - -
Translation adjustment in foreign subsidiary - - - 32 - - 32 - 32
Share-based payment - 539 - - - - 539 - 539
Loss for the quarter - - - (13) (13) 1 (12)
Balances at March 31, 2010 289,080 7,496 50,465 (3,748) - (47,798) 295,495 549 296,044 Balances at December 31, 2010 289,080 9,103 45,366 (6,123) (38,140) (33,525) 265,761 482 266,243
Realization of deemed cost - - (2,836) - - 2,836 - - -
Deferred taxes on deemed cost - - 964 - - (964) - - -
Translation adjustment in foreign subsidiary - - - (1,189) - - (1,189) (2) (1,191)
Share-based payment - 538 - - - - 538 1 539
Net income for the quarter - - - - - 1,289 1,289 8 1,297
Balances at March 31, 2011 289,080 9,641 43,494 (7,312) (38,140) (30,364) 266,399 489 266,888
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Unaudited statements of cash flows – Indirect method Quarters ended March 31, 2011 and 2010
(In thousands of reais)
Parent Company Consolidated 03/31/2011 03/31/2010 03/31/2011 03/31/2010 Cash flows from operating activities
Net income (loss) for the quarter 1,289 (13) 1,289 (13)
Adjustments to reconcile net income with cash provided by (used
in) operating activities:
Depreciation and amortization (Note 21) - - 9,310 7,160
Share-based payment expenses (Note 16) - - 538 539
Loss (gain) on disposals of property, plant and equipments - - (346) 306 Interest and monetary variation, net 5,071 - 13,031 9,115
Provision for judicial demands (Note 14) - - 754 (101)
Equity pickup (Note 9) (6,563) (166) - -
Net effect of fine and interest on adhesion of tax installment
instituted by Law No. 11941/09 - - - 245
Income and social contribution taxes (Note 7.b) - - 649 295 Provision for adjustment to market value and inventory
obsolescence - - (651) (305)
Other (15) (1) 5 (1)
(218) (180) 24,579 17,240
(Increase) decrease in assets:
Trade accounts receivable - - 1,622 (1,513)
Inventories - - (4,106) (10,143)
Taxes recoverable - - 1,178 (683)
Other assets, net - - (2,505) 3,089
Increase (decrease) in liabilities:
Trade accounts payable - - 469 (2,900)
Salaries, vacation and social charges payable - - 1,349 3,928
Taxes payable - - (4,198) (221)
Provision for judicial demands (payments) (Note 14) - - (691) (753)
Other liabilities, net - - 2,070 (2,102)
Net cash provided by (used in) operating activities (219) (180) 19,767 5,942
Cash flows from investment activities
Intangibles - - (699) (120)
Property, plant and equipment - - (34,932) (15,857)
Proceeds from sale of property, plant and equipment items - - 967 92
Net increase in loans to related parties 218 180 - 535
Net cash provided by (used in) investment activities 218 180 (34,664) (15,350)
Cash flows from financing activities
Loans and financing - - 111,653 194,385
Payment of loans and financing (principal and interest) - - (97,483) (190,593)
Net decrease in advances from customers - - 1,139 5,848
Net reduction in loans to related parties - - 24 (186)
Net cash provided by financing activities - - 15,333 9,454
Increase in cash and cash equivalents - - 436 46
Cash and cash equivalents at the beginning of the quarter 2 2 2,143 1,207 Cash and cash equivalents at the end of the quarter 2 2 2,579 1,253
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Unaudited statements of value added Quarters ended March 31, 2011 and 2010 (In thousands of reais)
Parent Company Consolidated 03/31/2011 03/31/2010 03/31/2011 03/31/2010 Revenues
Gross operating revenues, net of returns and rebates - - 282,921 191,064 Revenue related to construction of property - - 325 438
- - 283,246 191,502
Input acquired from third parties
Raw materials consumed - - (104,222) (70,302)
Materials, energy, third parties services and others - - (44,694) (33,529) Provision for adjustment to market value and inventory
obsolescence - - (651) (305)
- - (149,567) (104,136)
Gross added value - - 133,679 87,366
Depreciation and amortization (Note 21) - - (9,310) (7,159) Net added value provided by the Company - - 124,369 80,207
Added value received from transfer
Equity pickup (Note 9) 6,563 166 - -
Financial income - - 526 949
6,563 166 526 949
Total added value to distribute 6,563 166 124,895 81,156
Distribution of added value Personnel
Salaries and wages 41 28 35,164 25,080
Social charges 17 9 26,862 18,877
Taxes, charges and contributions
Federal - - 23,061 7,300
State - - 20,632 18,981
Local 34 57 999 344
Remuneration of third-parties capital
Financial expenses 5,071 - 15,611 10,011
Rentals, leases and others 111 85 1,269 575
Remuneration of equity
Retained earnings (loss) for the quarter 1,289 (13) 1,289 (13) Earnings attributable to non-controlling shareholders 8 1 8 1 Total added value distributed 6,563 166 124,895 81,156
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Report on Company’s performance
(In thousands of reais, except as otherwise stated)
Non-financial information included in this report, as well as the percentage derived from were not reviewed by the independent auditors.
Gross Profit
In the first quarter of 2011, the vehicle sales achieved a historical record, showing a
growth of 4.7% when compared to same period of 2010. The production increased 7.9% in 2011 when comparing the quarters (ANFAVEA data). Following the increase in vehicle production when comparing the quarters, the gross profit (R$ 49,532 = 21.5% in the first quarter of 2011 and R$ 31,355 = 21.2% in the first quarter of 2010), showed an increase of R$ 18,177. ANFAVEA DATA 1Q’10 1Q’11 % CHG VEHICLE PRODUCTION 836 902 7.88% R$ 114,719 R$ 147,781 R$ 229,893 R$ 17,707 R$ 31,355 R$ 49,532 1Q´09 1Q´10 1Q´11 21.5% 21.2% 15.4% Net Revenue Gross Revenue Gross Income % ...
*
* It is included Net Revenue amounting to R$ 47,639 and Gross Income amounting to R$ 7,097 from Plastal S.A., acquired on July 08, 2010.
