As
filed with the Securities and Exchange Commission on December 23,
2009
Registration
No. 333-163119
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
AMENDMENT
NO. 2
TO
FORM
F-4
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
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GAFISA
S.A.
(Exact
Name of Registrant as Specified in Its Charter)
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Not
applicable
(Translation
of Registrant’s name into English)
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The
Federative Republic of Brazil
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(State
or Other Jurisdiction of Incorporation or Organization)
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1520
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(Primary
Standard Industrial Classification Code Number)
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Not
Applicable
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(I.R.S.
Employer Identification Number)
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Av.
Nações Unidas No. 8,501, 19th floor
05425−070
− São Paulo, SP – Brazil
Telephone:
+ 55 (11) 3025−9000
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(Address,
Including Zip Code, and Telephone Number, Including Area Code, of
Registrant’s Principal Executive
Offices)
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National
Corporate Research, Ltd.
10
East 40th Street, 9th floor
New
York, NY 10016
Telephone:
(212) 947-7200
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(Name,
Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent
For Service)
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Copies
to:
Diane
G. Kerr, Esq.
Manuel
Garciadiaz, Esq.
Davis
Polk & Wardwell LLP
450
Lexington Avenue
New
York, New York 10017
(212)
450-4000
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Approximate date of commencement of
proposed offer to the public: As soon as practicable after this
registration statement becomes effective.
If this
form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. o
__________
If this
form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o
The
registrant hereby amends this registration statement on such date or dates as
may be necessary to delay its effective date until the registrant shall file a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the U.S.
Securities Act of 1933, as amended, or until this registration statement shall
become effective on such date as the U.S. Securities and Exchange Commission,
acting pursuant to Section 8(a), may determine.
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The information in this
preliminary
prospectus/information statement is not
complete and may be changed. Gafisa S.A. may not sell these securities
until the registration statement filed with the U.S. Securities and
Exchange Commission is effective. This preliminary prospectus/information statement is not an
offer to sell these securities and it is not soliciting an offer to buy
these securities in any state or jurisdiction where the offer or sale is
not permitted.
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PRELIMINARY PROSPECTUS/INFORMATION STATEMENT (Subject to
Completion)
Dated December
23,
2009
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Gafisa
S.A.
Exchange
of Common Shares
for
Common Shares of Construtora Tenda S.A.
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Gafisa
S.A., or Gafisa, has proposed a corporate restructuring, or the Restructuring,
the overall purpose of which is to consolidate at the Gafisa level all of its
noncontrolling share ownership in its direct subsidiary, Construtora Tenda S.A.,
or Tenda. The Restructuring will be accomplished via a merger of shares (incorporaçăo
de ações, under
Brazilian law): a merger of all of the Tenda shares that Gafisa does not own
into Gafisa in exchange for Gafisa shares, converting Tenda into a wholly-owned
subsidiary of Gafisa.
If the
Restructuring is approved by both the shareholders of Gafisa and the
shareholders of Tenda, holders of common shares of Tenda will receive 0.205
common share, no par value, of Gafisa for each Tenda common share they
hold.
The
Restructuring will require the approvals of holders of common shares of Gafisa
and Tenda as of the date of the shareholders’ meetings. The meetings
of the shareholders of Gafisa and Tenda at which the Restructuring will be
considered are currently scheduled for December 30, 2009, however, these
meetings will not take place until after the registration statement, of which
this preliminary prospectus/information statement is a part, has been declared
effective by the U.S. Securities and Exchange Commission, or the SEC. Gafisa and
its affiliates hold, directly or indirectly, all of the Tenda voting power
necessary to approve the Restructuring at the Tenda level without the support of
any other holders of common shares of Tenda.
Persons
who were holders of record of common shares of Tenda as of October 21, 2009 will
have withdrawal rights in connection with the Restructuring as described in this
preliminary prospectus/information statement. Holders of Gafisa shares or
American Depositary Shares, or ADSs representing Gafisa shares, will not have
any withdrawal rights in connection with the Restructuring.
The
common shares of Tenda and Gafisa are currently listed on the São Paulo Stock
Exchange (BM&FBOVESPA
S.A., Bolsa de Valores, Mercadorias e Futuros), or the BM&FBOVESPA.
The ADSs of Gafisa are listed on the New York Stock Exchange, or the NYSE, and
Gafisa is a foreign private issuer under U.S. securities laws. The common shares
of Tenda are not listed or traded in the United States and Tenda has not
previously been subject to the reporting requirements in the United
States.
You
should read this preliminary prospectus/information statement carefully. In
particular, please read the section entitled “Part Three: Risk Factors”
beginning on page 41 for a discussion of risks that you should consider in
evaluating the transactions described in this preliminary prospectus/information
statement.
Neither
the SEC nor any state securities commission has approved or disapproved of the
securities to be issued in connection with the Restructuring or determined if
this preliminary prospectus/information statement is truthful or complete. Any
representation to the contrary is a criminal offense.
IF
YOU ARE A DIRECT HOLDER OF GAFISA OR TENDA SHARES OR GAFISA ADSs, NEITHER GAFISA
NOR TENDA IS ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND GAFISA OR
TENDA A PROXY. IF YOU ARE ENTITLED TO VOTE ON THE RESTRUCTURING, WHILE WE HAVE
DESCRIBED GENERALLY THE PROCEDURE FOR VOTING YOUR SHARES IN THIS PRELIMINARY
PROSPECTUS/INFORMATION STATEMENT, YOU ALSO SHOULD CONSULT BRAZILIAN
COUNSEL.
This
preliminary prospectus/information statement incorporates by reference important
business and financial information about Gafisa and Tenda that is not included
in or delivered with the document. This information is available without charge
to security holders upon written or oral request. To obtain timely delivery,
security holders must request the information no later than December 22, 2009,
which is five business days before December 30, 2009, the scheduled date for the
shareholders meeting of Gafisa and Tenda to approve the Restructuring. See “Part
Seven: Additional Information for Shareholders—Incorporation by
Reference.”
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In this
preliminary prospectus/information statement, “Gafisa,” “we,” “us” and “our”
refer to Gafisa S.A. References to the “Companies” refer to Gafisa and
Tenda.
The
following are some questions that you may have regarding the Restructuring and brief answers to
those questions. Gafisa urges you to read carefully the remainder of this
document because the information in this section does not provide all the
information that might be important to you with respect to the Restructuring.
Additional important information is also contained in the documents incorporated
by reference into this preliminary prospectus/information statement. See “Part
Seven: Additional Information for Shareholders—Incorporation by
Reference.”
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Q:
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What
is the Restructuring?
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A:
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Gafisa
S.A., Which we refer to in this preliminary prospectus/information
statement as “Gafisa” or “we” has
proposed the Restructuring aiming at consolidating at the Gafisa level all
of the noncontrolling share ownership in its subsidiary, Construtora Tenda
S.A., or Tenda. The Restructuring will be accompanied via a merger of
shares (called Incorporação
de Ações,
under Brazilian law): a Brazilian business combination transaction where,
subject to the approvals of the Gafisa shareholders and the Tenda
shareholders, all of the Tenda shares not owned by Gafisa will be
exchanged for Gafisa shares and Tenda will become a wholly-owned
subsidiary of Gafisa.
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Q:
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What
are the reasons for the
Restructuring?
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A:
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Gafisa
and Tenda believe the Restructuring: will be advantageous to the shareholders of both Companies, to the
extent the Restructuring is likely to result in the creation of a national
leader in the civil construction sector that is likely to derive benefits
arising from scale and an increase in operational, commercial and
administrative efficiencies, and permit the reduction of redundant costs
and operational scale gains, allowing for larger investments to be made
and a higher sustainable growth rate. For further details on the reasons
for the Restructuring see “Part Two: Summary—Purposes of and Reasons for
the Restructuring” and “Part Five: The Restructuring—Reasons for the
Restructuring.”
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Q:
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What
will happen to my shares in the
Restructuring?
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A:
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If
the Restructuring is approved and you are a direct holder of common shares
of Tenda, you will receive 0.205 common share, no par value, of Gafisa for
each common share of Tenda that you hold, respectively, plus, in each
case, the cash value of any fractional
shares.
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If you
hold common shares of Tenda, no further action by you is required except that if
you are not a resident of Brazil, you will be required to comply with the
registration requirements of Instruction No. 325 of the Brazilian Securities
Commission (Comissão de
Valores Mobiliários), or CVM, and Resolution No. 2,689 of the Brazilian
Monetary Council (Conselho
Monetário Nacional), or CMN, or Law
No. 4,131, as the case may be, as described below under “Part Two: Summary—Terms
and Effects of the Restructuring.” To evidence your ownership of new shares of
Gafisa, an entry or entries will be made in the share registry of Gafisa to
evidence the common shares of Gafisa you will receive in the Restructuring. At
that time, you will also receive cash in lieu of any fractional Gafisa shares to
which you would have been entitled as a result of the Restructuring. See “When
will I receive any cash attributable to any fractional Gafisa share?”
below.
If you
are a holder of Gafisa common shares or Gafisa ADSs, you will continue to hold
these securities after the Restructuring.
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Q:
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What
shareholder approvals are needed?
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A:
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The
Restructuring will require the affirmative vote of holders representing at
least 50% of Tenda’s voting capital. Tenda’s extraordinarily general
shareholders’ meeting, or EGM, is currently scheduled for December 30,
2009.
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The
Restructuring is also subject to approval by the majority of Gafisa’s
shareholders at an EGM also scheduled for December 30, 2009, which shall
only occur if shareholders representing at least two thirds of Gafisa’s voting
capital are in attendance. Pursuant to Brazilian law, if the attendance quorum
is not reached on first call, the EGM of Gafisa may occur, on a second call,
with any number of shareholders.
Gafisa
and its affiliates hold, directly or indirectly, all of the voting power
necessary to approve the Restructuring at the Tenda level without the support of
any other holder of shares of Tenda.
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Q:
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Do
I have withdrawal rights?
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A:
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Persons
who were holders of record of common shares of Tenda as of October 21,
2009, will be entitled to exercise withdrawal rights in connection with
the Restructuring.
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If you
have withdrawal rights, your withdrawal rights will lapse 30 days after
publication of the minutes of Tenda’s EGM called to approve the Restructuring.
If you have withdrawal rights you cannot exercise those withdrawal
rights if you vote in favor of the Restructuring. If
Tenda’s shareholders exercise their withdrawal rights, they will receive from
Tenda a cash amount for their shares, calculated in accordance with Brazilian
law 6,404, dated December 15, 1976, or Brazilian corporate law, equal to the
book value of their shares on the date of the last audited balance sheet
approved by the shareholders of Tenda, i.e. December 31, 2008, unless they
request Tenda to draw down a special and more recent balance sheet, as of no
more than 60 days from the date of the EGM, in which case the requesting
shareholder will receive its withdrawal rights based on such more recent balance
sheet even if such value is lower than the value calculated as per Tenda’s
December 31, 2008 balance sheet. On December 31, 2008, the book value
of each share of Tenda amounted to R$2.65.
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Q:
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Have
the boards of directors or any committees of these boards taken any
position relating to the
Restructuring?
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A:
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The
board of directors of each of the Companies has approved the merger
agreement (Protocolo de
Incorporação de Ações e Instrumento de Justificação, under
Brazilian law) to which their Companies are parties and the calling of the
EGMs required to obtain the requisite shareholder approvals. At
the time the Restructuring was publicly announced, Tenda, adopting
recently issued recommendations of the CVM, established, by one of the
means recommended by the CVM, a special committee to negotiate the terms
of the Restructuring with the management of Gafisa and to submit its
recommendations to the board of directors of Tenda. The purpose
of setting up the special committee was to protect the interests of
noncontrolling shareholders of Tenda. This special
committee, or the Special Committee, after having reviewed and negotiated
the Gafisa proposals, having received advice from its own independent
financial adviser and legal counsel and after having reached an agreement
with the Gafisa management on the terms of the Restructuring, including
the Exchange Ratio, unanimously recommended to the board of directors of
Tenda the Exchange Ratio for the Restructuring set forth in this
preliminary prospectus/information statement. On November 6,
2009, the board of directors of Tenda considered the recommendation of the
Special Committee and other factors and approved the
Restructuring. The Gafisa board of directors also approved the
Restructuring on that day. For additional information regarding the
factors and reasons considered by the board of directors of Gafisa and
Tenda in approving the Restructuring, the manner in which these boards
made their decision, including the decision of certain members of the
boards to abstain from voting and the interest of certain directors and
their affiliates in the Restructuring, see “Part Two: Summary—Background
of the Restructuring” and “Part Five: The Restructuring—Background, the
Special Committee and Board Positions—The Special Committee.” For
additional information regarding the factors and reasons considered by the
boards of directors of Gafisa and Tenda in approving the Restructuring,
and the manner in which these boards made their decisions, including the
decision of certain members of the boards to abstain from voting, see
“Part Five: The Restructuring—Background, the Special Committee and Board
Positions” and “Part Five: The Restructuring—Reasons for the
Restructuring.”
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Q:
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Why
am I receiving this document?
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A:
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This
document is a preliminary prospectus/information statement of Gafisa
relating to the merger of Tenda shares into Gafisa. If you hold common
shares of Tenda you are receiving this preliminary prospectus/information
statement because Gafisa may be deemed to be offering you securities for
purposes of the U.S. Securities Act of 1933, as amended, or the Securities
Act. If you hold common
shares of either Gafisa or Tenda and you are a U.S. resident you are receiving this
document to provide you with at least the same information relating to
the shareholder meetings of the Companies as is being provided to other
holders of the same class of securities in Brazil. If you are a holder
of Gafisa ADSs, you are receiving this document to provide you with
information about the Restructuring and the matters that will be
considered at the EGM of Gafisa and with information regarding how you may
exercise your voting rights in relation to these
matters.
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Q:
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What
will be the accounting treatment of the
Restructuring?
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A:
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Under
Brazilian GAAP, the accounting principles used to prepare Gafisa’s
consolidated financial statements, the Restructuring is expected to be
accounted for by the book value of the shares
exchanged.
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Under
U.S. GAAP, the merger of shares will be accounted for as equity transactions in
accordance with Statement of Financial Accounting Standards (SFAS) No. 160,
“Noncontrolling Interests in Consolidated Financial Statements, an
Amendment of ARB No. 51” (U.S. GAAP codification: ASC 810 Consolidation), or
SFAS 160. This standard requires that the carrying amount of a
noncontrolling interest (formerly referred to as “a minority interest”) be
adjusted to reflect the change in our ownership interest in the subsidiary. Any
difference between fair value of the consideration received or paid and the
amount by which the noncontrolling interests is adjusted shall be
recognized in equity attributable to Gafisa.
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Q:
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What
are the U.S. federal income tax consequences of the
Restructuring?
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A:
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In
the opinion of Davis Polk & Wardwell LLP, the Restructuring should
qualify as a tax-free “reorganization” for U.S. federal income tax
purposes. In order for the Restructuring to qualify as a
reorganization for such purposes, among other things, Tenda shareholders
must receive, from Gafisa, solely Gafisa voting stock in exchange for
their Tenda shares. There is no authority under the U.S. tax laws
expressly addressing whether the payment of cash to Tenda shareholders who
exercise withdrawal rights pursuant to Brazilian law will prevent the
Restructuring from satisfying this “solely for voting stock”
requirement. However, based on the advice of Gafisa’s Brazilian
counsel to the effect that solely Tenda, and not Gafisa, will be liable to
make any cash payment to any Tenda shareholders who exercise withdrawal
rights, and assuming that any such payments are not funded indirectly by
Gafisa, the payment of such cash to Tenda shareholders who exercise
withdrawal rights should not prevent the Restructuring from qualifying as
a reorganization for U.S. federal income tax purposes. No
ruling has been sought or will be obtained from the U.S. Internal Revenue
Service on the U.S. federal income tax consequences of the
transaction.
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If the
Restructuring qualifies as a reorganization for U.S. federal income tax
purposes, you generally will not recognize gain or loss for U.S. federal income
tax purposes on the receipt of Gafisa shares in exchange for Tenda shares,
except to the extent of gain attributable to cash received in lieu of a
fractional Gafisa share. If the Restructuring is a taxable
transaction, you generally will recognize gain or loss on the receipt of Gafisa
shares in exchange for Tenda shares. Please review carefully the
section under “Part Five: The Restructuring—Material Tax Considerations—United
States Federal Income Tax Considerations.” Because the tax consequences of the
Restructuring are uncertain, and will depend in part on your particular facts
and circumstances, you should consult your tax adviser regarding the appropriate
characterization of the Restructuring and the specific tax consequences to
you.
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Q:
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When
will the Restructuring be
completed?
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A:
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The
EGM of Tenda will be held on December 30, 2009 at 9:00 a.m. (São Paulo
time) and the EGM of Gafisa will be held on December 30, 2009 at 2:00 p.m.
(São Paulo time). If either EGM is not convened
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due
to a lack of quorum, because the SEC shall not have declared effective the
registration statement of which this preliminary prospectus/information
statement is a part before that date or for any other reason, the EGMs
will be convened on a later date and a call notice will be released at
least eight days in advance of the rescheduled date of such EGM. Any
changes to the abovementioned dates shall be disclosed in Brazil in
accordance with Brazilian corporate law and by the issuance of a press
release and the filing of an amendment to this prospectus/information
statement with the SEC. The merger of shares will be legally effective
upon approval of the Restructuring at the EGMs. However, new common shares
will not be delivered to you in the Restructuring until a few days after
the end of the period for the exercise of withdrawal rights, which period
will end 30 days after publication of the minutes of Tenda’s EGM called to
approve the Restructuring. See “Could the Restructuring be unwound?”
below.
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Q:
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Can
I sell my old shares during the 30-day period following publication of the
minutes of the EGMs?
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A:
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There
will continue to be negotiation under the ticker TEND3 on the
BM&FBOVESPA, during the 30-day period. The shares of Gafisa will
continue to be listed on the BM&FBOVESPA and the Gafisa ADSs will
continue to be listed on the NYSE during and after that period until such
time, if any, as Gafisa might decide to alter the listing of the Gafisa
shares or ADSs. Gafisa does not currently have any plans of this
nature.
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Q:
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Could
the Restructuring be unwound?
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A:
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Under
Brazilian law, if management believes that the total value of the
withdrawal rights exercised by the shareholders of Tenda may place at risk
the financial stability of the companies, management may, within 10 days
after the end of the withdrawal rights period, call an EGM to either
unwind or ratify the Restructuring. Payment relating to the exercise of
the withdrawal rights will not be due if the Restructuring is unwound. See
“When will I receive my Gafisa Common Shares?”
below.
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Q:
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Are
any other approvals necessary for the completion of the
Restructuring?
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A:
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Yes.
The EGMs of Tenda and Gafisa will not take place until after the SEC
declares effective the registration statement of which this preliminary
prospectus/information statement is a part. Completion of the
Restructuring then is subject to (1) the occurrence of the Tenda EGM
(which under Brazilian law must occur before the Gafisa EGM) and the
approval of the Restructuring by the holders of at least 50% of Tenda’s
common shares, (2) the occurrence of the Gafisa EGM (whether as currently
scheduled or in a second call, due to minimum attendance requirements
under Brazilian law) and the approval of the matters presented to the
meeting by the holders of a majority of the Gafisa shares present or
represented at the meeting. In addition, Tenda will seek approval of its
debenture holders for the Restructuring and delisting from
BM&FBOVESPA’s Novo Mercado. Acceleration of the debentures may result
if either debenture holders decide without justification not to
approve the Restructuring or if the debenture holders do not approve the
delisting of Tenda from BM&FBOVESPA’s Novo
Mercado. See “Part Four: Information on Gafisa and Tenda—Management’s
Discussion and Analysis of Financial Condition and Results of Operations
of Tenda—Indebtedness—Debenture
Program.”
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Q:
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How
will my rights as a shareholder change after the
Restructuring?
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A:
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If
you are a shareholder of Tenda, your rights as a shareholder of Gafisa
will be substantially similar to your rights as a shareholder of Tenda. In
exchange for your shares, you will be receiving exclusively Gafisa shares
of the same class as your original shares plus any cash payable in respect
of fractional shares as described below. The Gafisa common shares that you
receive will be listed on BM&FBOVESPA as were your original Tenda
shares, and on the New York Stock Exchange, or the NYSE, if later you
decide to convert your Gafisa shares into Gafisa ADSs. See “Gafisa expects
your new Gafisa securities to enjoy greater market liquidity when compared
to your original securities” below.
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Q:
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When
will I receive my Gafisa common
shares?
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A:
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Assuming
the Restructuring is completed, we will deliver common shares in
connection with the Restructuring a couple of days after the end of the
period for the exercise of withdrawal rights, which period will end 30
days after the publication of the minutes of Tenda’s EGM called to approve
the Restructuring.
During that period, the common shares of Gafisa and Tenda are expected to
continue to trade on the BM&FBOVESPA under their existing ticker
symbols and the Gafisa ADSs are expected to continue to trade on the NYSE,
under their existing symbol.
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Q:
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Can
I opt to receive Gafisa ADSs instead of Gafisa
shares?
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A:
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No.
However, Citibank N.A., the depositary of Gafisa ADSs or the Gafisa
Depositary, may create ADSs on your behalf if you or your broker deposit
Gafisa shares with the custodian of Gafisa shares in Brazil, Itaú Unibanco
S.A., or the Gafisa Custodian. The Gafisa Depositary will issue ADSs (in
whole numbers only) and deliver such ADSs to the person indicated by you
only after you pay any applicable issuance fees and any charges and taxes
payable for the transfer of Gafisa shares to the Gafisa Custodian. Your
ability to deposit Gafisa shares and receive Gafisa ADSs may be limited by
U.S. and Brazilian legal considerations applicable at the time of deposit.