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Report on Company’s performance (Continued) (In thousands of reais, except as otherwise stated) Selling Expenses
The increase of R$ 4,715 shown in the first quarter of 2011 when compared to the same quarter of last year is driven mainly by the increase in variable expenses with freights in connection with the increased volume of billings when comparing the quarters. From the total increase, R$1,661 is due to the Plastal operations recorded only in 2011.
General and Administrative Expenses
The increase of R$ 2,030 in the first quarter of 2011 when compared to the same quarter of last year occurred proportionally among the main accounts of this group, which is due to the increased volume of Company’s transactions. From the total increase, R$ 1,859 is due to the Plastal operations recorded only in 2011.
Financial Income
The decrease of R$ 423 when comparing the quarters basically reflects the negative exchange variation on the Company’s operations in the first quarter versus the same period of last year.
Financial Expenses
The increase of R$ 5,357 when comparing the quarters basically reflects the interest on debentures transactions recorded in 2011 amounting to R$ 5,062.
Other P&L Items
Other P&L items represented a negative effect of R$ 4,350 mainly due to deferred taxes realization on tax loss recorded in first quarter of 2011 (R$ 354) and current income and social contribution taxes expenses recorded in 2011(R$ 2,114). From this total, R$ 648 is due to Plastal operations recorded only in 2011.
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Report on Company’s performance (Continued) (In thousands of reais, except as otherwise stated) Net Income
The combined result of all the above-mentioned factors at March 31, 2011 resulted in a positive cash generation (EBITDA) amounting to R$ 28,971 (12.6%) in the first quarter, as shown in the table below:
8,522
17,269
28,971
1Q’09
1Q’10
1Q’11
EBITDA (R$)
Margem EBITDA (%)
7.4%
12.6% 11.7%
*
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Report on Company’s performance (Continued) (In thousands of reais, except as otherwise stated) Net Income (Continued)
* Includes the equity pickup in the amount of R$ 331 calculated on the net income recorded by Plastal S.A., acquired on July 08, 2010.
PLASCAR CONSOLIDATED (BRAZIL + ARGENTINA)
Quarter
Net sales (R$)
Gross profit EBITDA Retained earnings (accumulated losses) in the period R$ % Sales R$ Mar, 2006 105,970 23,427 22,1% 16,009 15.1% 9,204 Jun, 2006 212,436 48,255 22,7% 32,673 15.4% 12,006 Sep, 2006 323,687 75,177 23,2% 48,827 15.1% 42,281 Dec, 2006 432,539 100,296 23,2% 64,117 14.8% 45,702 Mar, 2007 116,913 29,486 25,2% 20,283 17.3% 7,847 Jun, 2007 238,638 58,852 24,7% 39,467 16.5% 12,185 Sep, 2007 369,057 91,826 24,9% 60,545 16.4% 17,453 Dec, 2007 472,713 122,300 25,9% 79,406 16.8% 51,060 Mar, 2008 132,278 33,894 25,6% 24,106 18.2% 6,820 Jun, 2008 282,227 71,564 25,4% 48,093 17.0% 23,745 Sep, 2008 443,324 112,162 25,3% 77,305 17.4% 32,455 Dec, 2008 560,105 114,045 20,4% 74,322 13.3% 14,991 Mar, 2009 114,719 17,707 15,4% 8,522 7.4% (7,946) Jun, 2009 255,966 43,900 17,2% 25,050 9.8% (9,717) Sep, 2009 411,100 81,220 19,8% 50,238 12.2% 41 Dec, 2009 582,829 121,694 20,9% 81,464 14.0% 10,084 Mar, 2010 147,781 31,355 21,2% 17,269 11.7% (13) Jun, 2010 318,135 68,668 21,6% 37,258 11.7% 542 Set, 2010 556,279 115,446 20,8% 62,519 11.2% 9,506 Dec, 2010 839,959 156,546 18,6% 86,337 10.3% 9,151 Mar, 2011 229,893 49,532 21,5% 28,971 12.6% 1,289 *
PLASTAL S.A. - ARGENTINA
Quarter Net sales (R$)
Gross profit EBITDA Retained earnings in the period R$ % Sales R$ Set, 2010 47,170 8,489 18.0% 4,679 9.9% 2,154 Dec, 2010 98,606 14,739 14.9% 8,200 8.3% 607 Mar, 2011 47,639 7,097 14.9% 4,510 9.5% 331
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Report on Company’s performance (Continued) (In thousands of reais, except as otherwise stated) Human Resources
Despite the economic adversities in Brazil, the Company continues investing in
professional development of its employees, with approximately 269 teaching and training hours per employee (in the last 12 months), focused on Senai courses, trainee programs, fast-track high school courses, as well as training for technical and operating development. The number of employees on March 31, 2011 was 5,146 (including 1,003 from Plastal S.A.), against 3,754 in the first quarter of 2010.
Main awards received by Plascar in 2010
Public acknowledgement – People Management
Plascar is among the Best Companies to Work for in Latin America for the third consecutive year
For the third consecutive year, Plascar Indústria de Componentes Plásticos Ltda. ranked among the top 100 companies to work for in Latin America, according to the list published by HSM Management magazine (May/June issue). Plascar was also a finalist in the “Communication – Telling the Truth” item.
The survey that elects the 100 Best Companies to Work For is prepared annually by the Great Place to Work Institute. This year 1,400 companies from 12 different Latin American countries were evaluated. Overall, 17 Brazilian companies are on the list.
Plascar is considered the 13th Best Company to Work for in Brazil
For the 4th consecutive year Plascar ranked among the 100 Best Companies to Work for in Brazil, according to the ranking published by Época magazine and the Great Place to Work Institute.
This year, the survey received a record 770 registrations. Out of that total, 100 companies were classified, representing 11% of the Brazilian GDP. This time, Plascar ranked 13th. Additionally, Plascar also obtained excellent positions in the following survey items:
- the 5th best industry;
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Report on Company’s performance (Continued) (In thousands of reais, except as otherwise stated) Main awards received by Plascar in 2010 (Continued)
Public acknowledgement – People Management (Continued)
Plascar is among the “150 Best Companies to Work for”
Once more Plascar is among the “150 Best Companies to Work for”, a traditional ranking prepared by Editora Abril’s Exame and Você S.A. magazines in a partnership with Fundação Instituto de Administração (FIA) of São Paulo University (USP), which had its 14th edition in 2010.
For the 5th consecutive year, Plascar was certified as having one of the best working environments in Brazil among the 541 companies that participated in this year’s survey. Plascar receives the "Outstanding Performance in Social Responsibility" award According to the outcome of the survey it conducts annually using the method developed by the Great Place to Work Institute Brasil, the specialized magazine Melhor Gestão de Pessoas granted Plascar the award “Outstanding Performance in Social Responsibility”. This is the third year Plascar has been acknowledged by the magazine, having received the "Outstanding Performance - Reliability" award in 2008 and 2009.
Acknowledgment: Corporate Governance
Plascar ranks 1st in Sustainable Growth – Vehicles and Spare Parts – in the Valor 1000 survey
Plascar ranked 1st in the item “Sustainable Growth” among the companies in the vehicles and spare parts sector classified in the Valor 1000 survey, an annual publication of Valor Econômico newspaper that ranks the 1000 largest companies in Brazil.
Plascar ranked 9th in the ranking of the companies in the vehicles and spare parts sector, coming in 467th place in the overall ranking, up 13 positions from 2009.
Plascar goes up 30 positions in the “Maiores e Melhores” ranking published by Exame magazine
In 2010 Plascar came in 501st place in this selective ranking published by Exame magazine, up 30 positions compared to 2009.
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Report on Company’s performance (Continued) (In thousands of reais, except as otherwise stated) Main awards received by Plascar in 2010 (Continued)
Acknowledgment: Corporate Governance (Continued)
Plascar is once again recognized as one of the best at “Melhores da Dinheiro” ranking
This year Plascar achieved the following rankings on this important list, published annually by Isto é Dinheiro magazine:
-
The best company in the auto parts sector in terms of Human Resources;
-
The third best company in the auto parts sector; and,
-
The third best company in the auto parts sector in terms of Financial
Sustainability, Innovation and Quality.
Public acknowledgement – Technological Innovation
SAE Brasil Congress – “Technological Innovation” award
For the third consecutive year, Plascar received the “Technological Innovation” award by the SAE Brasil management, an international entity which represents different sector of automotive technology.
The award was won during the 19th International Automotive Technology Congress and Exhibition - SAE Brasil, held between October 5 and 7 in São Paulo, with 12,000 visitors. In this congress, Plascar introduced the "sustainable car" project, developed entirely by the company’s engineering, with several proposed solutions to the challenges of the
automotive industry.
The award was received by Plascar’s CEO, André Nascimento, by Engineering director, José Donizeti da Silva and also by Márcio Tiraboschi, Manager of Materials and Advanced Engineering and Marcos Julio, Manager of Product Development, who represented all Company’s professionals involved in this project.
The awards ceremony of SAE Brasil was attended by the Minister of Development, Commerce and Industry Miguel Jorge, representing the President Luiz Inacio Lula da Silva. The Minister received the award SAE Brasil 2010, which it is the most important award given by entity.
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Report on Company’s performance (Continued) (In thousands of reais, except as otherwise stated) Relationship with external auditors
As required by Instruction CVM No. 381, we inform that the Company contracted during the period ended March 31, 2011 non-audit services in the amount of R$ 772.
The Company, though discussions with its independent auditors, concluded that the rendered services did not affect their independence and objectivity, considering the scope and procedures performed by them.
The Company’s policy and subsidiary to contract non-audit services of its independent auditors is based on principles that preserve the independence of the independent auditor and consist of: auditor should not audit their own work, the auditor should not perform function of management on your client and the auditor should not advocate for your client.
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Notes to interim accounting information March 31, 2011 and December 31, 2010 (In thousands of reais)
1. Operations
The business activity of Plascar Participações Industriais S.A. (“Plascar S.A.” or “Company”), headquartered in Jundiaí, State of São Paulo, is represented by the controlling interest it holds in its subsidiary Plascar Indústria de Componentes Plásticos Ltda. (“Plascar Ltda.”), which operates in the automotive industry and whose operational activity is the manufacturing and selling of automotive internal and external component parts.
Plascar Ltda. has five manufacturing plants, located in the cities of Jundiaí and Pindamonhangaba, State of São Paulo, and Varginha, Betim and Camanducaia, in the State of Minas Gerais.
On July 2010, Plascar Ltda. acquired 100% of Plastal S.A. (“Plastal”) shares, located in Argentina, with plants in the cities of Tortuguitas, Córdoba and Rosário. Plastal, in its turn, holds 100% of Ristolsur S.A. (“Ristolsur”) shares, located in Uruguay.
In addition, Plascar Ltda. controls Plascar Indústria de Componentes Plásticos S.A., located in Argentina, with no relevant operations.
The Camanducaia plant is aimed for the production of non-automotive products, focusing on the injection and assembly of supermarket carts, multi-purpose boxes, pallets and ecological furniture. This operating segment, still in the development phase, represents less than 10% of the Company’s consolidated total assets, net revenue and net income.
Other manufacturing plants operate solely in the automotive segment, focusing only on serving car manufacturers, supplying mainly bumpers, panels, air outlets, cup holders, interior door panels, package trays, carpets, window lifters, and other smaller parts.
Controlling interest in Permali do Brasil Indústria e Comércio Ltda., who controls and holds 56.52% of Plascar Participações Industriais S.A. capital, is held by
International Automotive Components Group Brazil, LLC (IAC Group Brazil, LLC), joint venture established in October 2005 between WL Ross & Co. LLC and Franklin Mutual Advisers LLC., headquartered in Delaware, United States.
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Notes to interim accounting information (Continued) March 31, 2011 and December 31, 2010
(In thousands of reais)
2. Accounting policies
2.1 Basis of preparation and presentation
The authorization for conclusion of interim accounting information was granted by the Fiscal Council in meeting held on April 29, 2011.