Additional information on Gafisa ADSs, including exchange rights and
conversion fees, are included in Gafisa’s Depositary Agreement, which is
incorporated by reference herein. See “Part Five: The Restructuring—Conversion of Gafisa
Common Shares into Gafisa ADSs.”
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Q:
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When
will I receive any cash attributable to any fractional Gafisa
share?
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A:
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If
you hold shares of Tenda and the application of the Exchange Ratio in the
“Restructuring would entitle you to receive a fractional Gafisa share,
Gafisa will sell, in an auction on the BM&FBOVESPA, the aggregate of
all fractional Gafisa shares. You will receive cash in lieu of any
fractional Gafisa share to which you would have been entitled as a result
of the Restructuring based on the net proceeds (after deducting applicable
fees and expenses), from any sale on the BM&FBOVESPA of the aggregate
number of fractional entitlements to Gafisa shares within thirty business
days after the receipt of proceeds from the sale of all such fractional
interests by Gafisa on the BM&FBOVESPA. The sale of such
fractional interests in auctions on the BM&FBOVESPA will occur as soon
as practicable after the completion of the
Restructuring.
|
|
Q:
|
Will
I have to pay brokerage
commissions?
|
|
A:
|
You
will not have to pay brokerage commissions as a result of the exchange of
your Tenda shares for Gafisa shares in the Restructuring if your Tenda
shares are registered in your name. If your securities are held through a
bank or broker or a custodian linked to a stock exchange, you should
consult with them as to whether or not they charge any transaction fee or
service charges in connection with the Restructuring. Also, if
you are not a Brazilian resident, you may be required to pay other costs
in connection with complying with the Brazilian legal requirements
described under “Part Five: The Restructuring—Brokerage
Commission.”
|
|
Q:
|
What
do I need to do now?
|
|
A:
|
If
you hold common shares of Tenda, no further action by you is required
except that if you are not a resident of Brazil, you will be required to
comply with the registration requirements of Instruction No. 325 of the
CVM and Resolution No. 2,689 of the CMN, or Law No. 4,131, as the case may
be, as described below under “Part Two: Summary—General Terms and Effects
of the Restructuring” in order to
receive Gafisa shares upon the consummation of the Restructuring. The
Gafisa common shares are book-entry shares, and an entry or entries will
be made in the share registry of Gafisa to evidence the common shares you
will receive. See “Part Five: The Restructuring—Receipt of
Shares of Gafisa” for more details.
|
|
Q:
|
When
and where will the shareholders’ meetings take
place?
|
|
A:
|
The
EGM of Tenda is currently scheduled to take place at 9:00 a.m. (São Paulo
time) on December 30, 2009 on the 10th floor of Tenda’s headquarters
located at Avenida Engenheiro Luis Carlos Berrini, No. 1,376, 04571−000 −
São Paulo, SP − Brazil. The EGM of Gafisa at which the
Restructuring and certain related issues will be considered is currently
scheduled to take place at 2:00 pm (São Paulo time) on December 30, 2009
on the 19th floor of Gafisa’s headquarters located at Avenida das Nações
Unidas, No. 8,501, 05425 − 070 − São Paulo, SP − Brazil. However, these
EGMs will not occur until after the SEC
declares
effective the registration statement of which this preliminary
prospectus/information statements is a part. The CVM may suspend for up to
15 days the time period between the date of the call notice and the date
of the EGM scheduled to approve the Restructuring. See “Part
Three: Risk Factors—Risks Relating to the Restructuring—The CVM, the
Brazilian securities regulator, may suspend for up to 15 days the
shareholders’ meetings scheduled to approve the
Restructuring.”
|
|
Q:
|
What
do I need to do if I would like to vote my
shares?
|
|
A:
|
Gafisa. If you hold
common shares of Gafisa, you may attend the Gafisa EGM at which the
Restructuring will be considered, and you may vote. Under Brazilian law,
to vote shares at an EGM you must either appear at the meeting in person
and vote your shares or grant an appropriate power of attorney to another
shareholder, an executive officer of the applicable company or an attorney
who will appear at the meeting and vote your shares. The power of attorney
must have been granted, at most, one year prior to the shareholders’
meeting and must be certified by a notary public and legalized by the
Brazilian consulate located in the domicile of the grantor. A corporation
may be represented at the shareholders’ meeting by its officers. The
powers of attorney granted by the shareholders of Gafisa for
representation at the meeting should be deposited at the head office of
Gafisa, located at Av. Nações Unidas No. 8,501, 19th floor, 05425−070 −
São Paulo, SP − Brazil, at least 48 hours prior to the occurrence of the
EGM. If you hold Gafisa ADSs, you are not entitled to attend
the Gafisa EGM but will receive instructions from the Gafisa Depositary
about how to instruct the Gafisa Depositary to vote the Gafisa common
shares represented by your Gafisa
ADSs.
|
Tenda. If you hold common
shares, you may attend the Tenda EGM at which the Restructuring will be
considered, and you may vote. Under Brazilian law, to vote shares at an EGM you
must either appear at the meeting in person and vote your shares or grant an
appropriate power of attorney to another shareholder, an executive officer of
the applicable company or an attorney who will appear at the meeting and vote
your shares. The power of attorney must have been granted, at most, one year
prior to the shareholders’ meeting and must be certified by a notary public and
legalized by the Brazilian consulate located in the domicile of the grantor. A
corporation may be represented at the shareholders’ meeting by its officers. The
powers of attorney granted by the shareholders of Tenda for representation at
the meeting should be deposited at the head offices of Tenda, located at Av.
Engenheiro Luiz Carlos Berrini No. 1,376, 10th floor, 04571−000 − São Paulo, SP
− Brazil, at least 48 hours prior to the occurrence of the EGM.
If you
are a direct holder of shares that are entitled to vote at the EGMs relating to
the Restructuring, you may either attend the relevant EGM personally or complete
a power of attorney that complies with Brazilian law. While the form
of power of attorney attached as an exhibit to the registration statement of
which this preliminary prospectus/information statement is a part provides an
example of a power of attorney, shareholders should confirm, with Brazilian
counsel if necessary, that any power of attorney or revocation thereof satisfies
the requirements of Brazilian law, as Gafisa and Tenda will not accept such
forms if they do not comply with Brazilian law. Gafisa and Tenda encourage you
to consult with Brazilian counsel if you wish to complete a power of
attorney. Shareholders wishing to attend an EGM and who hold shares
through the fungible custody of registered shares of the stock exchange must
provide a statement containing their corresponding equity interest in the
applicable company dated within 48 hours of the applicable EGM. The
EGMs of Gafisa and Tenda are currently scheduled to be held as
follows:
Gafisa
S.A., December 30, 2009 2:00 p.m. (São Paulo time)
Av.
Nações Unidas No. 8,501, 19th floor, 05425−070 − São Paulo, SP −
Brazil
Construtora
Tenda S.A., December 30, 2009 9:00 a.m. (São Paulo time)
Av.
Engenheiro Luiz Carlos Berrini No. 1,376, 10th floor, 04571−000 − São Paulo, SP
− Brazil
|
Q:
|
Who
can help answer my questions?
|
|
A:
|
If
you have any questions about the Restructuring, you can
contact:
|
Gafisa
S.A.
Attention:
IR Department
Av.
Nações Unidas No. 8,501, 19th floor
05425−070
− São Paulo, SP − Brazil
Telephone:
+ 55 (11) 3025−9000
e-mail:
ri@gafisa.com.br
Construtora
Tenda S.A.
Attention:
IR Department
Av.
Engenheiro Luiz Carlos Berrini No. 1,376, 9th floor
04571−000
− São Paulo, SP − Brazil
Telephone:
+ 55 (11) 3040−6426
e-mail:
ri@tenda.com
|
|
You may also contact the
information agent for the
Restructuring:
|
D.F. King
& Co., Inc.
48 Wall
Street, 22nd floor
New York,
N.Y. 10005 - USA
Toll
Free: (800)207-3158
Collect –
(212)269-5550
e-mail:
proxy@dfking.com
|
|
In addition, if you are a holder
of Gafisa ADSs, you may also
contact:
|
Citibank,
N.A.
Attention:
Depositary Receipts Department
388
Greenwich Street
New York,
N.Y. 10013 − USA
Calls
within the United States: (800) 308−7887
Calls
outside the United States: (781) 575−4555
The
following summary highlights selected information from this preliminary
prospectus/information statement and may not contain all the information that
may be important to you. To understand the Restructuring more fully, you should
read carefully this entire preliminary prospectus/information
statement.
We use throughout this preliminary
prospectus/information statement, specially under “—The Companies” and “Part Four:
Information on Gafisa and Tenda,” the term “value of launches”
as measure of the Companies performances. Value of launches is not a
Brazilian GAAP measurement. Value of sales as used in this preliminary
prospectus/registration statement is calculated by multiplying the total numbers
of units in a real estate development by the unit sales
price.
Overview
of Gafisa
Gafisa is
incorporated under the laws of the Federative Republic of Brazil under the name
Gafisa S.A., known as Gafisa. Gafisa has the legal status of a sociedade por ações, or a
stock corporation, operating under Brazilian law. Gafisa’s principal executive
offices are located at Av. Nações Unidas No. 8,501, 19th floor, 05425−070 − São
Paulo, SP − Brazil. Gafisa’s telephone number is +55 (11) 3025−9000, its
facsimile number is +55(11) 3025−9348, and its website is www.gafisa.com.br.
Gafisa’s agent for service of process in the United States is National Corporate
Research, Ltd. located at 10 East 40th Street, 9th floor, New York, NY
10016.
We are
one of Brazil’s leading homebuilders. Over the last 50 years, we have been
recognized as one of the foremost high-quality homebuilders, having completed
and sold more than 970 developments and constructed over 11 million square
meters of housing under the Gafisa brand, which we believe is more than any
other residential development company in Brazil. We believe our brands “Gafisa,”
“Alphaville,” and “Tenda” are well-known brands in the Brazilian real estate
development market, enjoying a reputation among potential homebuyers, brokers,
lenders, landowners and competitors for quality, consistency and
professionalism.
Our core
business is the development of high-quality residential units in attractive
locations. For the year ended December 31, 2008, approximately 50% of the value
of our launches was derived from high and mid high-level residential
developments under the Gafisa brand. We are also engaged in the development of
land subdivisions, also known as residential communities, representing
approximately 15% of the value of our launches, and affordable entry-level
housing, which represents approximately 8% of the value of our total launches.
Other mid-level and commercial buildings represent approximately 27% of the
value of our total launches. In addition, we provide construction services to
third parties.
We are
one of Brazil’s most geographically-diversified homebuilders currently operating
in 94 cities, including São Paulo, Rio de Janeiro, Salvador, Fortaleza, Natal,
Curitiba, Belo Horizonte, Manaus, Porto Alegre and Belém, across 18 states. Many
of these developments are located in markets where few large competitors
currently operate. For the year ended December 31, 2008, approximately 38% of
the value of our launches were derived from our operations outside the states of
São Paulo and Rio de Janeiro.
Overview
of Tenda
Tenda is
incorporated under the laws of the Federative Republic of Brazil under the name
Construtora Tenda S.A., known as Tenda. Tenda has the legal status of a sociedade por ações, or a
stock corporation, operating under Brazilian law. Tenda’s principal executive
offices are located at Av. Engenheiro Luiz Carlos Berrini No. 1,376, 9th floor,
05425−070 − São Paulo, SP − Brazil. Tenda’s telephone number is +55 (11)
3040−6426, its facsimile number is +55 (11) 3040−6035, and its website is
www.tenda.com.
Tenda is
one of Brazil’s leading homebuilders focused in the development of
affordable/entry-level residential buildings. Over the last 40 years, Tenda has
been recognized as one of the foremost professionally-managed homebuilders in
the affordable entry-level segment in Brazil, having completed and sold more
than 230 developments and built and delivered more than 16,000
units.
On
October 21, 2008, Tenda shareholders approved the merger into the company of FIT
Residential Empreendimentos Imobiliários Ltda., or FIT, a company then
controlled by Gafisa. As a result of the merger of FIT into Tenda, Gafisa became
the controlling shareholder of Tenda. After the merger, the operations of Tenda
further expanded into other markets in Brazil and, consequently, Tenda became
one of the most diversified affordable/entry-level homebuilders in the
country.
Tenda is
currently present in 64 cities across 13 states in Brazil. Further, Tenda
employs an in-house sales force, operating out of centralized retail centers in
high traffic areas of the largest metropolitan regions with large housing
deficits. Specifically, Tenda operates in cities and respective outskirts of
high demographic density, including the cities and respective outskirts of São
Paulo, Rio de Janeiro, Belo Horizonte, Salvador, Porto Alegre, Vitoria and
Brasilia. According to IBGE, these seven Brazilian cities together
account for approximately 110 million people and approximately 75% of the
Brazilian GDP.
Tenda’s
core business is the development of affordable/entry-level residential units in
attractive locations targeted at lower-income population, which currently
represents more than 90% of all families in Brazil. For the year ended December
31, 2008, approximately 88% of the value of Tenda sales were derived from
affordable/entry-level residential developments.
Current
Corporate Structure of Gafisa
The
following chart shows Gafisa’s corporate structure as of September 30,
2009:
Post-Restructuring
Corporate Structure
The
following chart shows Gafisa’s expected corporate structure after the
Restructuring:
Additional
information about Gafisa and Tenda is included in our 2008 Annual Report on Form
20-F, which is incorporated by reference herein, except for the U.S. GAAP
information included in items 3A, 8A and 18, which has been adjusted to reflect
the retrospective adoption of the disclosures required by SFAS No. 160 and is
incorporated by reference from our Form 6-K filed with the SEC on November
13, 2009.
Upon
shareholder approvals on October 21, 2008, FIT Residential Empreendimentos
Imobiliários Ltda., or FIT, a company previously controlled by Gafisa, was
merged into Tenda. As a result of the level of Gafisa’s pre-transaction
ownership in FIT and the exchange ratio in the merger, Gafisa became the
controlling shareholder of Tenda.
On
September 10, 2009, Gafisa hired Estáter to study strategic options for its
equity stake in Tenda. Based in part on Estáter’s advice, Gafisa concluded on
October 16, 2009, that the Restructuring was the preferable option to be
pursued. Representatives of Gafisa did not discuss the concept of the
Restructuring with or disclose any proposed terms for the Restructuring to
representatives of Tenda until after the closing of the market on October 21,
2009, at which time Gafisa’s officers, including Gafisa’s Chief Executive
Officer and Investor Relations Officer, informed two of Tenda’s board members,
Messrs. Mauricio Luchetti and Henrique Alves Pinto, of the proposed
transaction. On October 22, 2009, Tenda’s Investors Relations Officer
therefore decided to issue the first Tenda announcement in compliance with CVM’s
regulations.
On
October 22, 2009, the Companies announced their intention to consummate the
Restructuring and stated that they would retain the services of specialized
appraisal companies required under Brazilian corporate law to prepare the
necessary reports and that they had retained and would retain other appropriate
financial advisory services to assist in the determination of the Exchange Ratio
and other terms of the Restructuring, as recommended by the CVM. In
these public announcements of the Restructuring, the Companies also indicated
that they would voluntarily comply with a recently issued CVM Release No.
35 (Parecer de
Orientação No. 35), or CVM Release No. 35, making certain recommendations
with respect to the negotiation and conduct of transactions between affiliated
companies in order to enhance minority shareholder protection. Among other
recommendations, CVM Release No. 35 suggests the establishment of special
committees in connection with these transactions.
The
Companies announced that Tenda would form a special committee to act in
connection with the Restructuring and, specifically, to negotiate with Gafisa’s
management and issue to the board of directors of Tenda its recommendation
regarding an appropriate exchange ratio for the Restructuring. On October 22,
2009, the board of directors of Tenda appointed Messrs. Henrique de Freitas
Alves Pinto, Mauricio Luis Luchetti and Eduardo B. Gentil to form a special
committee, to negotiate, with the management of Gafisa, the terms and conditions
of the Restructuring and to submit its recommendations relating to the
Restructuring to the board of directors of Tenda. The Special Committee was
formed, in accordance with one of CVM’s recommended methods for selecting the
members of a special committee. A majority of the board of directors of Tenda
chose two members, Mr. Maurício
Luis Luchetti and Mr.
Henrique de Freitas Alves Pinto, both “independent members,” as such term is
defined by the rules and regulations of the BM&FBOVESPA. Ms Henrique is a
minority shareholder of Tenda and was appointed to the board of directors of
Tenda by the noncontrolling shareholders thereof. Messrs.
Henrique de Freitas Alves Pinto and Mauricio Luis Luchetti then selected Mr.
Eduardo B. Gentil as the third member of the Special
Committee. Although Mr. Gentil is not a member of the board of
directors of either Gafisa or Tenda or an employee of either of the Companies
and he is not otherwise affiliated with the Companies, the
Special Committee is formed pursuant to Tenda’s
bylaws and,
therefore, Mr. Gentil is subject to the same fiduciary duties applicable to
Tenda’s
directors, including the duty of loyalty pursuant to Article 160 of Brazilian
corporate law. CVM Release No. 35 provides for the extension of
fiduciary duties to members
of a special committee who are not also directors, by requiring companies to
provide for the existence of such special committee in the bylaws, as has been
done by Tenda in regards to the Special Committee. By
following a CVM recommended procedure
and appointing these persons as the members of the Special Committee, Tenda
assured that there would exist an independent group to negotiate with Gafisa
regarding the terms of the Restructuring.
The
Special Committee retained an independent financial advisor as well as an
independent legal advisor in connection with the Restructuring and held meetings
with such advisors as well as with representatives and advisors of Gafisa. With
the assistance of its financial advisor, the Special Committee, after having
negotiated with representatives of Gafisa, recommended an exchange ratio of
0.205 common share of Gafisa for each common share of Tenda for the
Restructuring. On November 6, 2009 the Special Committee issued a written
recommendation to the board of directors of Tenda recommending that the board
adopt the Exchange Ratio set forth in this preliminary prospectus/information
statement in connection with the Restructuring. On November 6, 2009,
the boards of directors of Gafisa and Tenda voted to approve the terms and
conditions of the merger agreement (Protocolo de Incorporação de Ações e
Instrumento de Justificação, under Brazilian law), or the Merger
Agreement, and scheduled EGMs of Gafisa and Tenda shareholders, respectively, in
order to obtain the shareholder approvals required in connection with the
Restructuring. Mr. Thomas McDonald recused himself from voting as a member of
both the Tenda and the Gafisa board of directors. Mr. Gary Garrabrant recused
himself from voting. Messrs. Wilson Amaral de Oliveira, Alceu Duilio Calciolari,
Rodrigo Osmo and Fernando Cesar Calamita, recused themselves from voting with as
members of Tenda board of directors. For additional information regarding the
Restructuring, the Special Committee and the background of the Restructuring,
see “Part Five: The Restructuring—Background, the Special Committee and Board
Positions.” For additional information regarding the share ownership of Messrs.
Thomas McDonald and Gary Garrabrant in both Tenda and Gafisa and regarding their
other relationship with Tenda and Gafisa, see “Part Five: The
Restructuring—Management of Gafisa” and “—Management of Tenda.”
The
principal factors or reasons that caused the Gafisa management and the Tenda
management to approve and recommend the Restructuring to their respective boards
of directors are the following:
|
|
·
|
Gafisa
and Tenda believe the Restructuring is likely to result in the creation of
a Brazilian national leader in the civil construction sector;
and
|
|
|
·
|
Gafisa
and Tenda believe the Restructuring is likely to (1) permit Gafisa and
Tenda to derive economic benefits as a result of the larger scale of their
combined operations, (2) increase operational, commercial and
administrative efficiencies and (3) permit the reduction of redundant
costs, and thereby allow for the possibility of larger future
investments by Gafisa in its own business and the possibility of a higher
sustainable growth rate.
|
|
o
|
Gafisa
and Tenda management believe that in the Brazilian real estate sector it
is important to have scale. A typical project, from launch to delivery,
usually takes 36 months and 20 months to complete for Gafisa and Tenda,
respectively, and payments received prior to delivery, only represent up
to 30% of the unit cost (the remaining 70% is usually financed by a third
party bank or financial institution). Therefore, the cash needs
of the companies are high - a characteristic of the business that has
only been exacerbated by Gafisa’s increasing sales volume (which grew from
R$995 million in 2006 to R$2,194 million in the first nine months of
2009). By managing both companies together, Gafisa management
expects to be able to manage its cash needs more effectively by utilizing
the strength of the combined balance sheet of Gafisa and Tenda and by
being able to allocate capital more freely between the two
companies. Management also expects to realize cost savings as a
result of the Restructuring because it should be possible to eliminate
duplicative activities at the two companies and avoid the costs related to
maintaining Tenda as a publicly listed
company.
|
|
o
|
The
management of Gafisa and Tenda also believe that the affordable entry
level housing market in which Tenda is focused has the potential for
high-growth and that the mid and mid/high housing sectors in which Gafisa
operates are also performing very well at the present time; however, at
times, either of these markets may outperform the other. Gafisa
and Tenda management believe that having a diversified platform is the
best way to mitigate risk. As a result of the Restructuring,
Tenda’s shareholders will no longer be exposed to only one segment of the
Brazilian real estate market, but to the various sectors of the housing
market in Brazil, and Tenda and Gafisa management believe that this
diversification will be valuable to both Tenda and Gafisa shareholders.
Tenda and Gafisa management believe that the ability to switch investments
according to demand across all sectors of the housing market in Brazil,
will likely produce a higher sustainable growth rate for Gafisa. Prior to
the Restructuring, Gafisa’s 60% ownership of Tenda was not sufficient as
to allow Gafisa to easily switch investments between the
companies.
|
|
o
|
The affordable entry level housing
segment has recently received substantial funding from
government-backed programs, which has contributed to an increase in Tenda
sales. However, these government-backed programs did not materially
influence Gafisa’s decision to increase its stake
in Tenda, as the management of Gafisa believes that the impact of such
government-backed programs is already reflected in Tenda’s share
price. Moreover, there is no assurance that such programs will
continue to be in place or available to the same extent in the
future. To the extent any of these programs cease to be available,
the management of Gafisa believes that the affordable entry-level housing
market would return to pre-government-backed program levels, which would
have a material adverse effect on Tenda’s results of operations in the
short-term. However, Gafisa does not
believe it would have a long-term material adverse impact on Tenda’s
business.
|
When they
approved the Restructuring, members of the boards of directors of Gafisa and
Tenda considered the following factors:
|
|
·
|
the
views of the management of Gafisa and Tenda, described above, to the
effect that (1) the Restructuring is likely to result in the creation of a
Brazilian national leader in the civil construction sector and (2) the Restructuring is
likely to result in economic benefits as a result of the increased scale
of the business, operational and administrative efficiencies, and the
ability to easily switch investments according to demand across all
sectors of the housing market in Brazil. In considering these
views, the Board considered the likelihood that management’s predictions
would be realized and risks that these predictions might fail to be
realized as a result of, among other matters, changes in macro-economic
conditions in and changes in the competitive environment in which Gafisa
and Tenda operate. Each board concluded that, in its opinion,
the views presented by management were, as of the date of the board
meetings, based on reasonable assumptions and that achievement of
management’s objectives would be beneficial to all of the Gafisa
shareholders, including those receiving Gafisa shares as a result of the
Restructuring.
|
|
|
·
|
that
the final terms of the Restructuring approved by the boards were
consistent with the recommendations made by the Special Committee to the
Tenda board of directors.
|
|
|
·
|
that
the Restructuring will allow holders of common shares of Tenda to exchange
their securities at an equitable exchange ratio, as recommended by the
Special Committee and as determined by independent financial
advisors.
|
|
|
·
|
that
the Restructuring will allow holders of common shares of Tenda to receive
Gafisa common shares having substantially the same rights as their common
shares of Tenda but that instead are expected to enjoy greater liquidity
than the securities previously held by them. In reaching this
conclusion, the boards received advice from their respective Brazilian
legal advisors to the effect that, under Brazilian law and the respective
bylaws of Gafisa and Tenda, the common shares of each company had
substantially the same voting rights, dividend rights and other material
shareholder rights. The boards recognized that the nature of
the businesses represented by each of the respective classes of stock
differed in certain respects, with the Tenda business being focused on
affordable entry-level residential buildings and the Gafisa business being
focused on high quality homes and that certain shareholders might prefer
one over the other; however, the boards also noted that other shareholders
might well prefer diversification and that both management and the boards
view diversification as an appropriate means to mitigate
risk. More importantly, the boards noted that, because the
Gafisa shares are traded both on BM&FBOVESPA and, on the NYSE, in the
form of ADSs, there is a larger trading market for the Gafisa shares than
exists for the Tenda shares. For example, in October 2009,
Gafisa’s average daily trading volume (ADTV) was equivalent to R$60
million on the BM&FBOVESPA and approximately R$76.7 million on the
NYSE, resulting in a consolidated ADTV of close to R$137 million. In the
same period, Tenda’s ADTV was R$14.4 million, or 11% of Gafisa’s
ADTV. After the Restructuring, the potential combined liquidity
would be approximately R$150 million and this fact might facilitate sales
by shareholders no longer interested in maintaining their investment in
the business at prices deemed acceptable by those
shareholders.
|
|
|
·
|
that
the Restructuring will allow Tenda shareholders who do not want to become
shareholders in Gafisa a right to exercise withdrawal rights, but the
Restructuring will offer those Tenda shareholders who do
not
|
exercise
withdrawal rights an Exchange Ratio with an equivalent market price for the
Tenda shares that is likely to be higher than the value of the withdrawal rights
offered to dissenting Tenda shareholders. The value of the withdrawal
rights is based on Tenda’s equity value (book value) per share on December 31,
2008. Based on Tenda’s book value as of December 31, 2008 of
R$1,062,213,828.91 and the 400,804,117 outstanding shares, a holder of a single
Tenda share would receive R$2.65, if such holder were to exercise his withdrawal
rights. On the other hand, the Exchange Ratio of 0.205 and the market
price of Gafisa’s shares as of December 22, 2009 (R$27.15 per share) imply an
equivalent market price of R$5.57 to be received by a holder of a single Tenda
share who does not exercise his withdrawal rights. Although the
actual value of Gafisa shares (and therefore the equivalent value to be received
by Tenda shareholders based on the Exchange Ratio) will fluctuate between the
date of this Registration Statement and the date that Tenda shareholders will
receive Gafisa shares following the Restructuring, the value of withdrawal
rights will be greater than the value of the Gafisa shares received based on the
Exchange Ratio only if the market price of Gafisa shares falls below R$12.93 per
share (a decline of more than 50% from the market price on December 22,
2009).
Under
Brazilian corporate law, Tenda shareholders dissenting from the Restructuring
may request that withdrawal rights be calculated based on a balance sheet
prepared within no more than 60 days as of the date of the Tenda
EGM. Even applying the most recent public information available
(i.e., the interim balance sheet dated September 30, 2009), Tenda’s shareholders
exercising withdrawal rights would only receive approximately R$2.80 per Tenda
share, which would still be less than the value likely to be received based on
the Exchange Ratio. The book value of Tenda shares is unlikely to
have varied sufficiently since September 30, 2008 so as to provide Tenda
shareholders who choose to exercise withdrawal rights with a greater value than
that which they would receive if they participate in the
Restructuring. For more information on how the withdrawal value is
calculated, see “Part Five—The Restructuring—Withdrawal Rights.”
Gafisa
and Tenda do not generally publish their business plans and strategies or make
external disclosures of their anticipated financial position or results of
operations. However, the management of each of Tenda and Gafisa has provided
historical financial information set forth in valuation reports and financial
analyses issued for the benefit of the Special Committee by Banco Itaú BBA S.A.,
Estáter Assessoria Financeira Ltda., N.M. Rothschild & Sons (Brasil)
Ltda. and APSIS
Consultoria Empresarial Ltda., as described below. The assumptions and
estimates underlying the prospective financial information are inherently
uncertain and, though considered reasonable by the management of the Companies
as of the date of its preparation, are subject to a wide variety of significant
business, economic, and competitive risks and uncertainties that could cause
actual results to differ materially from those contained in the prospective
financial information, including, among other things, risks and uncertainties.
See “Part Three: Risk Factors.” Accordingly, there can be no assurance that the
prospective results are indicative of the future performance of Gafisa and Tenda
or that actual results will not differ materially from those presented in the
prospective financial information. The accompanying prospective financial
information was not prepared with a view toward public disclosure or with a view
toward complying with the guidelines established by the American Institute of
Certified Public Accountants with respect to prospective financial information.
Banco
Itaú BBA S.A.
In
connection with the Restructuring, the Special Committee received a valuation
report from Banco Itaú BBA S.A., or Itaú BBA, expressing the view that, as of
the date of that report and based on and subject to the considerations,
limitations and assumptions of Itaú BBA’s analysis described in that report, as
well as other matters Itaú BBA considered relevant, Itaú BBA determined for the
exclusive benefit of the Special Committee, after carefully hearing and
discussing the new assumptions and arguments presented by the Special Committee,
that the indicative exchange ratio should be between 0.200 to 0.220 shares of
Gafisa per share of Tenda, therefore increasing its initial analysis of an
indicative exchange ratio between 0.196 and 0.210.
Estáter
Assessoria Financeira Ltda.
In
connection with the Restructuring, Gafisa received a presentation of financial
analyses from Estáter Assessoria Financeira Ltda., or Estáter, expressing, as of
the date of that presentation and based on and subject to the considerations and
limitations of Estáter’s analysis described in that presentation and based on
other matters as Estáter considered relevant, that if the exchange ratio
recommended by Gafisa and approved by the boards of directors of Gafisa and
Tenda with respect to the Restructurings was within the range of implied
exchange ratios derived from the financial analyses performed by Estáter with
respect to Gafisa and Tenda, applied on a consistent basis, then such exchange
ratio, as of November 4, 2009, would constitute equitable treatment as
understood in the manner described in such presentation. The boards of directors
of Gafisa and Tenda and the Special Committee confirmed that the exchange ratio
falls within the range derived from the financial analyses performed by
Estáter.
N.M.
Rothschild & Sons (Brasil)
Ltda.
In
connection with the Restructuring, Gafisa’s board of directors was advised by
N.M. Rothschild & Sons
(Brasil) Ltda., or
Rothschild, which provided an additional analysis as to the appropriate
range for the Exchange Ratio in
the Restructuring and provided the Gafisa board of directors with its assessment
of the Estáter financial analyses. Rothschild stated that it considered the
Estáter financial analyses to be thorough,
professionally prepared and based on reasonable assumptions. Rothschild then noted that while
its valuation methodology differed in certain respects from that of Estáter, the range for the
exchange ratio derived by Rothschild and the range derived
by Estáter were
substantially consistent. Rothschild also noted that the
Estáter’s range fell within
the Rothschild’s range.
Rothschild thus reported to
the board of directors of Gafisa and Tenda and to the Special Committee that any
exchange ratio between 0.188 Gafisa shares per Tenda share to 0.259 Gafisa
shares per Tenda share for the Restructuring would be equitable from the
perspective of the noncontrolling shareholders.
APSIS
Consultoria Empresarial Ltda.
In
connection with the Restructuring, the board of directors of Gafisa received
from APSIS Consultoria Empresarial Ltda., or APSIS, an appraisal
report for purposes of Article 8 of Brazilian corporate law, which is the
Brazilian law that requires an appraisal of the shares of Tenda used to
determine the capital increase of Gafisa. APSIS concluded that, as of
September 30, 2009, the book value of the common shares of Tenda for this
purpose was R$2.80 per share.
In
addition, the boards of directors of Gafisa and Tenda and the Special Committee
received from APSIS an appraisal report for purposes of Article 264 of Brazilian
corporate law which
is the Brazilian law that requires an appraisal of the net worth of Gafisa and
Tenda at market prices as of September 30, 2009 and disclosure of the outcome of
that appraisal so that shareholders have a parameter against which to judge the
Exchange Ratio. APSIS expressed the view that, as of the date of its
reports and based on and subject to the assumptions and considerations described
in those reports and based on other matters as APSIS considered relevant (1) the
value of the net equity of Tenda as of September 30, 2009, calculated as if all
of its assets and liabilities had been sold at fair market value was
approximately R$3.04 per common share, (2) the value of the net
equity of Gafisa as of September 30, 2009, calculated as if all of its assets
and liabilities had been sold at fair market value was approximately R$16.32 per
common share of Gafisa and (3) these net equity values of Tenda and Gafisa
implied an exchange ratio of 0.186199 share of Gafisa per share of Tenda as
compared to the Exchange Ratio of 0.205 share of Gafisa per common share of
Tenda.
Uses
of the Valuation Reports and Appraisals
Only the
APSIS appraisals, prepared for purposes of sections 227, 8 and 264 of the
Brazilian corporate law, were required pursuant to the Brazilian corporate law.
One of the APSIS appraisals is intended, as required by Brazilian regulations,
to confirm that the capital increase in Gafisa resulting from the Restructuring
is supported by the net worth of Tenda. The other report, also required by
statute, is intended only to compare the proposed exchange ratio to another
theoretical exchange ratio based on the market value of the assets and
liabilities of both companies. Neither of those appraisals refers to the
fairness of the exchange ratio nor were they required to have done so pursuant
to Brazilian corporate law.
The
Special Committee was selected in accordance with the recommendations of CVM
Release No. 35 and therefore complies with such recommendations of CVM Release
No. 35 so as to adequately fulfill the fiduciary duties of directors related to
a transaction with an affiliate. While the CVM Release No. 35 acknowledges that
there are other means to comply with the fiduciary duties of the directors in
such cases, it indicates that the creation of a Special Committee in compliance
with the recommendations of CVM Release No. 35 is an adequate way of having the
applicable fiduciary duties fulfilled.
The
reports presented by Rothschild and Estáter were prepared
at the request of Gafisa’s Board of Directors and the report presented by Itaú
BBA was prepared at the request of Tenda’s Special Committee, to support their
respective evaluation and negotiation of the terms and conditions of the
transaction. Whereas such reports do not express any opinion with respect to the
fairness of transaction, they confirm that the proposed exchange ratio is
supported by the common methodologies of financial valuation standards as
described in each of the reports.
The Board
of Directors of Gafisa recommended the approval of the Restructuring based on
the appraisal prepared by APSIS and on the reports presented by Rothschild and
Estáter,
after having considered the recommendations of the Special Committee of Tenda,
including, specifically, the Exchange Ratio, which Gafisa’s Board of Directors
considered to be fair and adequately justified.
The Board
of Directors of Tenda recommended the approval of the Restructuring to the
shareholders of Tenda based on the appraisal prepared by APSIS and the
recommendation of the Special Committee (which was advised by Itaú BBA).
We
urge you to read carefully the summary of the reports set forth in “Part Five:
The Restructuring—Valuation Reports of Itaú BBA,” “Part Five: The
Restructuring—Financial Analyses of Estáter,” “Part Five: The
Restructuring—Valuation Reports of Rothschild” and “Part Five: The
Restructuring—Valuation Reports of APSIS,” which includes information on how to
obtain copies of the full reports.
If the
Restructuring is approved holders of common shares of Tenda will receive,
without any further action, except if they are not residents of Brazil, 0.205
common share, no par value, of Gafisa for each Tenda common share they hold,
plus, in each case, cash instead of any fractional shares.
Tenda
shareholders residing outside of Brazil will receive their shares in accordance
with their current investment regime. Hence, such shareholders will receive
their shares, either (1) as a portfolio investment pursuant to the registration
requirements of the Instruction No. 325 of the CVM, or Instruction No. 325, and
Resolution No. 2,689 of the CMN, or Resolution No. 2,689; or (2) as a foreign
direct investment in accordance with Law No. 4,131/62, depending on how they
hold their shares of Tenda.
With
certain limited exceptions, Resolution No. 2,689 investors are permitted to
carry out any type of transaction in the Brazilian financial capital market
involving securities traded on a Brazilian stock, futures or securities traded
in organized over-the-counter markets. Investments and remittances outside of
Brazil of gains, dividends, profits or other payments related to such securities
are made through the foreign exchange market.
In order
to become a Resolution No. 2,689 investor, an investor residing outside Brazil
must:
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appoint
a representative in Brazil with powers to take actions relating to the
investment;
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obtain
a taxpayer identification number from the Brazilian tax
authorities;
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appoint
an authorized custodian in Brazil for the investments, which must be a
financial institution duly authorized by the Brazilian Central Bank and
CVM; and
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through
its representative, register itself as a foreign investor with the CVM and
the investment with the Brazilian Central
Bank.
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Securities
and other financial assets held by foreign investors pursuant to Resolution No.
2,689 must be registered or maintained in deposit accounts or under the custody
of an entity duly licensed by the Central Bank or the CVM. In addition,
securities trading by foreign investors is generally restricted to transactions
involving securities listed on the Brazilian stock exchanges or traded in
organized over-the-counter markets licensed by the CVM.
Foreign
direct investors under Law No. 4,131 may sell their shares in both private and
open market transactions, but these investors are currently subject to less
favorable tax treatment on gains.
A foreign
direct investor under Law No. 4,131 must:
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register
as a foreign direct investor with the Central
Bank;
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obtain
a taxpayer identification number from the Brazilian tax
authorities;
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appoint
a tax representative in Brazil; and
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appoint
a representative in Brazil for service of process in respect of suits
based on the Brazilian corporate
law.
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As a
result of the Restructuring:
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Gafisa
will be a significantly larger company and will own 100% of the capital
stock of Tenda. Gafisa’s interest in the net book value and net income
(loss) of Tenda will therefore increase to
100%;
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subject
to satisfying applicable legal requirements, the Restructuring will
provide holders of Tenda shares with an opportunity to own ADSs instead of
shares by exchanging the Gafisa shares that they receive in the
Restructuring for Gafisa ADSs in accordance with the terms of the Gafisa
Deposit Agreement, a copy of which is included as exhibit 3.2 to the
registration statement of which this preliminary prospectus/information
statement is a part and which is incorporated by reference
herein;
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the
holders of common shares of Tenda will receive common shares of Gafisa
which will be listed on the BM&FBOVESPA, and any such Gafisa shares
that are exchanged for Gafisa ADSs pursuant to the terms of the Gafisa
Deposit Agreement will be listed on the
NYSE;
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the
common shares of Tenda will be delisted from the “Novo Mercado” of
BM&FBOVESPA, however Tenda will remain registered as a publicly-held
company with the CVM, until further decision from Gafisa on the
subject;
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the
common shares of Gafisa will continue to be listed on the BM&FBOVESPA
and the Gafisa ADSs will continue to be listed on the NYSE and Gafisa will
continue to file periodic reports with the SEC pursuant to the Securities
Exchange Act of 1934, or the Exchange Act;
and
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the
holders of common shares of Tenda that do not vote favorably to from the
Restructuring will have, for a period of 30 days from the date of the
publication of the minutes of Tenda’s EGM relating to the Restructuring,
the right to withdraw from Tenda and be reimbursed for the value of the
shares for which they
are record holders on October 21, 2009. For more
information on withdrawal rights, see “Part Five: The
Restructuring—Withdrawal
Rights.”
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Despite
the benefits of and reasons for the Restructuring as well as the effects of the
Restructuring all listed above, in considering the Restructuring,
noncontrolling shareholders should consider the following
factors:
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Gafisa
will be considerably more leveraged than Tenda was previously. The
Restructuring will not, however, cause Gafisa to absorb any properties,
rights, assets, obligations or responsibilities of Tenda, which shall keep
its legal identity in full without succession. See “Part Three: Risk
Factors—Risks Relating to the
Restructuring.”
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Because
Gafisa will be a larger company than Tenda, holders of Tenda shares will
generally have a lower ownership percentage in Gafisa than they currently
have in Tenda. Also, Gafisa
shareholders’ ownership percentage in Gafisa will be diluted as a result
of the issuance of the new Gafisa shares in the Restructuring. See “Part
Three: Risk Factors—Risks Relating to the
Restructuring.”
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While
the Exchange Ratio was determined in accordance with all applicable laws
and regulations in Brazil and was recommended by the Special Committee,
this ratio may be higher or lower, from the perspective of value to
unaffiliated shareholders, than those that could be achieved through arm’s
length negotiations between unrelated parties. See “Part Five: The
Restructuring— Past Contacts, Transactions, Negotiations and Agreements”
and “Part Five: The Restructuring—Transactions and Arrangements Concerning
the Common Shares of Tenda.”
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The
Exchange Ratio reflects the fact that Gafisa already owns, directly or
indirectly, a majority of the outstanding shares of Tenda and,
accordingly, the Restructuring does not involve a change of control. As a
result, the Exchange Ratio should not be expected to, and does not,
reflect a control premium.
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The
Special Committee relied on the valuation reports of Itaú BBA and,
together with its financial adviser, reviewed the financial analyses of
Estáter and the appraisal report of APSIS. Furthermore, Estáter’s exchange
ratio range fell within Rothschild’s exchange ratio range. APSIS’ fees
will be paid entirely by the Companies, Itaú BBA’s fees will be paid
entirely by Tenda and Estáter’s and Rothschild’s fees will be paid
entirely by Gafisa.
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In the
opinion of Davis Polk & Wardwell LLP, the Restructuring should qualify as a
tax-free “reorganization” for U.S. federal income tax purposes. In
order for the Restructuring to qualify as a reorganization for such purposes,
among other things, Tenda shareholders must receive, from Gafisa, solely Gafisa
voting stock in exchange for their Tenda shares. There is no authority under the
U.S. tax laws expressly addressing whether the payment of cash to Tenda
shareholders who exercise withdrawal rights pursuant to Brazilian law will
prevent the Restructuring from satisfying this “solely for voting stock”
requirement. However, based on the advice of Gafisa’s Brazilian
counsel to the effect that solely Tenda, and not Gafisa, will be liable to make
any cash payment to any Tenda shareholders who exercise withdrawal rights, and
assuming that any such payments are not funded indirectly by Gafisa, the payment
of such cash to Tenda shareholders who exercise withdrawal rights should not
prevent the Restructuring from qualifying as a reorganization for U.S. federal
income tax purposes. No ruling has been sought or will be obtained
from the U.S. Internal Revenue Service on the U.S. federal income tax
consequences of the transaction.
If the
Restructuring qualifies as a reorganization for U.S. federal income tax
purposes, you generally will not recognize gain or loss for U.S. federal income
tax purposes on the receipt of Gafisa shares in exchange for Tenda shares,
except to the extent of gain attributable to cash received in lieu of a
fractional Gafisa share. If the Restructuring is a taxable
transaction, you generally will recognize gain or loss on the receipt of Gafisa
shares in exchange for Tenda shares. Please review carefully the
section under “Part Five: the Restructuring—Material Tax Considerations—United
States Federal Income Tax Considerations.”
The
Restructuring may also have Brazilian tax implications, as described under “Part
Five: The Restructuring—Material Tax Considerations—Brazilian Tax
Considerations.”
The
Restructuring will require the affirmative vote of holders representing at least
50% of the Tenda common shares at the EGM of Tenda, to take place after the
declaration of effectiveness of the registration statement to which
this
preliminary prospectus/information statement is a part to by the SEC and the
distribution of this preliminary prospectus/information statement to the
shareholders of Tenda.
The
Restructuring will be also subject to approval by the majority of Gafisa’s
shareholders present at a duly convened EGM of Gafisa to take place promptly
after the Tenda EGM, provided that such EGM shall only occur on a first call if
shareholders representing at least two thirds of Gafisa’s voting capital
attend. If the attendance quorum is not reached, the EGM may occur,
on a second call, with any number of shareholders. The EGMs of Gafisa and Tenda
are currently scheduled to be held as follows:
Gafisa
S.A., December 30, 2009 2:00 p.m. (São Paulo time)
Av.