The consolidated interim accounting information include the financial statements of Plascar Participações Industriais S.A. and the companies in which the Company holds controlling interest, either directly or indirectly, as follows:
Interest at 03/31/2011 and
12/31/2010 03/31/2010 Direct Indirect Direct Indirect Plascar Indústria de Componentes Plásticos Ltda. 99.88% - 99.80% - Plascar Indústria de Componentes Plásticos S.A. - 99.88% - 99.80%
Plastal S.A. - 99.88% - -
Ristolsur S.A. - 99.88% - -
The Company’s individual interim accounting information for the quarter ended March 31, 2011 were prepared in accordance with Technical Pronouncement CPC 21 - Interim Financial Reporting, issued by the Accounting Standards Committee - CPC, and the consolidated interim accounting information were prepared in accordance with CPC 21 - Interim Financial Reporting and with IAS 34 - Interim Financial Reporting.
The interim accounting information do not include all information and disclosures required in the annual financial statements and should be read in conjunction with the December 31, 2010 financial statements.
2.2 Accounting practices
The accounting practices adopted in the preparation of the interim accounting information are consistent with those disclosed in Note 2 to the December 31, 2010 financial statements.
The following pronouncements and interpretations became effective as of January 1, 2011: IAS 24 - Disclosure Requirements for Government Entities and Definition of a Related Party (Revised); IFRIC 14 - Prepayments of a Minimum Funding
Requirement; and IFRIC 19 - Extinguishing Financial Liabilities with Equity
Instruments. Adopting these pronouncements and interpretations had no impact on the March 31, 2011 interim accounting information.
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Notes to interim accounting information (Continued) March 31, 2011 and December 31, 2010
(In thousands of reais)
2. Accounting policies
(Continued)
2.2 Accounting practices (Continued)Pronouncement IFRS 9 Financial Instruments – Classification and Measurement is effective for fiscal years beginning on or after January 1, 2013 and the Company has been reviewing it in order to determine whether it will have any significant impacts on its financial statements and interim accounting information.
3. Significant accounting judgment, estimates and assumptions
The estimates and assumptions considered for preparing the interim accounting information are consistent with those disclosed in Note 3 to the December 31, 2010 financial statements.
4. Trade accounts receivable
Consolidated 03/31/2011 12/31/2010 Third parties – domestic 123,020 108,731 Third parties – foreign (Note 23.a) 3,936 4,120 Accounts receivable from tooling (domestic) 22,569 38,296 Allowance for doubtful accounts (261) (261)
149,264 150,886
There was no movement in allowance for doubtful accounts during the quarter ended March 31, 2011.
At March 31, 2011 and December 31, 2010, the breakdown of trade accounts receivable by age was as follows:
Consolidated 03/31/2011 12/31/2010
Not yet due 138,000 134,895
Overdue: From 1 to 30 days 8,979 8,729 From 31 to 60 days 970 4,593 From 61 to 90 days 102 1,850 From 91 to 180 days 1,213 819 11,264 15,991
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Notes to interim accounting information (Continued) March 31, 2011 and December 31, 2010
(In thousands of reais)
5. Inventories
Consolidated 03/31/2011 12/31/2010 Finished goods 4,296 5,210 Work in process 15,645 13,430 Raw materials 38,720 37,189 Imports in transit 1,947 2,160 Maintenance and auxiliary materials 4,472 3,681 Tooling in progress intended for sale 65,480 67,869 Advances to suppliers 15,917 12,832 Provision for adjustment to market value and inventoryobsolescence (2,754) (3,405) 143,723 138,966
There were no significant movements in provision for adjustment to market value and inventory obsolescence during the quarter ended March 31, 2011.
6. Taxes recoverable
Consolidated
03/31/2011 12/31/2010 State VAT (ICMS) on purchase of fixed assets 7,510 7,791 Income tax and social contribution paid in advance 550 598 Value-added tax (IVA) - Argentina 16,558 17,850 Federal VAT (COFINS) – PAES 3,858 3,775
Other 3,640 3,280
32,116 33,294
Current (24,971) (25,851)
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Notes to interim accounting information (Continued) March 31, 2011 and December 31, 2010
(In thousands of reais)
7. Income and social contribution taxes
a) Composition of deferred income and social contribution taxes
Consolidated 03/31/2011 12/31/2010 Assets:
Income tax loss carryforwards (1) 40,096 39,322 Social contribution tax loss carryforwards (1) 14,434 14,156 Provision for judicial demands and other temporary
differences 1,534 2,472
56,064 55,950 Liabilities:
Property, plant and equipment - Deemed cost (2) (28,435) (29,765) (28,435) (29,765)
(1) Refers to balances of the subsidiaries Plascar Ltda. and Plastal. Plascar S.A. has income and social contribution taxes losses carryforward amounting to R$ 21,335 and R$ 32,337 (R$ 16,061 and R$ 27,063 at December 31, 2010, respectively), on which no deferred tax assets were set up for there was no realization perspective through future taxable profits.
(2) Refers to the tax effects on the deemed cost stemming from the accounting of fair value of fixed assets due to the first adoption of CPC 27 (IAS 16).
Based on a technical study, the Company expects to fully recover tax credits in the following years:
Consolidated 03/31/2011 12/31/2010 2013 388 388 2014 4,637 4,637 2015 6,340 6,340 2016 7,645 7,645 2017 8,356 8,356 2018 8,788 8,788 2019 9,653 9,653 2020 10,257 10,143 56,064 55,950
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Notes to interim accounting information (Continued) March 31, 2011 and December 31, 2010
(In thousands of reais)
7. Income and social contribution taxes
(Continued)
b) Reconciliation of expenses related to income and social contribution taxes Consolidated Quarters ended: 03/31/2011 03/31/2010 Income before income and social contribution taxes 4,060 283 Income and social contribution taxes at effective rates (34%) (1,380) (96) Adjustments for determining the effective rate:
Installment Law No. 11941/09 (1) 138 39
Tax credits (2) 725 -
Share-based payment plan (Stock Options) (Note 16) (183) (183) Deferred taxes on income and social contribution taxes losses for the quarter (3) (1,793) -
Other permanent differences (270) (55)
(2,763) (295) Income and social contribution taxes on net income for the quarters:
Current (2,114) -
Deferred (649) (295)
(2,763) (295)
(1) Refers to the tax effects on the reduction of financial charges (fines and interest) stemming from the tax installment instituted by Law No. 11941/09 (see Note 13 to the December 31, 2010 financial statements).