Nações Unidas No. 8,501, 19th floor, 05425−070 − São Paulo, SP −
Brazil
Construtora
Tenda S.A., December 30, 2009 9:00 a.m. (São Paulo time)
Av.
Engenheiro Luiz Carlos Berrini No. 1,376, 10th floor, 04571−000 − São Paulo, SP
− Brazil
Notwithstanding
the currently scheduled dates, the EGMs of Tenda and Gafisa will not take place
until after the SEC declares effective the registration statement of which this
preliminary prospectus/information statement is a part. If either EGM
is not convened due to a lack of quorum, because the SEC shall not have declared
the registration statement effective before the scheduled date of the EGM for
any other reason, the relevant EGM will be convened on a later date and a call
notice will be released at least eight days in advance of the rescheduled date
of such EGM. Any changes to the abovementioned dates shall be disclosed in
Brazil in accordance with Brazilian corporate law and by the issuance of a press
release and the filing of an amendment to this prospectus/information statement
with the SEC.
If you
hold common shares of Gafisa or Tenda, you may attend and vote at the applicable
meeting. Under Brazilian law, you may be required to show documents proving your
identity to gain admittance to the meeting. If you grant a power of attorney
under Brazilian law to someone to act for you at the meeting, your appointee
will be required to show original or certified copies of the documents that
grant him or her powers of representation. The power of attorney should be
deposited in properly notarized and consularized form at the head offices of
Gafisa or Tenda, as the case may be, no later than 48 hours before the
occurrence of the applicable EGM and may be revoked in accordance with Brazilian
law. While the form of power of attorney filed as an exhibit to the
registration statement of which this preliminary prospectus/information
statement is a part provides an example of a power of attorney, shareholders
should confirm, with Brazilian counsel if necessary, that any power of attorney
or revocation thereof satisfies the requirements of Brazilian law, as Gafisa and
Tenda will not accept such forms or revocations if they do not comply with
Brazilian law. Shareholders that have given a power of attorney may revoke it by
issuing an instrument of revocation and depositing it, in properly notarized and
consularized form at the head offices of Gafisa or Tenda, as the case may be, no
later than 48 hours before the occurrence of the applicable EGM. Shareholders
wishing to attend an EGM and who hold shares through the fungible custody of
registered shares of the stock exchanges must provide a statement containing
their corresponding equity interest in the applicable company dated within 48
hours of the applicable EGM.
No holder
of Gafisa ADSs may vote at the applicable meeting, although if you hold Gafisa
ADSs, subject to compliance with certain timing and other related requirements,
you have a right to instruct the Gafisa Depositary how to vote the Gafisa common
shares represented by your ADSs. See “Part Five: The Restructuring—The
Shareholder Meetings—Voting by Gafisa ADS Holders.”
Under
Brazilian law, there are no conditions for the completion of the Restructuring
other than approval by the holders of a majority of the common shares of Gafisa
attending the EGM and at least 50% of the common shares issued by Tenda. Under
U.S. law, however, the completion of the Restructuring is subject to the
declaration of effectiveness of the registration statement to which this
preliminary prospectus/information statement is a part by the SEC, as
well as to the distribution and delivery of this preliminary
prospectus/information statements to all non-Brazilian shareholders of Gafisa
and Tenda in accordance with U.S. securities laws.
If the
Restructuring is approved, each common share of Tenda will become 0.205 common
share, with no par value, of Gafisa, plus, in each case, cash instead of any
fractional shares, without any action by you except that if you are not a
resident of Brazil, in which case you will need to comply with Instruction No.
325 and Resolution No. 2,689, or Law No. 4,131, as the case may be, as described
above under “—Terms and Effects of the Restructuring.” Because the common shares
of Gafisa are book-entry shares, an entry or entries will be made in the share
registry of Gafisa to evidence the common shares received in the Restructuring.
Neither you nor any other person will receive certificates evidencing common
shares of Gafisa. Tenda shareholders who receive common shares of Gafisa upon
completion of the Restructuring, may then elect to deposit such common shares
and receive Gafisa ADSs, subject to the payment of certain fees imposed by the
Gafisa Depositary and the requirements for making such an election as specified
in the Deposit Agreement which is incorporated by reference herein. See “Part
Five: The Restructuring—Conversion of Gafisa Common Shares into Gafisa
ADSs.”
If you
are a holder of common shares of Gafisa or Gafisa ADSs, you will continue to
hold those securities after the Restructuring.
Gafisa is
managed, and after the Restructuring will continue to be managed, by a board of
directors of six members, all with terms expiring at the annual general meeting
of shareholders to be held in 2010. The board of executive officers of Gafisa
currently consists of five members, led by Wilson Amaral de Oliveira as chief
executive officer.
Gafisa is
headquartered in São Paulo, Brazil and will maintain that headquarters after the
Restructuring.
Under
Brazilian GAAP, the accounting principles used to prepare Gafisa’s consolidated
financial statements, the merger of shares is expected to be accounted for by
the book value of the shares exchanged.
Under
U.S. GAAP, the merger of shares will be accounted for as equity transactions in
accordance with SFAS No. 160, “Noncontrolling Interests in Consolidated
Financial Statements, an Amendment of ARB No. 51.” This standard requires that
the carrying amount of a noncontrolling interest (formerly referred to as “a
minority interest”) be adjusted to reflect the change in our ownership interest
in the subsidiary. Any difference between fair value of the consideration
received or paid and the amount by which the noncontrolling interests is
adjusted shall be recognized in equity attributable to the parent.
Upon the
completion of the Restructuring and after the end of the period for the exercise
of withdrawal rights, Gafisa’s shares delivered to Tenda’s shareholders in
connection with the Restructuring will trade on the Novo Mercado of
BM&FBOVESPA. The common shares of Gafisa will continue to trade under the
ticker symbol “GFSA3.”
After the
Restructuring is complete and the period for the exercise of withdrawal rights
has ended, common shares of Tenda will be delisted from the “Novo Mercado” of
BM&FBOVESPA However, Tenda will keep its register as a
publicly-held company with CVM, until further decision from
Gafisa. The Gafisa ADSs will continue to be listed on the NYSE and
Gafisa will continue to file periodic reports with the SEC pursuant to the
Exchange Act.
According
to article 137 of Brazilian corporate law, the holders of common shares of Tenda
that do not vote favorably to the Restructuring, refrain from voting on the
resolution relating to the Restructuring or fail to attend the relevant EGM
will, for 30 days from the date of the publication of Tenda’s EGM relating to
the Restructuring, have
the right
to withdraw from Tenda and be reimbursed by Tenda for the value of the shares
for which they were record holders on October 21, 2009.
Holders
of common shares of Gafisa are not entitled to exercise withdrawal rights in
connection with the Restructuring nor are holders of Gafisa ADSs.
For more
information on withdrawal rights, see “Part Five: The Restructuring—Withdrawal
Rights.”
The
timetable and the dates indicated below are for illustrative purposes
only. The dates of the Tenda and Gafisa EGMs and any corresponding
dates may change as necessary to obtain the quorum required under Brazilian
corporate law, to comply with U.S. securities laws or for any other
reason.
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Event
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Date
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Meeting
of the Board of Directors of Tenda to approve the submission of the
Restructuring to the shareholders
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November
6, 2009
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Meeting
of the Board of Directors of Gafisa to approve the submission of the
Restructuring to the shareholders
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November
6, 2009
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Announcement
of the Restructuring according to CVM Rules
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November
9, 2009
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Notice
of meeting of shareholders of Tenda to approve the Restructuring first
published in the Official Gazette
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November
10, 2009
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Notice
of meeting of shareholders of Gafisa to approve the Restructuring first
published in the Official Gazette
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November
10, 2009
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Notice
of meeting of shareholders of Tenda to approve the Restructuring first
published in the Valor Econômico Gazette
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November
10, 2009
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Notice
of meeting of shareholders of Gafisa to approve the Restructuring first
published in the Valor Econômico Gazette
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November
10, 2009
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Filling
of the Registration Statement on Form F-4 with the SEC
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November
13, 2009
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Mailing
of preliminary prospectus/information statement to U.S. holders of common
shares of Tenda and to holders of common shares and ADSs of
Gafisa
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Commencing
on or about November 15 , 2009
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Filing
of Amendment No. 1 to the Registration Statement on Form F-4 with the
SEC.
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December
11, 2009
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Filing of Amendment No. 2 to the
Registration Statement on Form F-4 with the SEC.
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December
23, 2009
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Effectiveness
of the Registration Statement on Form F-4 by the SEC
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on
or about December 28, 2009
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Meeting
of shareholders of Tenda to approve the Restructuring
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December
30, 2009
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Meeting
of shareholders of Gafisa to approve the Restructuring
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December
30, 2009
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Beginning
of period for exercise of withdrawal rights
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on
or about February 1, 2010
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End
of period for withdrawal rights
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on
or about February 1, 2010
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Expected
last day of trading of common shares of Tenda on the
BM&FBOVESPA
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on
or about February 8, 2010
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Expected
first day of trading of newly issued Gafisa common shares on the
BM&FBOVESPA
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on
or about February 9,
2010
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The
following financial statements are included or incorporated by reference in this
preliminary prospectus/information statement:
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Gafisa’s
audited consolidated financial statements prepared in accordance with
Brazilian GAAP as of December 31, 2008, 2007 and 2006 and for the years
then ended, which include a reconciliation to U.S. GAAP of net income and
shareholders’ equity as of and for the years ended December 31, 2008, 2007
and
|
2006,
included in the Form 6-K filed on November 13, 2009 with the SEC and which is
incorporated by reference herein;
|
|
·
|
Gafisa’s
unaudited interim consolidated financial statements prepared in accordance
with Brazilian GAAP as of September 30, 2009 and for the nine-month
periods ended September 30, 2009 and 2008, which includes a reconciliation
to U.S. GAAP of shareholders’ equity as of September 30, 2009 and December
31, 2008 and net income for the nine-month periods ended September 30,
2009 and 2008, included elsewhere in this preliminary
prospectus/information statement;
|
|
|
·
|
Tenda’s
audited consolidated financial statements prepared in accordance with
Brazilian GAAP as of December 31, 2008 and 2007 and for the years ended
December 31, 2008, 2007 and 2006, included elsewhere in this preliminary
prospectus/information statement;
and
|
|
|
·
|
Tenda’s
unaudited interim consolidated financial statements prepared in accordance
with Brazilian GAAP as of September 30, 2009 and for the nine-month
periods ended September 30, 2009 and 2008, included elsewhere in this
preliminary prospectus/information
statement.
|
A summary
of the historical financial data under Brazilian GAAP and U.S. GAAP for Gafisa
and Tenda (as available) as of and for the five years ended December 31, 2008,
2007, 2006, 2005 and 2004, as adjusted to reflect the retrospective adoption of
the disclosures required by SFAS No. 160, is included in this preliminary
prospectus/information statement.
The
unaudited pro forma consolidated condensed balance sheet of Gafisa as of
September 30, 2009 and the unaudited pro forma condensed consolidated statements
of income of Gafisa for the year ended December 31, 2008, and nine-month periods
ended September 30, 2009 are included in this preliminary
prospectus/information statement.
References
to the “real,” “reais” or “R$” are to
Brazilian reais
(plural) and the Brazilian real (singular), the lawful
currency of the Federative Republic of Brazil and references to “U.S. dollars”
or “US$” are to United States dollars, the lawful currency of the United States
of America.
This
preliminary prospectus/information statement contains translations of various
reais amounts into U.S.
dollars at specified rates solely for your convenience. You should not construe
these translations as representations by Gafisa that the real amounts actually
represent these U.S. dollar amounts or could be converted into U.S. dollars at
the rates indicated. Unless otherwise indicated, Gafisa have translated some
Brazilian currency amounts using a rate of R$1.778 to US$1.00, as published by
the Central Bank of Brazil (Banco Central do Brasil), or
the Central Bank, on September 30, 2009.
Gafisa’s
Financial Statements
Gafisa’s
audited consolidated financial statements as of and for the years ended December
31, 2008, 2007 and 2006 have been prepared in accordance with Brazilian GAAP,
which differs in certain significant respects from accounting principles
generally accepted in the United States, or U.S. GAAP. Note 22 to Gafisa’s
consolidated financial statements included in Gafisa’s Form 6-K filed on
November 13, 2009 with the SEC, which is incorporated by reference herein,
describe the principal differences between Brazilian GAAP and U.S. GAAP as they
relate to us, and provide a reconciliation to U.S. GAAP of net income and
shareholders’ equity as of and for the years ended December 31, 2008, 2007 and
2006. As a result of a change in Brazilian law with respect to
financial reporting (Law 11,638), certain changes in accounting criteria became
effective for fiscal year 2008. Pursuant to the CVM’s Resolution No. 565, which
approved accounting statement CPC 13 (Initial Adoption of Law No. 11,638/2007),
Gafisa elected to apply these changes in accounting criteria retroactively to
its financial statements with an effective date as of January 1, 2006. As a
result, certain adjustments have been made to Gafisa’s 2006 and 2007 financial
statements
to make them comparable to its 2008 financial statements. Gafisa has elected not
to revise its financial statements for fiscal years prior to 2006. Please see
Note 2 to Gafisa’s 2008 financial statements for a qualitative and quantitative
analysis of the changes resulting from the new accounting criteria. Gafisa’s
U.S. GAAP financial
information
included in it, with a reconciliation from Brazilian GAAP to U.S. GAAP in its
financial statements, and the selected historical US GAAP financial data as of
and for the years ended December 31, 2008, 2007 and 2006 has been adjusted for
the retrospective effect of the adoption on January 1, 2009 of the disclosure
required by SFAS No. 160.
Gafisa’s
unaudited interim consolidated financial statements as of September 30, 2009 and
for the nine-month periods ended September 30, 2009 and 2008 are included in
this preliminary prospectus/information statement. These unaudited interim
consolidated financial statements have been prepared in accordance with
Brazilian GAAP, which differs in certain significant respects from U.S. GAAP.
Note 21 to Gafisa’s interim financial statements included in this preliminary
prospectus/information statement describe the principal differences between
Brazilian GAAP and U.S. GAAP as they relate to Gafisa, and provide a
reconciliation to U.S. GAAP of shareholders’ equity as of September 30, 2009 and
December 31, 2008 and net income for the nine-month periods ended September 30,
2009 and 2008. Gafisa’s unaudited interim financial statements, as
well as Gafisa’s financial results for the nine-month period ended September 30,
2009 are not necessarily representative of the results that may be expected for
the full year ending December 31, 2009 or any other period.
Tenda’s
Financial Statements
Tenda’s
consolidated financial statements as of December 31, 2008 and 2007, and for each
of the three years in the period ended December 31, 2008, have been prepared in
accordance with Brazilian GAAP, which differs in certain significant respects
from accounting principles generally accepted in the United States, or U.S.
GAAP. As a result of a change in Brazilian law with respect to financial
reporting (Law 11,638), certain changes in accounting criteria became effective
for fiscal year 2008. Pursuant to the CVM’s Resolution No. 565, which approved
accounting statement CPC 13 (Initial Adoption of Law No. 11,638/2007), Tenda
elected to apply these changes in accounting criteria retroactively to its
financial statements with an effective date as of January 1, 2006. As a result, certain
adjustments have been made to Tenda’s 2006 and 2007 financial statements to make
them comparable to its 2008 financial statements. Tenda has elected not to
revise its financial statements for fiscal years prior to 2006. Please see Note
2 to Tenda’s 2008 financial statements for a qualitative and quantitative
analysis of the changes resulting from the new accounting criteria. Tenda’s
selected historical US GAAP financial data as of September 30, 2009 is
included in this preliminary prospectus/information statement. U.S. GAAP
reconciliation is not available for annual periods prior to the date of
acquisition of Tenda on October 21, 2008.
Tenda’s
unaudited interim consolidated financial statements as of September 30, 2009 and
for the nine-month periods ended September 30, 2009 and 2008 are included in
this preliminary prospectus/information statement. These unaudited interim
consolidated financial statements have been prepared in accordance with
Brazilian GAAP, which differs in certain significant respects from U.S.
GAAP. Notes 2 and 28 to Tenda’s interim financial statements included
in this preliminary prospectus/information statement describe the principal
differences between Brazilian GAAP and U.S. GAAP as they relate to Tenda, and
provide a reconciliation to U.S. GAAP of net income (loss) for the nine-month
period ended September 30, 2009 and shareholders’ equity as of September 30,
2009 and December 31, 2008. Tenda’s financial results for the nine-month period
ended September 30, 2009 are not necessarily representative of the results that
may be expected as of and for the full year ending December 31, 2009 or any
other period.
Selected
Historical Financial Data
The
following information is provided to aid you in your analysis of the financial
aspects of the Restructuring. The historical information below is only a summary
derived from the following financial statements included in, or incorporated by
reference in, this preliminary prospectus/information statement: the audited
consolidated financial statements of Gafisa as of and for the years ended
December 31, 2008, 2007 and 2006, of Tenda as of December 31, 2008 and
2007 and for the years ended December 31, 2008, 2007 and 2006, and the unaudited
interim consolidated financial statements of Gafisa and Tenda as of September
30, 2009 and for the nine months ended September 30, 2009 and 2008. A summary of
the historical financial data for Gafisa and Tenda is provided below as of and
for the five years ended December 31, 2008,
2007, 2006, 2005 and 2004.
The
consolidated financial information as of September 30, 2009 and for the nine
months ended September 30, 2009 and 2008 is unaudited. This
consolidated financial information includes all adjustments consisting of normal
recurring adjustments, which in the opinion of Gafisa and Tenda management, are
necessary for the fair presentation of the financial position, results of
operations and cash flows for the respective interim periods
presented.
Gafisa
and its subsidiaries have retroactively applied changes to Brazilian GAAP
introduced by the CPC and the provisions of Law No. 11,638/07 from January 1,
2006 to ensure consistency of presentation in their financial statements. See
note 2(a) to our consolidated financial statements as of and for the years ended
December 31, 2008, 2007 and 2006 incorporated by reference in this preliminary
prospectus/information statement for this amendment and other reclassifications
to our Brazilian GAAP financial statements. All periods presented from January
1, 2006 onwards have been modified to reflect such new accounting
practices.
Selected
Historical Gafisa Financial Data
|
As
of and for the nine-month period ended September 30,
|
As
of and for the year ended December 31,
|
|||||||||||||||||||||||||||
|
2009
|
2008
|
2008
|
2007(1)
|
2006(1)
|
2005(1)
|
2004(1)
|
||||||||||||||||||||||
|
(in
thousands of reais except per share, per ADS and operating
data)(2)
|
||||||||||||||||||||||||||||
|
Consolidated
statement of income data:
|
||||||||||||||||||||||||||||
|
Brazilian
GAAP:
|
||||||||||||||||||||||||||||
|
Gross
operating revenue
|
2,214,469 | 1,237,400 | 1,805,468 | 1,251,894 | 681,791 | 480,774 | 439,254 | |||||||||||||||||||||
|
Net
operating revenue
|
2,124,806 | 1,192,559 | 1,740,404 | 1,204,287 | 648,158 | 457,024 | 416,876 | |||||||||||||||||||||
|
Operating
costs
|
(1,523,640 | ) | (814,201 | ) | (1,214,401 | ) | (867,996 | ) | (464,766 | ) | (318,211 | ) | (292,391 | ) | ||||||||||||||
|
Gross
profit
|
601,166 | 378,358 | 526,003 | 336,291 | 183,392 | 138,813 | 124,485 | |||||||||||||||||||||
|
Operating
expenses, net(2)
|
(256,574 | ) | (235,403 | ) | (357,798 | ) | (236,861 | ) | (118,914 | ) | (79,355 | ) | (59,688 | ) | ||||||||||||||
|
Financial
income (expenses), net
|
(52,937 | ) | 40,117 | 41,846 | 28,628 | (11,943 | ) | (31,162 | ) | (34,325 | ) | |||||||||||||||||
|
Non-operating
income (expenses), net
|
— | — | — | — | — | (1,024 | ) | (1,450 | ) | |||||||||||||||||||
|
Income
before taxes on income, and
noncontrolling interests
|
276,593 | 183,072 | 210,051 | 128,058 | 52,535 | 27,272 | 29,022 | |||||||||||||||||||||
|
Taxes
on income
|
(64,904 | ) | (50,456 | ) | (43,397 | ) | (30,372 | ) | (8,525 | ) | 3,405 | (5,575 | ) | |||||||||||||||
|
Noncontrolling interests
|
(53,471 | ) | (35,540 | ) | (56,733 | ) | (6,046 | ) | — | — | — | |||||||||||||||||
|
Net
income
|
158,218 | 97,076 | 109,921 | 91,640 | 44,010 | 30,677 | 23,447 | |||||||||||||||||||||
|
Share
and ADS data(3):
|
||||||||||||||||||||||||||||
|
Earnings
per share—R$ per share
|
1.2123 | 0.7470 | 0.8458 | 0.7079 | 0.4258 | 1.2457 | 1.2188 | |||||||||||||||||||||
|
Number
of preferred shares outstanding as at end of period
|
— | — | — | — | — | 16,222,209 | 11,037,742 | |||||||||||||||||||||
|
Number
of common shares outstanding as at end of period
|
130,508,346 | 129,962,546 | 129,962,546 | 129,452,121 | 103,369,950 | 8,404,185 | 8,199,743 | |||||||||||||||||||||
|
Earnings
per ADS—R$ per ADS (pro forma)(4)
|
2.4246 | 1.4940 | 1.6916 | 1.4158 | 0.8516 | 2.4914 | 2.4376 | |||||||||||||||||||||
|
U.S.
GAAP:
|
||||||||||||||||||||||||||||
|
Net
operating revenue
|
1,674,652 | 1,148,938 | 1,692,706 | 1,090,632 | 674,740 | 439,011 | 442,913 | |||||||||||||||||||||
|
Operating
costs
|
(1,198,047 | ) | (799,519 | ) | (1,198,256 | ) | (865,756 | ) | (503,172 | ) | (329,775 | ) | (339,653 | ) | ||||||||||||||
|
Gross
profit
|
476,605 | 349,419 | 494,450 | 224,876 | 171,568 | 109,236 | 103,260 | |||||||||||||||||||||
|
Operating
expenses, net
|
(431,279 | ) | (197,150 | ) | (142,771 | ) | (190,430 | ) | (139,188 | ) | (77,305 | ) | (52,770 | ) | ||||||||||||||
|
Financial
income (expenses), net
|
(55,194 | ) | 38,989 | 40,198 | 27,243 | 4,022 | (17,684 | ) | (31,645 | ) | ||||||||||||||||||
|
Income
(loss) before income taxes, equity in results and
noncontrolling interests
|
(9,868 | ) | 191,258 | 391,877 | 61,689 | 36,402 | 14,247 | 18,845 | ||||||||||||||||||||
|
Taxes
on income
|
(37,250 | ) | (44,248 | ) | (70,576 | ) | (1,988 | ) | (11,187 | ) | (1,886 | ) | (3,530 | ) | ||||||||||||||
|
Equity
in results
|
11,063 | 27,688 | 26,257 | 8,499 | 894 | 22,593 | 11,674 | |||||||||||||||||||||
|
Noncontrolling
interests
|
(17,892 | ) | (32,205 | ) | (47,900 | ) | (4,738 | ) | (1,125 | ) | (571 | ) | 252 | |||||||||||||||
|
Cumulative
effect of a change in an accounting principle:
|
— | — | — | — | (157 | ) | — | — |
|
As
of and for the nine-month period ended September 30,
|
As
of and for the year ended December 31,
|
|||||||||||||||||||||||||||
|
2009
|
2008
|
2008
|
2007(1)
|
2006(1)
|
2005(1)
|
2004(1)
|
||||||||||||||||||||||
|
(in
thousands of reais except per share, per ADS and operating
data)(2)
|
||||||||||||||||||||||||||||
|
Net
income(loss)
|
(36,055 | ) | 174,698 | 347,558 | 68,200 | 25,952 | 34,954 | 26,989 | ||||||||||||||||||||
|
Less:
Net income attributable to the noncontrolling interests
|
(17,892 | ) | (32,205 | ) | (47,900 | ) | (4,738 | ) | (1,125 | ) | (571 | ) | 252 | |||||||||||||||
|
Net
income (loss) attributable to Gafisa (5)
|
(53,947 | ) | 142,493 | 299,658 | 63,462 | 24,827 | 34,383 | 27,241 | ||||||||||||||||||||
|
Per
share data(3):
|
||||||||||||||||||||||||||||
|
Per
preferred share data—R$ per share:
|
||||||||||||||||||||||||||||
|
Earnings
per share—Basic
|
— | — | — | — | 0.1518 | 0.6056 | 0.4910 | |||||||||||||||||||||
|
Earnings
per share—Diluted
|
— | — | — | — | 0.1498 | 0.6023 | 0.4910 | |||||||||||||||||||||
|
Weighted
average number of shares outstanding – in thousands
|
— | — | — | — | 1,701 | 42,803 | 33,113 | |||||||||||||||||||||
|
Per
common share data—R$ per share:
|
||||||||||||||||||||||||||||
|
Earnings
(loss) per share—Basic
|
(0.4144 | ) | 1.0997 | 2.3109 | 0.5036 | 0.2487 | 0.3469 | 0.4464 | ||||||||||||||||||||
|
Earnings
(loss) per share—Diluted
|
(0.4144 | ) | 1.0940 | 2.3024 | 0.5013 | 0.2458 | 0.3453 | 0.4464 | ||||||||||||||||||||
|
Weighted
average number of shares outstanding – in thousands
|
130,196 | 129,572 | 129,671 | 126,032 | 98,796 | 24,394 | 24,599 | |||||||||||||||||||||
|
Dividends
declared and interest on shareholders’ equity
|
— | — | 26,104 | 26,981 | 10,938 | — | — | |||||||||||||||||||||
|
Per
ADS data—R$ per ADS(4):
|
||||||||||||||||||||||||||||
|
Earnings
(loss) per ADS—Basic (pro forma)(4)
|
(0.8288 | ) | 2.1994 | 4.6218 | 1.0072 | 0.4974 | 0.6938 | 0.8928 | ||||||||||||||||||||
|
Earnings
(loss) per ADS—Diluted (pro forma)(4)
|
(0.8288 | ) | 2.1880 | 4.6048 | 1.0026 | 0.4916 | 0.6907 | 0.8928 | ||||||||||||||||||||
|
Weighted
average number of ADSs outstanding – in thousands
|
64,098 | 64,786 | 64,836 | 63,016 | 48,398 | 12,197 | 12,300 | |||||||||||||||||||||
|
Dividends
declared and interest on shareholders’ equity
|
— | — | 26,104 | 26,981 | 10,938 | — | — | |||||||||||||||||||||
|
Consolidated
balance sheet data:
|
||||||||||||||||||||||||||||
|
Brazilian
GAAP:
|
||||||||||||||||||||||||||||
|
Cash,
cash equivalents and marketable securities
|
948,350 | 605,502 | 517,420 | 266,159 | 133,891 | 45,888 | ||||||||||||||||||||||
|
Restricted
cash in guarantee to loans
|
151,337 | — | — | — | — | — | ||||||||||||||||||||||
|
Properties
for sale
|
1,762,432 | 2,028,976 | 1,022,279 | 486,397 | 304,329 | 237,113 | ||||||||||||||||||||||
|
Working
capital(6)
|
2,523,529 | 2,448,305 | 1,315,406 | 926,866 | 464,589 | 205,972 | ||||||||||||||||||||||
|
Total
assets
|
6,931,539 | 5,538,858 | 3,004,785 | 1,558,590 | 944,619 | 748,508 | ||||||||||||||||||||||
|
Total
debt(7)
|
2,531,727 | 1,552,121 | 695,380 | 295,445 | 316,933 | 151,537 | ||||||||||||||||||||||
|
Total
shareholders’ equity
|
1,783,476 | 1,612,419 | 1,498,728 | 807,433 | 270,188 | 146,469 | ||||||||||||||||||||||
|
U.S.
GAAP:
|
||||||||||||||||||||||||||||
|
Cash
and cash equivalents
|
1,075,975 | 510,504 | 512,185 | 260,919 | 136,153 | 42,803 | ||||||||||||||||||||||
|
Properties
for sale
|
2,192,572 | 2,208,124 | 1,140,280 | 483,411 | 376,613 | 214,744 | ||||||||||||||||||||||
|
Working
capital(6)
|
2,350,812 | 2,510,382 | 1,295,176 | 788,351 | 473,794 | 195,392 | ||||||||||||||||||||||
|
Total
assets
|
6,553,916 | 5,179,403 | 2,889,040 | 1,633,886 | 901,387 | 601,220 | ||||||||||||||||||||||
|
Total
debt(7)
|
2,493,447 | 1,525,138 | 686,524 | 289,416 | 294,149 | 141,476 | ||||||||||||||||||||||
|
Total
Gafisa shareholders’ equity
|
1,673,528 | 1,723,095 | 1,441,870 | 795,251 | 290,604 | 160,812 | ||||||||||||||||||||||
|
Noncontrolling
interests
|
525,377 | 451,342 | 39,756 | 1,050 | 197 | (98 | ) | |||||||||||||||||||||
|
As
of and for the nine-month period ended September 30,
|
As
of and for the year ended December 31,
|
|||||||||||||||||||||||||||
|
2009
|
2008
|
2008
|
2007(1)
|
2006(1)
|
2005(1)
|
2004(1)
|
||||||||||||||||||||||
|
(in
thousands of reais except per share, per ADS and operating
data)(2)
|
||||||||||||||||||||||||||||
|
Total
shareholders’ equity
|
2,198,905 | 2,174,437 | 1,481,626 | 796,301 | 290,801 | 160,714 | ||||||||||||||||||||||
|
Consolidated
cash flow data:
|
||||||||||||||||||||||||||||
|
Brazilian
GAAP
|
||||||||||||||||||||||||||||
|
Cash
flow provided by (used in):
|
||||||||||||||||||||||||||||
|
Operating
activities
|
(445,917 | ) | (620,411 | ) | (812,512 | ) | (451,929 | ) | (271,188 | ) | (112,947 | ) | 23,616 | |||||||||||||||
|
Investing
activities
|
(109,408 | ) | (32,714 | ) | (78,300 | ) | (149,290 | ) | (25,609 | ) | (5,576 | ) | (1,509 | ) | ||||||||||||||
|
Financing
activities
|
975,101 | 913,133 | 911,817 | 842,629 | 429,065 | 206,526 | 10,601 | |||||||||||||||||||||
________________
|
(1)
|
We
revised our Brazilian GAAP financial statements as of and for the years
ended December 31, 2007 and 2006 when we adopted, beginning January 1,
2006, the changes introduced by Law 11,638/07 which were effective in 2008
and the new accounting standards issued by the CPC in 2008. Brazilian GAAP
encourages companies to make such revisions in order to provide
comparative information within the financial statements. See note 2(a) to
our financial statements incorporated by reference in this preliminary
prospectus/information statement for this amendment and other
reclassifications to our Brazilian GAAP financial statements. However,
selected financial information presented as of and for the years ended
December 31, 2005 and 2004 has not been presented on the basis of the new
accounting policies introduced in 2008, as the cost and time required to
prepare such information would be prohibitive. As a result, such
information is not comparative to the financial information reported
herein as of and for the years ended December 31, 2008, 2007 and
2006.
|
|
(2)
|
Excludes
stock issuance expenses. Includes amortization of gain on partial sale of
FIT and others, net (nine-month period ended September 30, 2005 — R$
157,800; year ended December 31, 2008 — R$
41,008.
|
|
(3)
|
On
January 26, 2006, all our preferred shares were converted into common
shares. On January 27, 2006, a stock split of our common shares was
approved, giving effect to the split of one existing share into three
newly issued shares, increasing the number of shares from 27,774,775 to
83,324,316. All information relating to the numbers of shares and ADSs
have been adjusted retroactively to reflect the share split on January 27,
2006. All U.S. GAAP earnings per share and ADS amounts have been adjusted
retroactively to reflect the share split on January 27, 2006. Brazilian
GAAP earnings per share and ADS amounts have not been adjusted
retrospectively to reflect the share split on January 27,
2006.
|
|
(4)
|
Earnings
per ADS is calculated based on each ADS representing two common
shares.
|
|
(5)
|
The
following table sets forth reconciliation from U.S. GAAP net income to
U.S. GAAP net income available to common
shareholders:
|
|
Nine-month
period ended
September
30,
|
Year
ended December 31,
|
|||||||||||||||||||||||||||
|
2009
|
2008
|
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||||||||
|
(in
thousands of reais, except per share
data)
|
||||||||||||||||||||||||||||
|
Reconciliation
from U.S. GAAP net income (loss) attributable to Gafisa to U.S. GAAP
net income (loss) available to common shareholders
(Basic):
|
||||||||||||||||||||||||||||
|
U.S.
GAAP net income (loss) (Basic)
|
(53,497 | ) | 142,493 | 299,658 | 63,462 | 24,827 | 34,383 | 27,241 | ||||||||||||||||||||
|
Preferred
Class G exchange(8)
|
— | — | — | — | — | (9,586 | ) | — | ||||||||||||||||||||
|
Undistributed
earnings for Preferred Shareholders (Basic earnings)
|
— | — | — | — | (258 | ) | (16,334 | ) | (16,260 | ) | ||||||||||||||||||
|
U.S.
GAAP net income (loss) available to common shareholders (Basic
earnings)
|
(53,497 | ) | 142,493 | 299,658 | 63,462 | 24,569 | 8,463 | 10,981 | ||||||||||||||||||||
|
Reconciliation
from U.S. GAAP net income (loss) attributable to Gafisa to U.S. GAAP
net income (loss) available to common shareholders
(Diluted):
|
— | |||||||||||||||||||||||||||
|
U.S.
GAAP net income (loss)
|
(53,497 | ) | 142,493 | 299,658 | 63,462 | 24,827 | 34,383 | 27,241 | ||||||||||||||||||||
|
Preferred
Class G exchange(8)
|
— | — | — | — | — | (9,586 | ) | — | ||||||||||||||||||||
|
Undistributed
earnings for Preferred Shareholders (Diluted earnings)
|
— | — | — | — | (259 | ) | (16,373 | ) | (16,260 | ) | ||||||||||||||||||
|
U.S.
GAAP net income (loss) available to common shareholders (Diluted
earnings)
|
(53,497 | ) | 142,493 | 299,658 | 63,462 | 24,568 | 8,424 | 10,981 | ||||||||||||||||||||
________________
|
(6)
|
Working
capital equals current assets less current
liabilities.
|
|
(7)
|
Total
debt comprises loans, financings and current and non-current debentures.
Amounts exclude loans from real estate development
partners.
|
|
(8)
|
Pursuant
to EITF Topic D-42 “The Effect on the Calculation of Earnings per Share
for the Redemption or Induced Conversion of Preferred Stock,” following
the exchange of Class A for Class G Preferred shares, the excess of the
fair value of the consideration transferred to the holders of the
preferred stock over the carrying amount of the preferred stock in the
balance sheet was subtracted from net income to arrive at net earnings
available to common shareholders in the calculation of earnings per share.
For purposes of displaying earnings per share, the amount is treated in a
manner similar to the treatment of dividends paid to the holders of the
preferred shares. The conceptual return or dividends on preferred shares
are deducted from net earnings to arrive at net earnings available to
common shareholders.
|
Selected
Historical Tenda Financial Data
|
As
of and for the
nine-month
period ended
September
30,
|
As
of and for the year ended December 31,
|
|||||||||||||||||||||||||||
|
2009
|
2008
|
2008
|
2007(1)
|
2006(1)
|
2005(1)
|
2004(1)
|
||||||||||||||||||||||
|
(in
thousands of reais, except per share data)
|
||||||||||||||||||||||||||||
|
Consolidated
Statement of income data:
|
||||||||||||||||||||||||||||
|
Brazilian
GAAP:
|
||||||||||||||||||||||||||||
|
Gross
operating revenue
|
751,080 | 332,782 | 504,502 | 277,514 | 81,213 | 99,253 | 83,194 | |||||||||||||||||||||
|
Net
operating revenue
|
723,137 | 317,755 | 485,248 | 265,857 | 77,315 | 59,769 | 43,237 | |||||||||||||||||||||
|
Operating
costs
|
(493,401 | ) | (213,437 | ) | (317,852 | ) | (181,942 | ) | (52,303 | ) | (41,482 | ) | (28,447 | ) | ||||||||||||||
|
Gross
profit
|
229,736 | 104,318 | 167,396 | 83,915 | 25,012 | 18,287 | 14,790 | |||||||||||||||||||||
|
Operating
expenses, net
|
(157,737 | ) | (150,168 | ) | (225,338 | ) | (60,526 | ) | (16,479 | ) | (9,401 | ) | (8,666 | ) | ||||||||||||||
| — | — | — | — | — | — | — | ||||||||||||||||||||||
|
Income
before taxes on income
|
71,999 | (45,850 | ) | (57,942 | ) | 23,389 | 8,533 | 8,886 | 6,124 | |||||||||||||||||||
|
Taxes
on income
|
(16,288 | ) | (11,164 | ) | 19,733 | (4,657 | ) | (5,657 | ) | (6,221 | ) | (1,867 | ) | |||||||||||||||
|
Net
income (loss)(2)
|
55,711 | (57,014 | ) | (38,209 | ) | 18,732 | 2,876 | 2,665 | 4,257 | |||||||||||||||||||
|
Share
data:
|
||||||||||||||||||||||||||||
|
Earnings
(loss) per share—R$ per thousand shares
|
0.14 | (0.36 | ) | (0.10 | ) | 0.12 | 1.65 | 1.53 | 2,45 | |||||||||||||||||||
|
Number
of preferred shares outstanding as at end of period
|
— | — | — | — | 540 | 540 | 540 | |||||||||||||||||||||
|
Number
of common shares outstanding as at end of period
|
400,652 | 160,261 | 400,652 | 160,261 | 1,740 | 1,740 | 1,740 | |||||||||||||||||||||
|
U.S.
GAAP
|
||||||||||||||||||||||||||||
|
Gross
operating revenue
|
404,361 | — | — | — | — | — | — | |||||||||||||||||||||
|
Net
operating revenue
|
386,965 | — | — | — | — | — | — | |||||||||||||||||||||
|
Operating
costs
|
(256,179 | ) | — | — | — | — | — | — | ||||||||||||||||||||
|
Gross
profit
|
130,786 | — | — | — | — | — | — | |||||||||||||||||||||
|
Operating
expenses, net
|
(155,384 | ) | — | — | — | — | — | — | ||||||||||||||||||||
|
Financial
income (expenses), net
|
969 | — | — | — | — | — | — | |||||||||||||||||||||
|
Loss before
income taxes, equity in results and
noncontrolling interests
|
(23,609 | ) | — | — | — | — | — | — | ||||||||||||||||||||
|
Taxes
on income
|
9,140 | — | — | — | — | — | — | |||||||||||||||||||||
|
Noncontrolling interests
|
3,727 | — | — | — | — | — | — | |||||||||||||||||||||
|
Net
loss
|
(10,742 | ) | — | — | — | — | — | — | ||||||||||||||||||||
|
Per
share data - R$ per thousand shares:
|
||||||||||||||||||||||||||||
|
Earnings
(loss) per share—Basic
|
(0.027 | ) | — | — | — | — | — | — | ||||||||||||||||||||
|
Earnings
per share—Diluted
|
(0.027 | ) | — | — | — | — | — | — | ||||||||||||||||||||
|
Consolidated
Balance sheet data:
|
||||||||||||||||||||||||||||
|
Brazilian
GAAP
|
- | |||||||||||||||||||||||||||
|
Cash,
bank and financial investments
|
574,563 | 92,995 | 201,887 | 400,512 | 509 | 884 |
1,082
|
|||||||||||||||||||||
|
Properties
for sale
|
357,130 | 124,687 | 401,852 | 128,742 | 5,058 | 10,970 |
15,457
|
|
||||||||||||||||||||
|
Working
capital
|
1,139,449 | 221,501 | 532,115 | 473,498 | (1,902 | ) | 3,826 |
11,736
|
||||||||||||||||||||
|
Total
assets
|
2,383,672 | 1,005,318 | 1,544,030 | 927,186 | 102,317 | 75,689 |
60,611
|
|||||||||||||||||||||
|
Total
debt
|
747,030 | 104,864 | 126,450 | 24,098 | 5,519 | 1,819 |
1,700
|
|||||||||||||||||||||
|
Total
shareholders’ equity
|
1,121,373 | 629,745 | 1,062,214 | 683,677 | 8,254 | 14,445 |
11,780
|
|||||||||||||||||||||
|
Consolidated
Cash flow data:
|
||||||||||||||||||||||||||||
|
Brazilian
GAAP
|
||||||||||||||||||||||||||||
|
Cash
flows from (used in) operating activities
|
(261,192 | ) | (381,117 | ) | (706,993 | ) | (240,564 | ) | (3,502 | ) | (209 | ) | (1,407 | ) | ||||||||||||||
|
Investing
activities
|
(14,658 | ) | (2,443 | ) | (16,578 | ) | (10,401 | ) | (279 | ) | (57 | ) | (792 | ) | ||||||||||||||
|
Financing
activities
|
586,422 | 76,103 | 504,720 | 650,968 | 3,406 | 68 | 1,282 | |||||||||||||||||||||
_________________
|
(1)
|
We
revised our Brazilian GAAP financial statements as of and for the years
ended December 31, 2007 and 2006 when we adopted, beginning January 1,
2006, the changes introduced by Law 11,638/07 and the new accounting
standards issued by the CPC in
2008.
|
Brazilian
GAAP encourages companies to make such revisions from the date the accounting
changes were introduced in order to provide comparative information within the
financial statements. See note 2(a) to our financial statements included
elsewhere in this annual report for this amendment and other reclassifications
to our Brazilian GAAP financial statements. However, selected financial
information presented as of and for the years ended December 31, 2006, 2005 and
2004 has not been represented on the basis of the new accounting policies
introduced in 2008, as the cost and time required to prepare such information
would be prohibitive. As a result, such information is not comparative to the
financial information reported herein as of and for the years ended December 31,
2008, 2007 and 2006.
Unaudited
Pro Forma Condensed Consolidated Financial Information
The
following unaudited pro forma condensed consolidated financial information has
been developed by applying pro forma adjustments to the historical audited
consolidated financial statements and unaudited condensed consolidated financial
statements of Gafisa under Brazilian GAAP. The Brazilian GAAP unaudited pro
forma condensed consolidated balance sheet gives effect to the Restructuring as
if it had occurred on September 30, 2009; the unaudited pro forma condensed
consolidated statement of income for the nine months ended September 30, 2009
gives effect to the Restructuring as if it had occurred on January 1, 2009. The
Brazilian GAAP unaudited pro forma condensed consolidated statement of income
for the year ended December 31, 2008 gives effect to Gafisa’s acquisition of 60%
of Tenda which was completed on October 21, 2008, and the Restructuring as if
they had occurred on January 1, 2008. Assumptions underlying the pro forma
adjustments are described in the accompanying notes, which should be read in
conjunction with this unaudited pro forma condensed consolidated financial
information.
The
unaudited pro forma condensed consolidated balance sheet, based on the
historical Brazilian GAAP consolidated balance sheet, presents a reconciliation
of shareholders’ equity to U.S. GAAP. The unaudited pro forma condensed
consolidated statements of income based on the historical Brazilian GAAP
consolidated statements of income present a reconciliation of net income to U.S.