(2) Refers to tax credits calculated according to the Law No. 11196/05 art. 17 – Decree 5798/06 on research and development expenses incurred for the quarter ended March 31, 2011.
(3) It is included in the income and social contribution taxes losses of Plascar S.A., with respect to which no deferred tax assets is recorded.
c) Movements in deferred tax assets and liabilities
Consolidated Assets Liabilities Balance at December 31, 2010 55,950 (29,765)
Tax effect on deemed cost stemming from the accounting of fair value of
fixed assets realized for the quarter - 964 Tax effect on movements in temporary differences (893) - Exchange rate changes on deferred taxes recorded in foreign subsidiary (*) (716) 366 Restatement of tax loss - Law No. 11941 (**) 2,443 - Tax effect on the income and social contribution taxes losses offset for the
quarter (720) -
Balance at March 31, 2011 56,064 (28,435)
(*) Refers to the exchange rate changes on balances recorded by Plastal S.A., recorded against the cumulative translation adjustments under shareholder´s equity.
(**) Refers to the tax effect arising from restatement of balance of income and social contribution taxes losses in the amount of the credit used for payment the moratorium interest stemming from the tax installment instituted by Law 11941/09. See Note 13.
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Notes to interim accounting information (Continued) March 31, 2011 and December 31, 2010
(In thousands of reais)
8. Related parties
a) Employee benefits
Expenses with salaries, benefits and social charges are stated as follows:
Consolidated 03/31/2011 03/31/2010 Salaries and social charges 50,153 34,301 Profit sharing plan 3,925 5,957 Legal benefits 7,806 3,551 Additional benefits 142 148 62,026 43,957
Additional benefits
In addition to usual benefits required in the labor legislation, the Company adopts the practice to grant additional benefits contracted from third parties to its
employees, such as: medical care, life insurance, transportation and food, education allowance, child care assistance, training sessions and pension plan, whose actuarial risks are not assumed by the Company.
Profit sharing plan
The Company and its subsidiaries have supplementary variable compensation plans which consider whether goals established have been met:
(i) Profit sharing plan (PPR): the Company compensates its employees through profit sharing according to the collective labor agreement established between the Company, its employees’ commission and their trade union, who
establishes monthly assessed and disclosed goals. This plan aims to
encourage development and productivity, by providing opportunities of financial gains and effective conditions for profit sharing of Company.
(ii) Additional profit sharing bonus plan (short-term PPR): the Company grants bonuses with a different number of salaries to the Company’s executive and management members. Profit sharing payable to employees holding these functions is based on the individual and Company’s performance, in accordance with previously defined goals.
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Notes to interim accounting information (Continued) March 31, 2011 and December 31, 2010
(In thousands of reais)
8. Related parties
(Continued)
b) Management feesThe compensation of the Board of Directors and Fiscal Council is composed of fixed compensation approved in general meeting and paid on monthly basis. The compensation of the key managements of Company and its subsidiaries refers to fixed compensation, variable compensation based on previously defined goals and additional benefits, as follows:
· Fixed compensation: includes salaries and management fees, vacations, 13th salary, pension plan and social charges (contributions for social security - INSS, FGTS and other);
· Variable compensation: refers to profit sharing and bonuses, as mentioned in topic (a), item (ii) above;
· Pension plan, as mentioned in Note 18; and · Share-based payment, as mentioned in Note 16.
For the quarter ended March 31, 2011, the amounts paid to management related to fixed and variable compensation and benefits amounted R$ 3,365 (R$ 3,063 for the quarter ended March 31, 2010) and are recorded as General and Administrative Expenses in the income statement.
c) Related companies
The Company carries out business operations and loan agreements with its subsidiaries and other related parties based on the following criteria:
The business transactions carried out between the Company and its subsidiaries involve the purchase and sale of raw materials and parts to complete the products sold to car manufacturers by the Company's related parties. These business transactions are subject to regular outlet prices, being the budget, payment conditions and sale terms equal to those charged to third parties (payment within 90 days, not subject to interest or charges).
Historically, the balances (receivable) from these business transactions have been timely settled considering the dates defined on the related purchase orders upon closing foreign exchange contracts.
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Notes to interim accounting information (Continued) March 31, 2011 and December 31, 2010
(In thousands of reais)
8. Related parties
(Continued)
c) Related companies (Continued)The Company and its subsidiaries enter into loan agreements with related parties to meet cash requirements immediately, not adopting the approval processes required by financial institutions. These agreements are subject to the lender's having available funds and not impairing its cash flow. These intercompany agreements are executed at rates generally adopted in the market. To this end, the Company’s management adopts the average interest rate adopted by first-tier financial institutions for working capital loans.
Exceptionally, where the lender is a non-operating company and holds 100% interest in the borrower’s capital (operating company), loans may be executed with no charges, since in this case, any applicable charges would have no effect on the lender’s results (because they would be consolidated with the borrower’s results, so that any income received by the lender would offset the expense recognized by the borrower). To avoid doubts or challenges, loan agreements executed between operating companies should observe market rates, even if the borrower is a lender´s subsidiary.
The main balances of assets and liabilities at March 31, 2011 and December 31, 2010, as well as the main transactions that impact the statements of income for the quarters ended March 31, 2011 and 2010, are as follows:
Parent Company Consolidated 03/31/2011 12/31/2010 03/31/2011 12/31/2010 Current assets (Note 23.a)
Trade accounts receivable:
IAC NA Warren – USA - - 553 655 IAC Madsnvil – USA - - 83 108
Other - - - 10 - - 636 773 Non-current assets Loan agreement: Plascar Ltda. 20,250 20,468 - - 20,250 20,468 - - Current liabilities Loan agreement:
Permali do Brasil Ind. e Com. Ltda. - - 1,736 1,712
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Notes to interim accounting information (Continued) March 31, 2011 and December 31, 2010
(In thousands of reais)
8. Related parties
(Continued)
c) Related companies (Continued)Consolidated Quarters ended: 03/31/2011 03/31/2010 Income statement
Selling revenues:
IAC NA Warren – USA 366 187
IAC Madsnvil – USA 46 17
Plastal S.A. (1) - 72
Other - 6
412 282 Rental between Plascar S.A. - Argentina and Plastal S.A.) (1) - 263 Financial expenses, net, (1) - (17)
(1) Refers to the results of transactions with Plastal S.A. until the date of its acquisition by Plascar Ltda., as disclosed in Note 10 to the December 31, 2010 financial statements.