GAAP.
Under
U.S. GAAP, Gafisa’s acquisition of Tenda on October 21, 2008 has been accounted
for as a business combination using the purchase method of accounting. The pro
forma information presented considers the amortization of intangible assets
allocated from the business combination as if the purchase price allocation had
occurred on January 1, 2008 or 2009, as applicable. According to SFAS No. 160,
“Noncontrolling Interests in Consolidated Financial Statements, an Amendment of
ARB No. 51,” the Restructuring will be accounted for under U.S. GAAP as an
equity transaction and any difference between fair value of the consideration
for Tenda’s common shares and the carrying amount of Gafisa’s noncontrolling
interest in Tenda will be recognized in equity attributable to
Gafisa.
Pro forma
adjustments were made to reflect:
|
|
·
|
Gafisa’s
acquisition of 60% of Tenda on October 21,
2008;
|
|
|
·
|
the
effects of the Restructuring;
|
|
|
·
|
recording
of amortization of intangible assets allocated from the business
combination as if the purchase price allocation under U.S. GAAP had
occurred on January 1, 2008, as applicable;
and
|
|
|
·
|
the
effect of deferred income taxes on the pro forma
adjustments.
|
Gafisa’s
EGM shall, subsequent to the closing of the Restructuring, determine if the
non-exercised stock options granted under the stock option plans of Tenda will
migrate to Gafisa. Based on currently available information, no adjustment has
been reflected in the accompanying unaudited condensed consolidated statements
of income for the year ended December 31, 2008 and for the nine months ended
September 30, 2009 for any cancelation or exercise of the options with
accelerated vesting, the accounting consequences of which , if any, are not
determinable at this time.
The
unaudited pro forma adjustments are based upon available information and certain
assumptions that are factually supportable and that we believe are reasonable
under the circumstances. The unaudited pro forma condensed consolidated
financial information is presented for informational purposes only. The
unaudited pro forma condensed consolidated financial information does not
purport to represent what our actual consolidated results of operations or the
consolidated financial condition would have been had Gafisa’s acquisition
of Tenda and the Restructuring actually occurred on the dates indicated,
nor are they necessarily indicative of future consolidated results of operations
or consolidated financial condition. The unaudited pro forma condensed
consolidated financial information should be read in conjunction with the
information contained in “Part Two: Summary”, “—Selected Historical and Pro
Forma Financial Data”, “—Management’s Discussion and Analysis of Financial
Condition and Results of Operations of Gafisa”, “—Management’s Discussion and
Analysis of Financial Condition and Results of
Operations
of Tenda” appearing elsewhere in this prospectus/information statement, the
audited consolidated financial statements of Gafisa as of and for the years
ended December 31, 2008, 2007 and 2006 and the related notes incorporated by
reference in this prospectus/information statement, the unaudited consolidated
financial statements of Gafisa and Tenda as of September 30, 2009 and for the
nine months ended September 30, 2009 and 2008 and the related notes appearing
elsewhere in this prospectus/information statement, and the audited consolidated
financial statements of Tenda as of December 31, 2008 and 2007 and for the years
ended December 31, 2008, 2007 and 2006 appearing elsewhere in this
prospectus/information statement. The pro forma adjustments and their underlying
assumptions are described more fully in the notes to our unaudited pro forma
condensed consolidated financial information.
Unaudited
Pro Forma Condensed Consolidated Balance Sheet of Gafisa as of September 30,
2009
|
Historical
Gafisa(1)
|
Effects
of the Restructuring
|
Pro
forma adjustments
|
Pro
forma Gafisa
|
|||||||||||||
|
(in
thousands of reais)
|
||||||||||||||||
|
ASSETS
|
||||||||||||||||
|
Current assets
|
||||||||||||||||
|
Cash,
cash equivalents and marketable securities
|
948,350 | – | – | 948,350 | ||||||||||||
|
Restricted
cash in guarantee to loans
|
151,337 | – | – | 151,337 | ||||||||||||
|
Receivables
from clients
|
1,718,110 | – | – | 1,718,110 | ||||||||||||
|
Properties
for sales
|
1,376,236 | – | – | 1,376,236 | ||||||||||||
|
Other
accounts receivable
|
93,722 | – | – | 93,722 | ||||||||||||
|
Deferred
taxes
|
13,099 | – | – | 13,099 | ||||||||||||
|
Deferred
selling expenses
|
7,205 | – | – | 7,205 | ||||||||||||
|
Prepaid
expenses
|
13,522 | – | – | 13,522 | ||||||||||||
| 4,321,581 | – | – | 4,321,581 | |||||||||||||
|
Non-current
assets
|
||||||||||||||||
|
Receivables
from clients
|
1,662,300 | – | – | 1,662,300 | ||||||||||||
|
Properties
for sale
|
386,196 | – | – | 386,196 | ||||||||||||
|
Deferred
taxes
|
250,846 | – | – | 250,846 | ||||||||||||
|
Escrow
deposits
|
2,489 | – | – | 2,489 | ||||||||||||
|
Other
|
49,651 | – | – | 49,651 | ||||||||||||
| 2,351,482 | – | – | 2,351,482 | |||||||||||||
|
Goodwill, net
|
195,088 | – | – | 195,088 | ||||||||||||
|
Property and equipment,
net
|
53,698 | – | – | 53,698 | ||||||||||||
|
Intangible
assets
|
9,690 | – | – | 9,690 | ||||||||||||
| 258,476 | – | – | 258,476 | |||||||||||||
|
Total assets
|
6,931,539 | – | – | 6,931,539 | ||||||||||||
|
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
||||||||||||||||
|
Current
liabilities
|
||||||||||||||||
|
Loans
and financing, net of swaps
|
570,307 | – | – | 570,307 | ||||||||||||
|
Debentures
|
80,781 | – | – | 80,781 | ||||||||||||
|
Obligations
for purchase of land and advances from clients
|
488,935 | – | – | 488,935 | ||||||||||||
|
Materials
and service suppliers
|
194,302 | – | – | 194,302 | ||||||||||||
|
Taxes
and contributions
|
132,216 | – | – | 132,216 | ||||||||||||
|
Salaries,
payroll charges and profit sharing
|
61,206 | – | – | 61,206 | ||||||||||||
|
Mandatory
dividends
|
26,106 | – | – | 26,106 | ||||||||||||
|
Provision
for contingencies
|
10,512 | – | – | 10,512 | ||||||||||||
|
Deferred
taxes
|
52,375 | – | – | 52,375 | ||||||||||||
|
Other
accounts payable
|
181,312 | – | – | 181,312 | ||||||||||||
| 1,798,052 | – | – | 1,798,052 | |||||||||||||
|
Non-current
liabilities
|
||||||||||||||||
|
Loans
and financing, net of swaps
|
636,639 | – | – | 636,639 | ||||||||||||
|
Debentures
|
1,244,000 | – | – | 1,244,000 | ||||||||||||
|
Obligations
for purchase of land and advances from clients
|
147,168 | – | – | 147,168 | ||||||||||||
|
Deferred
taxes
|
322,870 | – | – | 322,870 | ||||||||||||
|
Provision
for contingencies
|
59,509 | – | – | 59,509 | ||||||||||||
|
Deferred
gain on sale of investment
|
11,594 | – | – | 11,594 | ||||||||||||
|
Negative
goodwill on acquisition of subsidiaries
|
12,499 | – | – | 12,499 | ||||||||||||
|
Other
accounts payable
|
362,843 | – | – | 362,843 | ||||||||||||
| 2,797,122 | – | – | 2,797,122 | |||||||||||||
|
Noncontrolling interests
|
552,889 | (448,495 | )(3) | – | 104,394 | |||||||||||
|
Shareholders’
equity
|
1,783,476 | 448,495 | (3) | – | 2,231,971 | |||||||||||
|
Total liabilities and
shareholders’ equity
|
6,931,539 | – | – | 6,931,539 | ||||||||||||
|
Shareholders’ equity under
Brazilian GAAP
|
1,783,476 | 448,495 | – | 2,231,971 | ||||||||||||
|
Total
U.S. GAAP adjustments
|
(109,948 | )(2) | (37,273 | )(4) | – | (147,221 | ) | |||||||||
|
Historical
Gafisa(1)
|
Effects
of the Restructuring
|
Pro
forma adjustments
|
Pro
forma Gafisa
|
|||||||||||||
|
(in
thousands of reais)
|
||||||||||||||||
|
Shareholders’ equity under U.S.
GAAP
|
2,336,365 | 411,222 | – | 2,084,750 | ||||||||||||
|
Noncontrolling
interests
|
525,377 | (411,222 | ) | – | 114,155 | |||||||||||
|
Shareholders’ equity
attributable to Gafisa
|
2,198,905 | – | – | 2,198,905 | ||||||||||||
________________
See the
accompanying Notes to Unaudited Pro Forma Condensed Consolidated Balance
Sheet
Notes
to Unaudited Pro Forma Condensed Consolidated Balance Sheet of Gafisa As of
September 30, 2009
(in
thousands of reais)
|
(1)
|
Represents
the historical consolidated financial information of Gafisa S.A., which
includes Gafisa’s 60% ownership interest in
Tenda.
|
|
(2)
|
Reflects
the reconciling items between Brazilian GAAP to U.S. GAAP and the related
references as they refer to Gafisa which are described in Gafisa’s
unaudited interim consolidated financial statements as of September 30,
2009 and for the nine months ended September 30, 2009 and 2008, included
elsewhere in this prospectus/information
statement.
|
|
(3)
|
Reflects
the exchange of Gafisa’s common shares for common shares of
Tenda.
|
|
(4)
|
Reflects
U.S. GAAP adjustments to noncontrolling interest in
Tenda.
|
Unaudited
Pro Forma Condensed Consolidated Statement of Income of Gafisa For the Year
Ended December 31, 2008
|
Historical
Gafisa(1)
|
Historical
Tenda(2)
|
Eliminations(3)
|
Effects
of the Restructuring
|
Pro
forma adjustments
|
Pro
forma Gafisa
|
|||||||||||||||||||
|
(in
thousands of reais)
|
||||||||||||||||||||||||
|
Gross
operating revenue
|
||||||||||||||||||||||||
|
Real
estate development and sales
|
1,768,200 | 504,502 | (169,026 | ) | — | — | 2,103,676 | |||||||||||||||||
|
Construction
services rendered, net of costs
|
37,268 | — |
—
|
— | — | 37,268 | ||||||||||||||||||
|
Taxes
on services and revenues
|
(65,064 | ) | (19,254 | ) | 4,757 | — | — | (79,561 | ) | |||||||||||||||
|
Net
operating revenue
|
1,740,404 | 485,248 | (164,269 | ) | — | — | 2,061,383 | |||||||||||||||||
|
Operating
costs
|
||||||||||||||||||||||||
|
Real
estate development costs
|
(1,214,401 | ) | (317,852 | ) | 111,920 | — | — | (1,420,333 | ) | |||||||||||||||
|
Gross
profit
|
526,003 | 167,396 | (52,349 | ) | — | — | 641,050 | |||||||||||||||||
|
Operating
(expenses) income
|
||||||||||||||||||||||||
|
Selling
expenses
|
(154,401 | ) | (87,603 | ) | 24,147 | — | — | (217,857 | ) | |||||||||||||||
|
General
and administrative expenses
|
(180,839 | ) | (137,561 | ) | 28,234 | — | — | (290,166 | ) | |||||||||||||||
|
Depreciation
and amortization
|
(52,635 | ) | (11,499 | ) | 4,213 | — | — | (59,921 | ) | |||||||||||||||
|
Amortization
of gain on partial sale of FIT
|
41,008 |
|
|
— | (41,008 | )(5) | — | |||||||||||||||||
|
Other,
net
|
(10,931 | ) | 1,679 | 1,171 | — | — | (8,081 | ) | ||||||||||||||||
|
Operating
profit (loss) before financial income (expenses)
|
168,205 | (67,588 | ) | 5,416 | — | (41,008 | ) | 65,025 | ||||||||||||||||
|
Financial
income (expenses)
|
||||||||||||||||||||||||
|
Financial
expenses
|
(61,008 | ) | (11,512 | ) | 2,788 | — | — | (69,732 | ) | |||||||||||||||
|
Financial
income
|
102,854 | 21,159 | (5,505 | ) | — | — | 118,508 | |||||||||||||||||
|
Income
(loss) before taxes on income and
noncontrolling interests
|
210,051 | (57,941 | ) | 2,699 | — | (41,008 | ) | 113,801 | ||||||||||||||||
|
Current
income taxes
|
(24,437 | ) | (1,220 | ) | 1,193 | — | — | (24,464 | ) | |||||||||||||||
|
Deferred
tax
|
(18,960 | ) | 20,953 | (30,034 | ) | — | 13,943 | (6) | (14,098 | ) | ||||||||||||||
|
Total
tax expense
|
(43,397 | ) | 19,733 | (28,841 | ) | — | 13,943 | (38,562 | ) | |||||||||||||||
|
Income
(loss) before noncontrolling interests
|
166,654 | (38,208 | ) | (26,142 | ) | — | (27,065 | ) | 75,239 | |||||||||||||||
|
Noncontrolling interests
|
(56,733 | ) |
|
– | 10,457 | (4) |
—
|
(46,276 | ) | |||||||||||||||
|
Net
income (loss) under Brazilian GAAP
|
109,921 | (38,208 | ) | (26,142 | ) | 10,457 | (27,065 | ) | 28,963 | |||||||||||||||
|
Total
U.S. GAAP adjustments
|
189,737 | (7) | (25,544 | )(8) | 7,040 | (8) | (2,816 | )(9) | (180,050 | )(10) | (11,633 | ) | ||||||||||||
|
Net
income (loss) attributable to Gafisa under U.S. GAAP
|
299,658 | (63,752 | ) | (19,102 | ) | 7,641 | (207,115 | ) | 17,330 | |||||||||||||||
|
Brazilian
GAAP pro forma shares outstanding as of December 31, 2008 (in
thousands)
|
162,847 | (11) | ||||||||||||||||||||||
|
Brazilian
GAAP pro forma earnings per share as of December 31, 2008
|
0.1779 | |||||||||||||||||||||||
|
Brazilian
GAAP dividends declared per share as of December 31, 2008
|
0.1613 | |||||||||||||||||||||||
|
U.S.
GAAP weighted average number of shares outstanding (in
thousands)
|
162.555 | (12) | ||||||||||||||||||||||
|
U.S.
GAAP pro forma earnings per share
Basic
|
0.1066 | |||||||||||||||||||||||
|
Diluted
|
0.1063 | |||||||||||||||||||||||
|
U.S.
GAAP dividends declared per share (weighted-average)
|
0.1606 | |||||||||||||||||||||||
_________________
See the
accompanying Notes to Unaudited Pro Forma Condensed Consolidated Statements of
Income
Unaudited
Pro Forma Condensed Consolidated Statement of Income of Gafisa For the
Nine-Month Period Ended September 30, 2009
|
Historical
Gafisa(1)
|
Effects
of the Restructuring
|
Pro
forma adjustments
|
Pro
forma Gafisa
|
|||||||||||||
|
(in
thousands of reais)
|
||||||||||||||||
|
Gross
operating revenue
|
||||||||||||||||
|
Real
estate development and sales
|
2,184,117 | — | — | 2,184,117 | ||||||||||||
|
Construction
services rendered, net of costs
|
30,352 | — | — | 30,352 | ||||||||||||
|
Taxes
on services and revenues
|
(89,663 | ) | — | — | (89,663 | ) | ||||||||||
|
Net
operating revenue
|
2,124,806 | — | — | 2,124,806 | ||||||||||||
|
Operating
costs
|
||||||||||||||||
|
Real
estate development costs
|
(1,523,640 | ) | — | — | (1,523,640 | ) | ||||||||||
|
Gross
profit
|
601,166 | — | — | 601,166 | ||||||||||||
|
Operating
(expenses) income
|
||||||||||||||||
|
Selling
expenses
|
(153,344 | ) | — | — | (153,344 | ) | ||||||||||
|
General
and administrative expenses
|
(172,832 | ) | — | — | (172,832 | ) | ||||||||||
|
Depreciation
and amortization
|
(24,166 | ) | — | — | (24,166 | ) | ||||||||||
|
Amortization
of gain on partial sale of FIT
|
157,800 | — | (157,800 | )(5) | — | |||||||||||
|
Other,
net
|
(79,094 | ) | — | — | (79,094 | ) | ||||||||||
|
Operating
profit before financial income (expenses)
|
329,530 | — | (157,800 | ) | 171,730 | |||||||||||
|
Financial
income (expenses)
|
||||||||||||||||
|
Financial
expenses
|
(159,336 | ) | — | — | (159,336 | ) | ||||||||||
|
Financial
income
|
106,399 | — | — | 106,399 | ||||||||||||
|
Income
before taxes on income and
noncontrolling interests
|
276,593 | — | (157,800 | ) | 118,793 | |||||||||||
|
Current
income taxes
|
(15,659 | ) | — | — | (15,659 | ) | ||||||||||
|
Deferred
tax
|
(49,245 | ) | — | 53,652 | (6) | 4,407 | ||||||||||
|
Total
tax expenses
|
(64,904 | ) | — | 53,652 | (11,252 | ) | ||||||||||
|
Income
before noncontrolling interests
|
211,689 | — | (104,148 | ) | 107,541 | |||||||||||
|
Noncontrolling
interests
|
(53,471 | ) | 22,284 | (3) | — | (31,187 | ) | |||||||||
|
Net
income under Brazilian GAAP
|
158,218 | 22,284 | (104,148 | ) | 76,354 | |||||||||||
|
Total
U.S. GAAP adjustments
|
(212,165 | )(7) | (26,004 | )(10) | 104,148 | (134,021 | ) | |||||||||
|
Net
income (loss) attributable to Gafisa under U.S. GAAP
|
(53,947 | ) | (3,720 | ) | — | (57,667 | ) | |||||||||
|
Brazilian
GAAP pro forma shares outstanding as of September 30, 2009 (in
thousands)
|
163,393 | (11) | ||||||||||||||
|
Brazilian
GAAP pro forma earnings per share as of September 30, 2009
|
0.4673 | |||||||||||||||
|
Brazilian
GAAP dividends declared per share as of September 30, 2009
|
— | |||||||||||||||
|
U.S.
GAAP weighted average number of shares outstanding (in
thousands)
|
163,080 | (12) | ||||||||||||||
|
U.S.
GAAP pro forma earnings (loss) per share
|
||||||||||||||||
|
Basic
|
(0.3536 | ) | ||||||||||||||
|
Diluted
|
(0.3536 | )(13) | ||||||||||||||
|
U.S.
GAAP dividends declared per thousand shares (weighted
–average)
|
— | |||||||||||||||
________________
See the
accompanying Notes to Unaudited Pro Forma Condensed Consolidated Statement of
Income.
Notes
to Unaudited Pro Forma Condensed Consolidated Statements of Income of Gafisa
S.A.
(in
thousands of reais)
|
(1)
|
Represents
the historical consolidated financial information of Gafisa for the year
ended December 31, 2008, which includes the results of Tenda for the
period from October 22 through December 31, 2008, and for the nine months
ended September 30, 2009.
|
|
(2)
|
Represents
the historical consolidated financial information of Tenda for the year
ended December 31, 2008.
|
|
(3)
|
Represents
the historical consolidated financial information of Tenda for the period
from October 22, 2008 through December 31, 2008, which was consolidated by
Gafisa.
|
|
(4)
|
Reflects
the removal of the historical 40% noncontrolling interests
expense of Tenda’s minority shareholders as a result of the
Restructuring.
|
|
(5)
|
Reflects
the reversal of non-recurring amortization of gain on partial sale of
FIT.
|
|
(6)
|
Reflects
the income tax effect on the pro forma adjustments using a Brazilian
statutory income tax rate of 34.0%. This rate is not necessarily
indicative of our future effective tax
rate.
|
|
(7)
|
Reflects
the reconciling items between Brazilian GAAP to U.S. GAAP and the related
references as they refer to Gafisa which are described in Gafisa’s: (a)
audited consolidated financial statements for the year ended December 31,
2008, incorporated by reference in this prospectus/information statement;
or (b) unaudited interim consolidated financial statements as of September
30, 2009 and for the nine months ended September 30, 2009 and 2008,
included elsewhere in this prospectus/information
statement.
|
|
(8)
|
Reflects
the adjustments to U.S. GAAP as they relate to Tenda: (a) the estimated
adjustments to U.S. GAAP for the year ended December 31, 2008; and (b) the
elimination of adjustments to U.S. GAAP, which were consolidated by Gafisa
for the period from October 22, 2008 through December 31, 2008, as
follows:
|
|
Year
ended December 31, 2008
|
Period
from October 22, 2008 through December 31, 2008
|
|||||||
|
(in
thousands of reais)
|
||||||||
|
Net
income (loss) of Tenda under Brazilian GAAP
|
(38,208 | ) | 26,142 | |||||
|
Revenue
recognition - net operating revenue
|
(151,442 | ) | 42,869 | |||||
|
Revenue
recognition - operating costs
|
101,317 | (22,778 | ) | |||||
|
Stock
compensation (expense) reversal
|
2,145 | 2,145 | ||||||
|
Business
combination
|
(780 | ) | (780 | ) | ||||
|
Other
|
6,826 | 616 | ||||||
|
Deferred
income tax reversal
|
— | (22,536 | ) | |||||
|
Deferred
income tax on the adjustments above
|
16,390 | (6,576 | ) | |||||
|
Net
income (loss) of Tenda under U.S. GAAP
|
(63,752 | ) | 19,102 | |||||
|
(9)
|
Reflects
the adjustments to net income attributable to noncontrolling interests of
Tenda under U.S. GAAP.
|
|
(10)
|
Reflects:
(a) the reversal of amortization of gain on partial sale of FIT, net of
tax effects, under U.S. GAAP; (b) the reversal of a non-recurring
gain of R$205,527 thousand recorded under U.S. GAAP from the transfer
of FIT as a partial sale to the noncontrolling shareholders of Tenda;
and (c) the amortization of intangible assets allocated from
the business combination as if the purchase price allocation had occurred
on January 1, 2008 under U.S. GAAP of R$1,588, net of tax
effects.
|
|
(11)
|
Represents
the pro forma shares outstanding, calculated as of December 31, 2008 and
September 30, 2009, considering the issuance of an additional 32,884,592
of Gafisa’s common shares to the noncontrolling shareholders of
Tenda at the exchange ratio of 0.205 common share of Gafisa to one common
share of Tenda. The Exchange Ratio of 0.205 for the conversion of Tenda’s
common shares into Gafisa’s common share will be subject to approval of
the EGM of Gafisa and Tenda.
|
|
(12)
|
Represents
the pro forma weighted average number of shares for the year ended
December 31, 2008 and the nine months ended September 30, 2009,
considering the issuance at the beginning of each period of an additional
32,884,592 Gafisa’s common shares to the minority shareholders
of Tenda at the exchange ratio of 0.205 common share of Gafisa to one
common share of Tenda.
|
|
(13)
|
Potentially
dilutive securities were not considered in the pro forma loss per
share.
|
Gafisa
has derived the unaudited pro forma combined information appearing below from
the unaudited pro forma combined financial data of Gafisa appearing elsewhere in
this preliminary prospectus/information statement.
You
should read the information below together with the historical and pro forma
financial data of Gafisa and the historical financial statements of Tenda
appearing elsewhere in this preliminary prospectus/information statement. The
unaudited pro forma combined financial data appearing below is for illustrative
purposes only. Gafisa and Tenda may have performed differently had they always
been a combined entity. You should not rely on this information as being
indicative of the actual results of that the combined businesses of these
companies will experience after the Restructuring.
For more
information about historical dividend payments by Gafisa and Tenda, see “Part
Six: Shareholder Rights—Information About Historical Dividend
Payments.”
|
As
of and for the nine-month period ended September 30,
2009
|
||||||||||||||||
|
(Historical)
|
(Pro
Forma)
|
|||||||||||||||
|
Gafisa
|
Tenda
|
New
Gafisa
|
Per
share equivalent Tenda
|
|||||||||||||
|
(Reais)
|
||||||||||||||||
|
Brazilian
GAAP
|
||||||||||||||||
|
Book
value per common share
|
13.66 | 2.80 | 13.66 | 2.80 | ||||||||||||
|
Cash
dividends declared per common share
|
— | — | — | — | ||||||||||||
|
Net
income from continuing operations per share
|
1.21 | 0.14 | 0.47 | 0.09 | ||||||||||||
|
As
of and for the year ended December 31, 2008
|
||||||||||||||||
|
(Historical)
|
(Pro
Forma)
|
|||||||||||||||
|
Gafisa
|
Tenda
|
New
Gafisa
|
Per
share equivalent Tenda
|
|||||||||||||
|
(Reais)
|
||||||||||||||||
|
Brazilian
GAAP
|
||||||||||||||||
|
Book
value per common share
|
12.40 | 2.65 | 16.79 | 3.44 | ||||||||||||
|
Cash
dividends declared per common share
|
0.20 | — | 0.16 | 0.03 | ||||||||||||
|
Net
income from continuing operations per common share
|
0.84 | (0.10 | ) | 0.18 | 0.04 | |||||||||||
Brazilian
Central Bank Rates
Since
2000, the Brazilian government has been introducing significant changes aimed at
simplifying the Brazilian foreign exchange market. Until March 4, 2005, there
were two principal legal foreign exchange markets in Brazil:
|
|
·
|
the
commercial rate exchange market;
and
|
|
|
·
|
the
floating rate exchange market.
|
Most
trade and financial foreign-exchange transactions were carried out on the
commercial rate exchange market. The floating market rate generally applied to
transactions to which the commercial market rate did not apply. Since February
1, 1999, with the enactment of Resolution No. 2,588, the Brazilian Central Bank
placed the commercial rate exchange market and the floating rate exchange market
under identical operational limits, and financial institutions operating in the
commercial market were authorized to unify their positions in the two different
markets,
which led to a convergence in the pricing and liquidity of both markets and a
reduction in the difference between their respective rates.
With the
enactment of Resolution No. 3,265 by the National Monetary Council on March 4,
2005, both markets were consolidated into one single foreign exchange market,
effective as of March 14, 2005. All foreign exchange transactions are now
carried out in this single consolidated market through institutions authorized
to operate in such market.
Foreign
exchange rates continue to be freely negotiated, but may be influenced by
Brazilian Central Bank intervention. Since January 1999 when the Brazilian
Central Bank abandoned the system of “exchange bands” and allowed the Brazilian
real –U.S. dollar exchange rate to float freely, the Brazilian real-U.S. dollar
exchange rate has been established mainly by the Brazilian interbank market and
has fluctuated considerably. The Brazilian Central Bank has intervened
occasionally to control unstable movements in the exchange rate (i.e., using its
foreign reserves to support the Brazilian real currency). Nevertheless, the the
Brazilian real may depreciate or appreciate substantially in relation to the
U.S. dollar in the future. Gafisa cannot predict whether the Brazilian Central
Bank or the Brazilian government will continue to let the real float freely or
will intervene in the exchange rate market through the establishment of
the currency band system, or using its foreign reserves to support the
Brazilian real currency, or otherwise, or whether the exchange market will
not be volatile as a result of change in govenmental policy, presidential
elections, political instability or other factors. In addition, exchange rate
fluctuations may also affect Gafisa’s financial condition.
On August
4, 2006, Resolution No. 3,389 relieved the exchange regime for exports,
allowing Brazilian exporters to keep up to 30% of the income generated from
exports of goods and/or services outside of Brazil. The remaining 70% of such
income continued to be subject to compulsory repatriation to Brazil. In
addition, the foreign exchange mechanism was simplified to allow for the
simultaneous purchase and sale of foreign currency through the same financial
institution and using the same exchange rate. Since March 14, 2008, Brazilian
exporters are allowed to keep 100% of such income earned outside of
Brazil.
On
September 27, 2006, Resolution No. 3,412 eliminated existing restrictions on
investments in foreign financial and derivative markets by individuals and legal
entities, and on May 29, 2008, Resolution No. 3,568 revoked Resolution No. 3,265
and Resolution No. 3,412, maintaining the past improvements, and continued
simplifying the Brazilian foreign exchange market, including providing better
access of the authorized financial institutions to operate the foreign exchange
market by the public.
The
following tables set forth the exchange rate (rounded to the nearest tenth of a
cent), expressed in reais per U.S. dollar (R$/US$), for the periods indicated,
as reported by the Brazilian Central Bank.
|
Exchange
Rate of R$ per US$
|
||||||||||||||||
|
Low
|
High
|
Average(1)
|
Period-End
|
|||||||||||||
|
Year
ended December 31,
|
||||||||||||||||
|
2004
|
2.654 | 3.205 | 2.930 | 2.654 | ||||||||||||
|
2005
|
2.163 | 2.762 | 2.463 | 2.341 | ||||||||||||
|
2006
|
2.059 | 2.371 | 2.215 | 2.138 | ||||||||||||
|
2007
|
1.762 | 1.823 | 1.793 | 1.771 | ||||||||||||
|
2008
|
1.559 | 2.050 | 2.030 | 2.337 | ||||||||||||
|
Month
Ended
|
||||||||||||||||
|
June
30, 2009
|
1.921 | 2.007 | 1.958 | 1.952 | ||||||||||||
|
July
31, 2009
|
1.873 | 2.015 | 1.933 | 1.873 | ||||||||||||
|
August
31, 2009
|
1.818 | 1.886 | 1.845 | 1.886 | ||||||||||||
|
September
30, 2009
|
1.790 | 1.914 | 1.833 | 1.790 | ||||||||||||
|
October
31, 2009
|
1.718 | 1.757 | 1.737 | 1.744 | ||||||||||||
|
November
30, 2009
|
1.702 | 1.758 | 1.725 | 1.750 | ||||||||||||
|
December (through
December 22, 2009)
|
1.709 | 1.787 | 1.750 | 1.782 | ||||||||||||
________________
Source:Brazilian
Central Bank, PTAX
|
(1)
|
Represents
the average of the exchange rates (PTAX) on the last day of each month
during the relevant period.
|
The
following table shows the closing prices of the common shares of Gafisa and
Tenda, as applicable, as well as the exchange ratio based on those values as of
October 21, 2009, the last trading day preceding public announcement of this
transaction.
|
Actual
|
Actual
|
Ratio
of exchange
|
||||||||||
|
Gafisa
|
Tenda
|
Gafisa
per Tenda
|
||||||||||
|
Common
shares
|
R$ | 30.45 | R$ | 6.00 | 0.197 | |||||||
The
Exchange Ratio agreed upon by the boards of directors of Gafisa and Tenda and
the Special Committee is 0.205, and is higher than the exchange ratio of 0.197
based the closing prices of Gafisa and Tenda common shares on October 21, 2009
as shown in the table above.
Gafisa
and Tenda have made forward-looking statements in this preliminary
prospectus/information statement that are subject to risks and uncertainties.
These forward-looking statements relate to among other things:
|
|
·
|
management
strategy;
|
|
|
·
|
synergies
and cost savings;
|
|
|
·
|
integration
of new business units;
|
|
|
·
|
market
position and the size of the Brazilian real estate
market;
|
|
|
·
|
statements
concerning the operations and prospects of Gafisa, Tenda and the other
Gafisa companies;
|
|
|
·
|
estimated
demand forecasts;
|
|
|
·
|
Gafisa’s
and Tenda’s strategic initiatives and plans for business
growth;
|
|
|
·
|
industry
conditions;
|
|
|
·
|
Gafisa’s
and Tenda’s funding needs and financing
sources;
|
|
|
·
|
influence
of main shareholders;
|
|
|
·
|
litigation;
and
|
|
|
·
|
the
timetable for the Restructuring.
|
Forward-looking
statements also may be identified by words such as “believes,” “expects,”
“anticipates,” “projects,” “intends,” “should,” “seeks,” “estimates,” “future”
or similar expressions. The sections of this preliminary prospectus/information
statement that contain forward-looking statements include:
|
|
·
|
“Part
One: Questions and Answers About the
Restructuring;”
|
|
|
·
|
“Part
Two: Summary;”
|
|
|
·
|
“Part
Three: Risk Factors;”
|
|
|
·
|
“Part
Five: The Restructuring;”
|
|
|
·
|
“Part
Six: Shareholder Rights;”
|
|
|
·
|
“Part
Seven: Additional Information for Shareholders—Enforceability of Civil
Liabilities Under U.S. Securities Laws;”
and
|
|
|
·
|
“Part
Eight: Legal and Regulatory
Matters—General.”
|
These
statements reflect the current expectations of Gafisa and Tenda. They are
subject to a number of risks and uncertainties, including but not limited to
changes in technology, regulation, the Brazilian real estate marketplace and
local economic conditions. In light of the many risks and uncertainties
surrounding this marketplace, you should understand that Gafisa and/or Tenda
cannot assure you that the forward-looking statements contained in this
preliminary prospectus/information statement will be realized. You are cautioned
not to place undue reliance on any forward-looking information.
Gafisa
and/or Tenda undertake no obligation to publicly update or revise these forward
looking statements after the date they distribute this preliminary
prospectus/information statement.
In
addition to general investment risks and the other information contained in this
document, including the matters described under the caption “Cautionary
Statement Regarding Forward-Looking Statements” and the matters discussed under
the caption “Risk Factors” included in Gafisa’s Annual Report on Form 20-F for
the year ended December 31, 2008, filed with the SEC on June 5, 2009, and which
is incorporated herein by reference, you should further carefully consider the
following risks before deciding whether to exercise withdrawal
rights, to the extent applicable, or take no action and receive Gafisa shares in
connection with the Restructuring.
Your
ownership percentage in Gafisa will decrease.
Because
Gafisa is a larger company than Tenda and because there are many existing
shareholders of Gafisa, your ownership percentage in Gafisa shares will, as a
result of the Restructuring, be less than your existing ownership percentage in
Tenda. Assuming that none of the common shareholders of Tenda exercise
withdrawal rights, former noncontrolling shareholders of Tenda will
hold approximately 19.7%, of the total capital stock of Gafisa in the aggregate
following the Restructuring. Similarly, the ownership percentage in Gafisa of
existing Gafisa shareholders will be diluted as a result of the issuance of the
new Gafisa shares in the Restructuring, and the percentage of the outstanding
capital stock of Gafisa held by existing shareholders of Gafisa will decrease
from 97.7% to 78.4%, excluding shares held in treasury.
The
market price of Gafisa and Tenda shares is uncertain.
The
exchange ratio in the Restructuring is fixed and there is no mechanism to adjust
the exchange ratio in the event that the market price of the Gafisa shares
declines. Consequently, if the market price of the Gafisa shares declines for
any reason prior to completion of the Restructuring, the value of the shares
received by holders of Tenda common shares in the Restructuring will similarly
be reduced.
The
trading market for the Tenda common shares after the exchange ratio for the
Restructuring is publicly announced and after the Restructuring is approved by
the requisite shareholders’ meetings may be severely impaired or disrupted. As a
result, until the Restructuring closes and you receive Gafisa shares, the
liquidity of the Tenda shares may decline and their volatility may increase.
This could result in substantial fluctuations in the trading price for Tenda
shares.
The
market price of Gafisa and Tenda shares may be adversely affected by arbitrage
activities occurring prior to the completion of the Restructuring.
The
market price of Gafisa and Tenda shares may be adversely affected by arbitrage
activities occurring prior to the completion of the Restructuring. These sales,
or the prospects of such sales in the future, could adversely affect the market
price for, and the ability to sell in the market, shares of Tenda stock before
the Restructuring is completed and Gafisa shares before and after the
Restructuring is completed. Any adverse effect on the market prices
of the Tenda shares or the Gafisa shares could adversely affect the cash value
that you will receive for any fractional share to which you otherwise would have
been entitled in the Restructuring and the value of any common shares of Gafisa
you may receive during the Restructuring.
If
regulatory agencies impose conditions on approval of the Restructuring, the
anticipated benefits of the Restructuring could be diminished.
Under
U.S. securities laws, the registration statement of which this preliminary
prospectus/information statements is a part, must be declared effective by the
SEC prior to the Tenda shareholders’ approval of the
Restructuring. In addition, while no governmental antitrust approvals
are currently required in order to complete the transaction, if regulators were
to impose any requirements for approval, Gafisa and Tenda would vigorously
pursue any such governmental approvals. If any such approvals were withheld, the
benefits of the Restructuring could be delayed, possibly for a significant
period of time after the shareholders approve the Restructuring. In addition, if
governmental
agencies conditioned their approval of the Restructuring on the imposition of
conditions, Gafisa’s operating results or the value of Gafisa’s stock could be
adversely affected.
The
Restructuring may not result in the benefits that Gafisa seeks to achieve,
including increased share liquidity.
Gafisa
and Tenda are undertaking the Restructuring because, among other reasons, they
believe that the Restructuring will provide Gafisa, Tenda and their respective
shareholders with a number of advantages, including providing shareholders of
Gafisa and Tenda with securities that Gafisa expects will enjoy greater market
liquidity than the securities these shareholders currently hold. However, the
Restructuring may not accomplish these objectives. Gafisa cannot predict whether
a liquid market for the newly issued and existing Gafisa securities will be
maintained. If the Restructuring does not result in increased liquidity for the
securities held by shareholders of Gafisa and Tenda, you may experience a
decrease in your ability to sell your shares compared to your ability to sell
the shares you currently hold.
The
exercise of withdrawal rights by shareholders of Tenda could decrease the cash
balances of Tenda and otherwise adversely affect its financial condition and the
consolidated financial position of Gafisa and its subsidiaries.
As
described in “Part Five: The Restructuring—Withdrawal Rights” holders of common
shares of Tenda at the close of business on October 21, 2009, are entitled to
withdrawal rights in connection with the Restructuring and have the right to
receive from Tenda the amounts per share set forth in that section. If holders
of a significant number of these shares exercise their withdrawal rights, the
requirement to make large cash payments could decrease the cash balances of
Tenda, limit its ability to borrow funds or fund capital expenditures or prevent
it from complying with existing contractual obligations. In addition, under
Brazilian law, if management believes that the total value of the withdrawal
rights exercised by shareholders of Tenda may put at risk the financial
stability of the Companies, management may, within 10 days after the end of the
withdrawal rights period, call a general meeting of shareholders to unwind the
Restructuring.
The
CVM, the Brazilian securities regulator, may suspend for up to 15 days the
shareholders’ meetings scheduled to approve the Restructuring.
The CVM
may suspend for up to 15 days the EGMs scheduled to approve the Restructuring in
order to analyze the transaction and verify that it does not breach applicable
laws or regulations. Although Gafisa and Tenda believe that the proposed
Restructuring described in this preliminary prospectus/information statement is
legal and provides equitable treatment to Gafisa’s and Tenda’s shareholders,
Gafisa and Tenda cannot predict the outcome of any such analysis of the
transaction by the CVM.
The
U.S. federal income tax consequences of the Restructuring are
uncertain.
The U.S.
federal income tax consequences of the Restructuring will depend on whether the
Restructuring qualifies as a tax-free “reorganization” for U.S. federal income
tax purposes, which will in turn depend on whether (i) any Tenda shareholder
receives cash upon the exercise of withdrawal rights and (ii) such cash is for
U.S. federal income tax purposes treated as having been paid by
Gafisa. In order for the Restructuring to qualify as a reorganization
for such purposes, among other things, Tenda shareholders must receive, from
Gafisa, solely Gafisa voting stock in exchange for their Tenda shares. There is
no authority expressly addressing whether the payment of cash to Tenda
shareholders who exercise withdrawal rights pursuant to Brazilian law will
prevent the Restructuring from satisfying this “solely for voting stock”
requirement. However, based on the advice of Gafisa’s Brazilian
counsel to the effect that solely Tenda, and not Gafisa, will be liable to make
any cash payment to any Tenda shareholders who exercise withdrawal rights, and
assuming that any such payments are not funded indirectly by Gafisa, the payment
of such cash to Tenda shareholders who exercise withdrawal rights should not
prevent the Restructuring from qualifying as a reorganization for U.S. federal
income tax purposes. No ruling has been sought or will be obtained
from the U.S. Internal Revenue Service on the U.S. federal income tax
consequences of the transaction.
If the
Restructuring qualifies as a reorganization for U.S. federal income tax
purposes, you generally will not recognize gain or loss for U.S. federal income
tax purposes on the receipt of Gafisa shares in exchange for Tenda shares,
except to the extent of gain attributable to cash received in lieu of a
fractional Gafisa share. If the Restructuring is a taxable
transaction, U.S. Holders generally will recognize gain or loss on the receipt
of Gafisa shares in exchange for Tenda shares. U.S. Holders should
review carefully the section under “Part Five: the Restructuring—Material Tax
Considerations—United States Federal Income Tax Considerations.”
There
is no clear guidance under Brazilian law regarding the income tax consequences
to investors who exchange shares in the Restructuring
There is
no specific legislation, nor administrative or judicial precedent regarding the
income tax consequences to investors who exchange shares as a result of the
Restructuring. Based on the opinion of its external tax advisors, Gafisa
believes that there are reasonable legal grounds to sustain that the receipt
(resulting from the Restructuring) by a U.S. person holding Tenda common shares,
of Gafisa common shares that are registered as a foreign portfolio investment
under Resolution No. 2,689 or are registered as a foreign direct investment
under Law No. 4,131, would not be subject to income tax pursuant to Brazilian
tax law. However, this position may not prevail, in which case Gafisa would be
liable to the Brazilian tax authorities for withholding and collecting the
taxable capital gains of shareholders resident abroad. While such shareholders
would not be directly liable to Brazilian tax authorities, Gafisa would be
entitled to reimbursements from them.
Gafisa
may have actual or potential conflicts of interest relating to the
Restructuring.
Gafisa
may have actual or potential conflicts of interest because Gafisa, a controlling
shareholder of Tenda, exercises voting control over the board of directors of
Tenda, even though the board of directors contains a representative of Tenda’s
noncontrolling shareholders. In accordance with the CVM release No.
35, Tenda has selected three members to constitute its Special Committee making
recommendations to the board of directors of Tenda on the Restructuring, with
one of these members representing the minority shareholders. While the Exchange
Ratio was determined in accordance with all applicable laws and regulations in
Brazil, was validated by financial analysis prepared by Estáter and Rothschild,
and was recommended by the Special Committee, based on the valuation report of
Itaú BBA, this ratio may be higher or lower, from the perspective of value to
unaffiliated shareholders, then that which could be achieved through arm’s
length negotiations between unrelated parties.
The
financial advisory fees of Estáter and Rothschild will be paid by Gafisa, and
the financial advisory fees of Itaú BBA, the independent financial advisor of
the Special Committee, will be paid by Tenda. The appraisal report fees of APSIS
will be paid by the Companies.
Gafisa
common shares you receive in the Restructuring will represent an investment in a
different business from that in which you originally invested.
You will
receive Gafisa common shares for your Tenda common shares in the Restructuring.
Concurrently with the exchange of shares of Tenda for Gafisa shares, the
business operations of Tenda will also combine with those of Gafisa. The
resulting company will operate in states and markets in which Tenda does not
currently conduct business and the expected synergies between these companies
may not materialize.
Gafisa
after the Restructuring will be more leveraged than Tenda currently is, and a
significant portion of Gafisa’s cash flow will have to be used to service its
obligations.