Trade accounts receivable refer to the sales of products in foreign currencies, not received yet and not subject to interest rates.
The loan agreement between the Company (lender) and Plascar Ltda. (borrower) is not subject, on an exceptional basis, to financial charges, due to the fact that the Company holds directly 99.88% of interest in the Plascar Ltda.´s capital. This is the single intercompany loan agreement in which the lender is a non-operating company and directly holds approximately 100% of the borrower’s capital, which justifies the exemption of interest. This agreement was executed on May 31, 2000 to adjust the cash flow of Plascar Ltda.
The loan agreement between Permali do Brasil Indústria e Comércio Ltda. (lender) and Plascar Ltda. (borrower) is subject to monthly interest at 1.25% and has no fixed maturity. This agreement was concluded on March 31, 2009 to adjust the cash flow of Plascar Ltda., and the interest rate was based on the average rate adopted by first-tier financial institutions for working capital loans.
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Notes to interim accounting information (Continued) March 31, 2011 and December 31, 2010
(In thousands of reais)
9. Investments
Parent Company 03/31/2011 12/31/2010 In subsidiary Plascar Ltda. 406,827 400,915 406,827 400,915Relevant information related to Plascar Ltda. is as follows:
03/31/2011 12/31/2010
Capital 370,082 370,082
Total quotas of interest 370,082,159 370,082,159 Quotas of interest held 369,636,115 369,636,115 Equity interest 99.88% 99.88% Subsidiary’s quotaholders’ equity 407,315 401,396 Investment recognized in Plascar S.A. 406,827 400,915 Net income for the period (1) 6,571 19,476 Equity pickup 6,563 19,452
(1) Net income determined by Plascar Ltda. for the quarter ended March 31, 2010 was R$ 167, which resulted in a equity pickup recorded by Plascar S.A. in the amount of R$ 166.
Plascar Ltda. holds 100% interest in Plascar Indústria de Componentes Plásticos S.A., located in Pilar, Argentina, such relevant information is shown below:
03/31/2011 12/31/2010
Capital 19,414 19,414
Total units of shares 6,012 6,012 Shares held by Plascar Ltda. 6,012 6,012 Equity interest 100.00% 100.00% Subsidiary’s shareholders’ equity 8,191 8,522 Investment recognized in Plascar Ltda. 8,191 8,522 Net income for the period 29 433
Equity pickup 29 433
Plascar Ltda. holds also 100% interest in Plastal S.A., located in Pilar, Argentina, such relevant information is shown below:
03/31/2011 12/31/2010
Capital 27,834 27,834
Total units of shares 66,367 66,367 Shares held by Plascar Ltda. 63,049 63,049 Equity interest 100.00% 100.00% Subsidiary’s shareholders’ equity 20,947 21,490
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Notes to interim accounting information (Continued) March 31, 2011 and December 31, 2010
(In thousands of reais)
9. Investments
(Continued)
As disclosed in Note 10 to the December 31, 2010 financial statements, Plastal S.A. was acquired by Plascar Ltda. on July 8, 2010. If the acquisition had taken place at the beginning of 2010, consolidated net revenues and net loss for the quarter ended March 31, 2010, presented for comparison purposes with the interim accounting information for the quarter ended March 31, 2011, would have been R$ 172, 209 and R$ 781, respectively.
10. Property, plant and equipment
a) Breakdown Consolidated Annual depreciation rate % 03/31/2011 12/31/2010 Cost Depreciation Net Net Building 2 to 4 137,842 (48,772) 89,070 89,834 Machinery and equipment 4 to 13.79 (1) 605,007 (302,205) 302,802 291,541 Tooling 6 to 9 35,050 (19,605) 15,445 15,180 Furniture and fixtures 6 to 10 19,379 (13,234) 6,145 5,975 Vehicles 18.57 to 20 9,042 (4,099) 4,943 4,212 Computer equipment 15 to 16.81 9,288 (8,377) 911 780
Land - 13,459 - 13,459 13,615
Replacement parts and materials - 2,754 - 2,754 2,754 Construction in process - 29,837 - 29,837 29,709 Advances to suppliers - 35,806 - 35,806 22,989 897,464 (396,292) 501,172 476,589
(1) Weighted average rate of 5.82%
b) Cost movements during the quarter
Consolidated Quarter ended March 31, 2011 Opening
balance
Exchange rate changes on foreign
subsidiaries Additions Disposals Transfers
Ending balance
Building 138,014 (521) 325 - 24 137,842
Machinery and equipment 590,529 (2,551) 19,004 (1,922) (53) 605,007
Tooling 34,343 - 677 (13) 43 35,050
Furniture and fixtures 19,120 (202) 456 (5) 10 19,379
Vehicles 7,999 (13) 1,101 (52) 7 9,042
Computer equipment 8,992 (56) 385 (2) (31) 9,288
Land 13,615 (156) - - - 13,459
Replacement parts and materials 2,754 - - - - 2,754 Construction in process 29,709 - 128 - - 29,837 Advances to suppliers 22,989 (39) 12,856 - - 35,806 868,064 (3,538) 34,932 (1,994) - 897,464
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Notes to interim accounting information (Continued) March 31, 2011 and December 31, 2010
(In thousands of reais)
10. Property, plant and equipment
(Continued)
b) Cost movements during the quarter (Continued)Advances to suppliers recorded at March 31, 2011 and December 31, 2010 refers to the acquisition of machinery and equipment to expand and modernize the Company´s manufacturing units.
c) Depreciation movements during the quarter
Consolidated Quarter ended March 31, 2011 Opening
balance
Exchange rate changes on foreign
subsidiaries Additions Disposals Transfers balance Ending
Building (48,180) 110 (699) - (3) (48,772)
Machinery and equipment (298,988) 1,179 (5,718) 1,319 3 (302,205)
Tooling (19,163) - (453) 11 - (19,605)
Furniture and fixtures (13,145) 106 (200) 5 - (13,234)
Vehicles (3,787) 6 (354) 36 - (4,099)
Computer equipment (8,212) 46 (213) 2 - (8,377) (391,475) 1,447 (7,637) 1,373 - (396,292)
d) Capitalized borrowing costs
Capitalized borrowing costs for the quarter ended March 31, 2011 was R$ 1,122 (R$ 1,142 for the quarter ended March 31, 2010). The rate used to determine loan costs subject to capitalization was the weighted average of not specifically
allocated loan costs in force during the years, whose funds were substantially used to acquire, construct or produce the property, plant and equipment. e) Assets pledged in collateral
The Company has property, plant and equipment items used as collateral in tax administrative proceedings. On March 31, 2011, residual value o these assets amounted to R$ 59,375 (R$ 59,286 at December 31, 2010).
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Notes to interim accounting information (Continued) March 31, 2011 and December 31, 2010
(In thousands of reais)
10. Property, plant and equipment
(Continued)
f) Finance lease agreementsPlascar Ltda. and Plastal have entered into 22 financial lease agreements for machines, equipment and vehicles.
The carrying amount of property, plant and equipment held under finance lease commitments at March 31, 2011 amounted to R$ 43,810 (R$ 44,014 at December 31, 2010). During the quarter ended March 31, 2011, there were no additions to property, plant and equipment. These items regarding finance lease commitments are secured by the agreement objects themselves.
g) Impairment of non-financial assets
During the quarter ended March 31, 2011, no impairment indicators were identified.
11. Loans and financing
Consolidated Type/purpose Financial charges at 03/31/2011 03/31/2011 12/31/2010 Working capital – local currency CDI + interests from 0.23% to 0,46% p.m. 187,556 167,908 Export credit notes CDI + interests of 0.46% p.m. 25,094 23,989 Lease (Note 20.a) Interests from 1.11% to 1.80% p.m. 39,754 43,335 Finame Interests from 0.38% p.m. a 0.46% p.m. 19,775 13,618 272,179 248,850
Current (171,202) (147,504)
Non-current 100,977 101,346
Non-current liabilities mature as follows: Consolidated 03/31/2011 12/31/2010 24 months 42,974 40,445 36 months 32,256 33,637 48 months 22,322 23,802 60 months 1,092 1,129 72 months 1,000 1,000 84 months 1,000 1,000 96 months 333 333 100,977 101,346
Loans for working capital, advances on foreign exchange agreements and export credit notes were taken out by Plascar Ltda. and are secured by Company’s receivables and collaterals. FINAME financing is secured by chattel mortgage of financed assets.
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Notes to interim accounting information (Continued) March 31, 2011 and December 31, 2010
(In thousands of reais)
12. Debentures
In Extraordinary Shareholders’ Meeting held on April 7, 2010, shareholders approved, by majority vote, the private issue of a single series of 40,000 (forty thousands) subordinate debentures and mandatorily convertible into Company’s shares, at R$10.00 each.
Debentures will be indexed to a rate equal to 100% of the CDI variation.
Compensation interest must be paid on the maturity date through the payment via stock issued by the Company.
Debentures have a two-year period maturity as from issue date, therefore maturing May 7, 2012. Compensatory interest will be paid on the maturity date, mandatorily, upon payment in shares issued by the Company.
During the quarter ended March 31, 2011, no new subscriptions for debentures. Until December 31, 2010, 14,756 debentures had been subscribed in a total of 40,000 debentures approved for issuing.
The closing for the debentures transaction will take place after the approval of the CVM for conducting the auction of unsubscribed debentures, whose total offer will be 11,069 debentures, as described in the draft of the Call for Auction available on the websites of CVM and Company, which must take place in the second quarter of 2011.
Funds from the issue will be allocated to the amortization of the Company’s current debt.
At March 31, 2011, the update balance including compensatory interest, recorded under “Debentures” on non-current liabilities, is R$ 160,677 (R$ 155,615 at December 31, 2010.
At March 31, 2011, debentures were subjected to an effective interest rate of 10.75% per year.
Other explanations regarding this note have not changed significantly in relation to information disclosed in Note 14 to the December 31, 2010 financial statements.
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Notes to interim accounting information (Continued) March 31, 2011 and December 31, 2010
(In thousands of reais)
13. Taxes payable in installments
Consolidated 03/31/2011 12/31/2010 Installments – Law No. 11941/09 13,510 11,898
13,510 11,898 Current (1) (2,440) (827) Non-current 11,070 11,071
(1) Recorded under Taxes payable.
Based on its best understanding, the Company settled the moratorium interests calculated after the adhesion date to the installment program with the use of tax credits arising from income and social contribution tax on net income. During the quarter ended March 31, 2011, the calculations are awaiting approvals; however, the Revenue Federal Board concluded that the moratorium interests should not be settled with the use of tax credits arising from income and social contribution tax on net income. Accordingly, the Company restated the balance of deferred taxes recorded on non- current assets against the interests payable stemming from the taxes installment in the amount of R$ 2,443.
Other explanations regarding this note have not changed significantly in relation to information disclosed in Note 13 to the December 31, 2010 financial statements.
14. Provisions
The Company and its subsidiaries are parties to legal suits and administrative proceedings filed with several courts and governmental agencies, in the normal course of its operations, involving labor claims, tax and civil proceedings and other issues.
Company management, based on information provided by its internal and outside legal advisors with respect to suits pending decision, set up a provision at an amount considered sufficient to cover any unfavorable outcome in relevant cases, as follows:
Consolidated 03/31/2011 12/31/2010
Labor 2,848 2,785
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Notes to interim accounting information (Continued) March 31, 2011 and December 31, 2010
(In thousands of reais)
14. Provisions
(Continued)
Movements in provision for judicial demands during the quarter
Consolidated
Beginning
balance Addition Payments
Ending balance
Labor 2,785 754 (691) 2,848 2,785 754 (691) 2,848
Tax
At March 31, 2011, Plascar Ltda. is a party in 12 tax proceedings in the amount of R$ 10,657 (R$ 10,580 at December 31, 2010), whose likelihood of an unfavorable outcome was assessed by the legal advisors as possible, and therefore no provision was set up.
Labor
Labor claims provision comprises, primarily, employees’ claims related to employment relationship and it was set up based on estimation provided by Company’s legal advisors for labor proceedings, whose chances of loss were assessed as probable.
Plascar Ltda. has other 297 labor claims in the amount of R$ 27,462 (R$ 28,274 at December 31, 2010), whose likelihood of an unfavorable outcomes was rated as possible by legal counsel, and for which no provision was set up.
15. Shareholder’s equity
During the quarter ended March 31, 2011, there were no changes in capital or Company´sarticles of association. Accordingly, there were no changes in relation to information disclosed in Note 16 to the December 31, 2010 financial statements.
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Notes to interim accounting information (Continued) March 31, 2011 and December 31, 2010
(In thousands of reais)
16. Share-based payment plan
During the quarter ended March 31, 2011, no exercise or loss of any share or option by beneficiaries took place. See details of plan and valuation assumptions in Note 17 to the December 31, 2010 financial statements.
At March 31, 2011, the net income for the quarter was reduced in R$ 538 (R$ 539 for the quarter ended March 31, 2010).
17. Earnings (loss) per share
The table below establishes the calculation of earnings (loss) per share for the quarters ended March 31, 2011 and 2010 (in thousands or reais, except for earning or loss per share):
03/31/2011 03/31/2010 Numerator:
Net income (loss) for the quarter 1,289 (13) Denominator:
Weighted average of number of shares 166,430,346 166,430,346
Basic and diluted earnings (loss) per share - R$ 0,007744 (0,00008)
There were no other transactions involving common or potential common shares during the quarters ended March 31, 2011 and 2010.
For quarters ended March 31, 2011 and 2010, option and share grant price provided for in the share-based payment plan exceeded Company’s share market value and, therefore, generated no diluted earnings (loss) per share. In addition, for the quarter ended March 31, 2011, convertible debentures had no effect related to diluted earnings per share, and generated no effects on calculation of diluted earnings per share, since expenses with interest for potential shares exceeded basic earnings per share.
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Notes to interim accounting information (Continued) March 31, 2011 and December 31, 2010
(In thousands of reais)
18. Pension plan
The Company, through Plascar Ltda., offers its employees, former employees and related beneficiaries a retirement and pension benefit plan. Details on the plan and actuarial assumptions used to calculate the plan’s assets are described in Note 19 to the December 31, 2010 financial statements.
There were no significant changes in the plan, number of participants, and
assumptions during the quarter ended March 31, 2011 compared to those used at December 31, 2010. At March 31, 2011, this plan presents an actuarial asset in the amount of R$ 13,501, which was recognized as Unrealized actuarial assets under non-current assets, considering the expected realization of this amount with future contributions to the plan.
19. Net operating revenue
Consolidated 03/31/2011 03/31/2010 Gross revenue from sales 285,194 195,080 Taxes on sales (53,028) (43,283) Returns and rebates on sales (2,273) (4,016) 229,893 147,781
Taxes on sales mainly comprise State VAT - ICMS (7%, 12 and 18%), IPI (5% and 15%), Social Integration Program - PIS (1.65% and 2.30%) and Social Contribution for social security financing - COFINS (7.60% and 10.80%).
20. Cost of sales
Consolidated 03/31/2011 03/31/2010 Raw material, inputs and consumer and in-use materials (103,099) (65,569) Personnel expenses (47,965) (32,036) Depreciation and amortization (8,490) (6,216) Third-party services (6,615) (3,435) Electric energy, water and telephone services (8,530) (6,521)
Other (5,662) (2,649)
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Notes to interim accounting information (Continued) March 31, 2011 and December 31, 2010
(In thousands of reais)
21. Cost and expenses by nature
The Company opted to present its consolidated income statement by function, and details by nature are as follows.
Consolidated 03/31/2011 03/31/2010 Raw material, tooling inputs, and consumer and
in-use materials (103,366) (65,777) Personnel expenses (Note 8.a) (62,026) (43,957) Depreciation and amortization (9,310) (7,159) Third-party services (7,661) (4,354) Energy, water, and telephone expenses (8,898) (6,703) Freight on sales (8,895) (4,953) Commission on sales (497) (380) Other (9,148) (5,838) (209,801) (139,121) Classified as Cost of sales (180,361) (116,426) Selling expenses (13,036) (8,321) General and administrative expenses (16,404) (14,374) (209,801) (139,121)
22. Financial income/expenses
Consolidated 03/31/2011 03/31/2010 Financial expenses Interest (9,159) (8,899) Interest on debentures (5,062) - Foreign exchange losses (915) (935) Tax on financial transactions (IOF) (522) (765)Other (475) (177)
(16,133) (10,776) Financial income
Interest 292 171
Monetary variation gains 113 44 Foreign exchange gains 109 725
Other 12 9
526 949 Financial income/expenses (15,607) (9,827)
PLASCAR PARTICIPAÇÕES INDUSTRIAIS S.A.
Notes to interim accounting information (Continued) March 31, 2011 and December 31, 2010
(In thousands of reais)
23. Financial risk management objectives and policies
The main financial liabilities of the Company and its subsidiaries refer to trade accounts payable, loans and financing, debentures, advances from customers and accounts payable to related parties.
The main financial assets of the Company and its subsidiaries refer to trade
accounts receivable from thirds and related parties, accounts receivable from sale of real estate and judicial deposits, which directly result from their activities.
The Company and its subsidiaries are exposed to market, credit and liquidity risks. The Company and its subsidiaries have no derivative financial operation agreements to hedge against currency risk, since they have no significant operations stated in foreign currency.
The Company’s top management oversees the management of these risks. The Board of Directors reviews and sets management policies for each of these risks, which are summarized as follows:
a. Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices for the Company and its subsidiaries comprise two types of risk: interest rate risk and foreign currency risk.
Financial instruments affected by market risk include loans and financing,
debentures, receivables and payables in foreign currency and net investments in foreign subsidiaries. At March 31, 2011 and 2010 and December 31, 2010, the Company and its subsidiaries have no financial instruments available for sale and measured at fair value through profit or loss.
The sensitivity analyses were prepared based on net debt value, and fixed interest rate index is based on debt floating interest rate at March 31, 2011. The analyses exclude the impact on movements in market variables on the carrying value of pension and post-employment obligations, provisions and on non-financial assets and liabilities of foreign operations.