On
September 30, 2009, Gafisa and Tenda had R$1,784.6 million of consolidated total
debt, of which R$747.0 million was attributable to Tenda. Gafisa is subject to
the risks normally associated with significant amounts of debt, which could have
important consequences to you. Gafisa’s indebtedness could, among other
things:
|
|
·
|
require
us to use a substantial portion of their cash flow from operations to pay
their obligations, thereby reducing the availability of our cash flow to
fund working capital, operations, capital expenditures, dividend payments,
strategic acquisitions, expansion of our operations and other business
activities;
|
|
|
·
|
increase
our vulnerability to general adverse economic and industry
conditions;
|
|
|
·
|
limit,
along with financial and other restrictive covenants in their debt
instruments, our ability to borrow additional funds or dispose of assets;
and
|
Gafisa
may also need to refinance all or a portion of their debt on or before maturity,
and they may not be able to do this on commercially reasonable terms or at
all.
In
addition, Tenda will seek approval of its debenture holders for the
Restructuring and delisting from BM&FBOVESPA’s Nova Mercado. Acceleration of
the debentures may result if either debenture holders decide without
justification not to approve the Restructuring or if the debenture holders do
not approve the delisting of Tenda from BM&FBOVESPA’s Novo
Mercado.
You
should read the following discussion in conjunction with our consolidated
financial statements and accompanying notes in this preliminary
prospectus/information statement. As a result of a change in Brazilian law with
respect to financial reporting (Law No. 11,638), certain changes in
accounting criteria became effective for calendar year 2008. Pursuant to a CVM
resolution, we elected to apply these changes in accounting criteria
retroactively to our financial statements with an effective date as of January
1, 2006. As a result, certain adjustments have been made to our 2006 and 2007
financial statements to make them comparable to our 2008 financial statements.
We have elected not to revise our financial statements for fiscal years prior to
2006. Please see Note 2 to our 2008 financial statements contained in Gafisa’s
Current Report on Form 6-K filed on November 13, 2009 with the SEC for
the year ended December 31, 2008 for a qualitative and quantitative analysis of
the changes resulting from the new accounting criteria. Additionally, the
Brazilian GAAP to US GAAP reconciliations in Gafisa’s audited consolidated
financial statements as of and for the years ended December 31, 2008, 2007 and
2006 incorporated by reference in this preliminary prospectus/information
statement have been adjusted to reflect the retrospective application of
provisions of the Statement of Financial Accounting Standards (SFAS) No. 160,
“Noncontrolling Interests in Consolidated Financial Statements, an Amendment of
ARB No. 51.”
We
use throughout this preliminary prospectus/information statement, specifically
under “Part Two: Summary—The Companies,” “—Management’s Discussion and Analysis
of Financial Condition and Results of Operations of Gafisa” and ““—Management’s
Discussion and Analysis of Financial Condition and Results of Operations of
Tenda,” the term “value of launches, or potential sales value” is used by the
Companies to measure their respective performance. Value of launches is not,
however, a Brazilian GAAP measurement. Value of sales as used in this
preliminary prospectus/registration statement is calculated by multiplying the
total numbers of units in a real estate development by the unit sales
price.
Overview
For
information on the principal factors affecting Gafisa’s results of operations,
Gafisa’s critical accounting policies, Gafisa’s developments, the Brazilian
economic environment in which Gafisa’s operate and Gafisa’s results of
operations for the years ended December 31, 2008, 2007 and 2006, please refer to
the Form 6-K filed on November 13, 2009 with the SEC, which is incorporated by
reference herein. We have retroactively applied changes to Brazilian GAAP
introduced by the CPC and the provisions of Brazilian Law No. 11,638/07 from
January 1, 2006 to ensure consistency of presentation in our financial
statements. Under Brazilian GAAP, investments in jointly-controlled
investees are accounted for using the proportional consolidation
method.
Results
of Operations for the nine-month periods ended September 30, 2009 and
2008
The
following discussion of Gafisa’s results of operations is based on Gafisa’s
consolidated financial statements prepared in accordance with Brazilian GAAP.
References to increases and decreases in any given period relate to the
corresponding preceding period, unless otherwise indicated.
On
September 1, 2008, the management of Tenda and Gafisa entered into an agreement
by means of which a wholly owned subsidiary of Gafisa, FIT Residencial
Empreendimentos Imobiliários Ltda. or FIT, was to be merged into Tenda. On
October 21, 2008, the merger between FIT and Tenda was completed and, as a
result, Gafisa acquired a 60% ownership interest in Tenda. As a consequence of
its acquisition of a 60% ownership interest in Tenda, Gafisa has been reporting
financial results fully consolidated with those of Tenda since October 21, 2008,
which resulted in a substantial improvement in Gafisa’s financial results for
the nine month period ended September 30, 2009 as compared to the same period in
2008.
|
Consolidated
Statement of Income
|
Nine-Month
Period Ended September 30,
|
|||||||||||||||||||
|
2009
|
Total
%
|
2008
|
Total
%
|
%
Variation
|
||||||||||||||||
|
(In
thousands of Reais)
|
||||||||||||||||||||
|
Gross
operating revenue
|
||||||||||||||||||||
|
Revenue
from real estate developments and sales
|
2,184,117 | 102.8 | 1,224,199 | 102.7 | 78.4 | |||||||||||||||
|
Other
|
30,352 | 1.4 | 13,201 | 1.1 | 129.9 | |||||||||||||||
|
Taxes
and rates
|
(89,663 | ) | 4.2 | (44,841 | ) | 3.8 | 100.0 | |||||||||||||
|
Net
operating revenue
|
2,124,806 | 100.0 | 1,192,559 | 100.0 | 78.2 | |||||||||||||||
|
Operating
costs
|
||||||||||||||||||||
|
Expenses
from real estate developments and sales
|
(1,523,640 | ) | 71.7 | (814,201 | ) | 68.3 | 87.1 | |||||||||||||
|
Gross
profit
|
601,166 | 28.3 | 378,358 | 31.7 | 58.9 | |||||||||||||||
|
Operating
income (expense)
|
||||||||||||||||||||
|
Selling
expenses
|
(153,344 | ) | 7.2 | (87,504 | ) | 7.3 | 75.2 | |||||||||||||
|
General
and administrative expenses
|
(172,832 | ) | 8.1 | (104,990 | ) | 8.8 | 64.6 | |||||||||||||
|
Net
financial result
|
(52,937 | ) | 2.5 | 40,117 | 3.4 | 232.0 | ||||||||||||||
|
Depreciation
and amortization
|
(24,166 | ) | 1.1 | (29,606 | ) | 2.5 | 18.4 | |||||||||||||
|
Amortization
of gain on partial sale of Fit Residencial and other,
net
|
157,800 | 7.4 | — | — | 100.0 | |||||||||||||||
|
Other
operating expenses, net
|
(79,094 | ) | 3.7 | (13,303 | ) | 1.1 | 494.6 | |||||||||||||
|
Total
operating revenue (expense)
|
(324,573 | ) | 15.3 | (195,286 | ) | 16.4 | 66.2 | |||||||||||||
|
Operating
results before income tax and social contribution
|
276,593 | 13.0 | 183,072 | 15.4 | 51.1 | |||||||||||||||
|
Income
tax and social contribution
|
(64,904 | ) | 3.1 | (50,456 | ) | 4.2 | 28.6 | |||||||||||||
|
Income
before noncontrolling interests
|
211,689 | 10.0 | 132,616 | 11.1 | 59.6 | |||||||||||||||
|
Noncontrolling interests
|
(53,471 | ) | 2.5 | (35,540 | ) | 3.0 | 50.5 | |||||||||||||
|
Net
income for the period
|
158,218 | 7.4 | 97,076 | 8.1 | 63.0 | |||||||||||||||
Net
operating revenue
Net
operating revenue increased by 78.4% in the first nine months of 2009, as
compared to the first nine months of 2008, reflecting a greater number of real
estate developments and sales, in part as a result of the acquisition of a
controlling interest in Tenda and increased activity at Tenda. Excluding the net
operating revenue associated with Tenda, Gafisa’s net operating revenues for the
first nine months of 2009 were R$1,398.7 million, a 17.3% increase over the same
period in 2008.
The
following table sets forth the final completion of the real estate development
projects in first nine months of 2009 and 2008 and the related net operating
revenue recognized during those periods:
|
As
of September 30,
|
Nine-month
period ended September 30,
|
||||||||||||||||||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
||||||||||||||||||||||||||||
|
Development
|
Month/
Year launched
|
Total
area
(m2) (1) (2)
|
Final
completion (%)
|
Percentage
sold-accumulated (%)
|
Gafisa
Participation (%)
|
Revenue
recognized
|
|||||||||||||||||||||||||||
|
GAFISA
BRAND
|
|||||||||||||||||||||||||||||||||
|
Other
|
257,656 | 314,579 | |||||||||||||||||||||||||||||||
|
Península
Fit
|
Sep-06
|
24,080 | 100 | 91 | 92 | 77 | 100 | 16,263 | 33,498 | ||||||||||||||||||||||||
|
Rua
das Laranjeiras 29
|
Apr-08
|
11,740 | 63 | 47 | 100 | 98 | 100 | 11,430 | 31,166 | ||||||||||||||||||||||||
|
London
Green
|
Mar-08
|
44,007 | 81 | 44 | 742 | 67 | 100 | 46,736 | 30,222 | ||||||||||||||||||||||||
|
Vp
Horto – Phase 2 (OAS)
|
Jan-08
|
44,596 | 50 | 33 | 96 | 97 | 50 | 16,312 | 29,103 | ||||||||||||||||||||||||
|
Olimpic
Chac. Santo Antonio
|
Aug-06
|
24,988 | 99 | 71 | 100 | 99 | 100 | 3,506 | 25,202 | ||||||||||||||||||||||||
|
Vision
|
Dec-07
|
19,712 | 66 | 41 | 90 | 75 | 100 | 25,698 | 21,363 | ||||||||||||||||||||||||
|
Isla
Residence Clube
|
May-07
|
31,423 | 93 | 44 | 93 | 85 | 100 | 32,828 | 19,948 | ||||||||||||||||||||||||
|
Supremo
|
Sep-06
|
34,864 | 54 | 42 | 96 | 84 | 100 | 21,811 | 19,731 | ||||||||||||||||||||||||
|
As
of September 30,
|
Nine-month
period ended September 30,
|
||||||||||||||||||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
||||||||||||||||||||||||||||
|
Development
|
Month/
Year launched
|
Total
area
(m2) (1) (2)
|
Final
completion (%)
|
Percentage
sold-accumulated (%)
|
Gafisa
Participation (%)
|
Revenue
recognized
|
|||||||||||||||||||||||||||
|
GAFISA
BRAND
|
|||||||||||||||||||||||||||||||||
|
Csf
Acacia
|
May-07
|
23,461 | 93 | 44 | 100 | 95 | 100 | 20,531 | 19,015 | ||||||||||||||||||||||||
|
Parc
Paradiso
|
Jun-07
|
38,430 | 60 | 21 | 99 | 93 | 95 | 51,165 | 18,353 | ||||||||||||||||||||||||
|
Enseada
Das Orquídeas
|
Aug-07
|
52,589 | 57 | 29 | 95 | 66 | 100 | 46,794 | 17,691 | ||||||||||||||||||||||||
|
Beach
Park Living
|
Jun-06
|
14,913 | 100 | 89 | 92 | 88 | 80 | 1,169 | 15,968 | ||||||||||||||||||||||||
|
Vp
Parides
|
Nov-06
|
13,093 | 100 | 89 | 100 | 100 | 100 | 114 | 14,754 | ||||||||||||||||||||||||
|
Blue
Land SPE 36
|
Oct-05
|
18,252 | 100 | 98 | 96 | 65 | 100 | 16,920 | 14,725 | ||||||||||||||||||||||||
|
Terraças
Alto da Lapa
|
Nov-07
|
24,525 | 72 | 24 | 88 | 72 | 100 | 29,267 | 14,618 | ||||||||||||||||||||||||
|
Csf
Paradiso
|
Nov-06
|
16,286 | 100 | 58 | 99 | 89 | 100 | 12,178 | 14,493 | ||||||||||||||||||||||||
|
Espacio
Laguna – Phase 1
|
Jun-06
|
16,364 | 98 | 68 | 89 | 76 | 100 | 12,477 | 14,205 | ||||||||||||||||||||||||
|
Csf
Santtorino
|
Aug-06
|
14,979 | 98 | 67 | 100 | 100 | 100 | 2,091 | 13,760 | ||||||||||||||||||||||||
|
Ville
du Soleil
|
Oct-07
|
8,920 | 100 | 99 | 98 | 67 | 100 | 4,927 | 12,777 | ||||||||||||||||||||||||
|
Collori
|
Oct-06
|
39,462 | 92 | 43 | 100 | 93 | 50 | 22,998 | 11,478 | ||||||||||||||||||||||||
|
Magic
|
May-07
|
31,487 | 74 | 33 | 74 | 42 | 100 | 34,817 | 11,420 | ||||||||||||||||||||||||
|
Olimpic
Bosque da Saúde
|
Nov-06
|
19,150 | 67 | 44 | 89 | 80 | 100 | 11,997 | 11,080 | ||||||||||||||||||||||||
|
Felicita
|
Nov-06
|
11,323 | 97 | 61 | 100 | 91 | 100 | 7,360 | 11,012 | ||||||||||||||||||||||||
|
Olimpic
Condominium Resort
|
Oct-05
|
21,851 | 100 | 100 | 100 | 100 | 100 | 1,057 | 10,264 | ||||||||||||||||||||||||
|
The
Gold
|
Dec-05
|
10,465 | 100 | 100 | 100 | 100 | 100 | 466 | 10,138 | ||||||||||||||||||||||||
|
Del
Lago Urbanização
|
May-05
|
62,022 | 99 | 99 | 99 | 99 | 100 | 293 | 9,232 | ||||||||||||||||||||||||
|
Csf
Prímula
|
May-07
|
13,897 | 88 | 42 | 100 | 82 | 100 | 13,005 | 8,979 | ||||||||||||||||||||||||
|
Town
Home
|
Nov-05
|
8,319 | 100 | 97 | 100 | 98 | 100 | 151 | 8,941 | ||||||||||||||||||||||||
|
Sunplaza
Personal Office
|
Mar-06
|
6,328 | 100 | 100 | 100 | 100 | 100 | 1,156 | 8,438 | ||||||||||||||||||||||||
|
Acqua
Residencial
|
Mar-07
|
35,536 | 75 | 34 | 54 | 39 | 100 | 21,042 | 8,164 | ||||||||||||||||||||||||
|
Solares
da Vila Maria
|
Nov-07
|
13,376 | 52 | 19 | 100 | 100 | 100 | 9,825 | 7,827 | ||||||||||||||||||||||||
|
Grand
Valley
|
Mar-07
|
16,908 | 84 | 42 | 69 | 62 | 100 | 12,172 | 7,513 | ||||||||||||||||||||||||
|
Vivance
Res. Service
|
Jan-07
|
14,717 | 93 | 37 | 95 | 76 | 100 | 16,826 | 7,467 | ||||||||||||||||||||||||
|
VP
Horto – Phase 1 (OAS)
|
Oct-07
|
44,563 | 66 | 38 | 98 | 100 | 50 | 31,513 | 7,384 | ||||||||||||||||||||||||
|
Quinta
Imperial
|
Jul-06
|
8,422 | 98 | 72 | 89 | 75 | 100 | 3,405 | 7,245 | ||||||||||||||||||||||||
|
Star
res. Service/Blue Concept
|
Dec-05
|
9,367 | 100 | 96 | 98 | 49 | 100 | 263 | 7,066 | ||||||||||||||||||||||||
|
Nova
Petropolis SBC – Phase 1
|
Mar-08
|
41,182 | 49 | 15 | 49 | 37 | 100 | 17,122 | 6,944 | ||||||||||||||||||||||||
|
Mirante
do Rio
|
Oct-06
|
8,125 | 100 | 65 | 99 | 100 | 60 | 4,812 | 6,876 | ||||||||||||||||||||||||
|
Secret
Garden
|
May-07
|
15,344 | 75 | 36 | 70 | 66 | 100 | 9,823 | 6,194 | ||||||||||||||||||||||||
|
Fit
Residence Service Niterói
|
Aug-06
|
8,523 | 98 | 62 | 88 | 86 | 100 | 7,151 | 6,022 | ||||||||||||||||||||||||
|
Beach
Park Acqua
|
Nov-05
|
9,770 | 100 | 100 | 98 | 95 | 90 | 1,284 | 5,820 | ||||||||||||||||||||||||
|
Icaraí
Corporate
|
Dec-06
|
5,683 | 82 | 50 | 97 | 94 | 100 | 4,460 | 5,660 | ||||||||||||||||||||||||
|
Csf
Dalia
|
May-07
|
9,000 | 82 | 37 | 98 | 81 | 100 | 5,013 | 5,082 | ||||||||||||||||||||||||
|
Hype
Residence Service
|
Nov-04
|
10,753 | 100 | 100 | 93 | 55 | 100 | 12,034 | 4,994 | ||||||||||||||||||||||||
|
Campo
D’ourique
|
Dec-05
|
11,775 | 100 | 100 | 94 | 52 | 50 | 5,225 | 4,851 | ||||||||||||||||||||||||
|
Csf
Saint Etiene
|
May-05
|
11,261 | 100 | 100 | 99 | 96 | 100 | 1,987 | 4,839 | ||||||||||||||||||||||||
|
Palm
D’or
|
Nov-05
|
8,493 | 100 | 99 | 100 | 100 | 100 | 425 | 4,784 | ||||||||||||||||||||||||
|
Grand
Valley Niterói – Phase 1
|
Oct-07
|
17,905 | 35 | 20 | 92 | 91 | 100 | 4,494 | 4,682 | ||||||||||||||||||||||||
|
Privilege
Residencial
|
Sep-07
|
16,173 | 59 | 20 | 85 | 81 | 80 | 13,372 | 4,572 | ||||||||||||||||||||||||
|
Magnific
|
Mar-08
|
10,969 | 50 | 7 | 63 | 63 | 100 | 5,702 | 4,141 | ||||||||||||||||||||||||
|
Celebrare
Residencial
|
Mar-07
|
14,679 | 65 | 28 | 78 | 77 | 100 | 8,862 | 3,861 | ||||||||||||||||||||||||
|
Reserva
do Lago – Phase I
|
Feb-07
|
16,800 | 92 | 47 | 92 | 75 | 100 | 11,587 | 3,852 | ||||||||||||||||||||||||
|
Costa
Paradiso
|
Jun-05
|
63,041 | 100 | 100 | 93 | 79 | 100 | 521 | 3,577 | ||||||||||||||||||||||||
|
Vp
Domaine du Soleil
|
Sep-05
|
8,225 | 100 | 100 | 100 | 100 | 100 | 128 | 3,577 | ||||||||||||||||||||||||
|
Orbit
|
Aug-07
|
11,332 | 59 | 17 | 47 | 30 | 100 | 4,749 | 2,686 | ||||||||||||||||||||||||
|
Acquarelle
|
Mar-07
|
17,742 | 54 | 9 | 82 | 60 | 85 | 13,227 | 2,585 | ||||||||||||||||||||||||
|
Horizonte
|
Apr-07
|
9,382 | 63 | 23 | 100 | 90 | 80 | 4,820 | 2,482 | ||||||||||||||||||||||||
|
Belle
Vue – Porto Alegre
|
May-06
|
4,264 | 100 | 88 | 77 | 45 | 80 | 2,682 | 2,452 | ||||||||||||||||||||||||
|
Weber
Art
|
Jun-05
|
5,812 | 100 | 100 | 98 | 98 | 100 | 175 | 2,247 | ||||||||||||||||||||||||
|
Montenegro
Boulevard
|
Jun-05
|
174,862 | 100 | 100 | 100 | 100 | 100 | 14 | 1,886 | ||||||||||||||||||||||||
|
La
Place Residence Service
|
May-04
|
8,416 | 100 | 100 | 100 | 96 | 100 | 681 | 1,585 | ||||||||||||||||||||||||
|
Blue
One Spe 125
|
Sep-03
|
15,973 | 100 | 100 | 99 | 83 | 67 | 6,608 | 1,513 | ||||||||||||||||||||||||
|
Riv.
Ponta Negra – ed Cannes
|
Jan-04
|
9,703 | 100 | 100 | 73 | 79 | 50 | 104 | 1,495 | ||||||||||||||||||||||||
|
Evidence
|
Mar-07
|
23,487 | 58 | 21 | 74 | 58 | 50 | 7,196 | 1,344 | ||||||||||||||||||||||||
|
Palm
Ville
|
Apr-07
|
13,582 | 73 | 12 | 95 | 90 | 50 | 6,958 | 1,168 | ||||||||||||||||||||||||
|
Vistta
Santana
|
Jun-09
|
27,897 | 44 | — | 69 | — | 100 | 35,502 | — | ||||||||||||||||||||||||
|
Pq
barueri Cond – Phase 1
|
Nov-08
|
58,437 | 39 | — | 63 | — | 100 | 27,313 | — | ||||||||||||||||||||||||
|
As
of September 30,
|
Nine-month
period ended September 30,
|
||||||||||||||||||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
||||||||||||||||||||||||||||
|
Development
|
Month/
Year launched
|
Total
area
(m2) (1) (2)
|
Final
completion (%)
|
Percentage
sold-accumulated (%)
|
Gafisa
Participation (%)
|
Revenue
recognized
|
|||||||||||||||||||||||||||
|
GAFISA
BRAND
|
|||||||||||||||||||||||||||||||||
|
Chácara
Santana
|
Nov-08
|
30,517 | 37 | — | 94 | 50 | 19,726 | — | |||||||||||||||||||||||||
|
Quintas
do Pontal
|
Sep-08
|
21,915 | 62 | — | 31 | 15 | 100 | 14,434 | — | ||||||||||||||||||||||||
|
Mansão
Imperial – F1
|
Oct-08
|
18,778 | 32 | — | 67 | — | 100 | 14,149 | — | ||||||||||||||||||||||||
|
Brink
|
Nov-08
|
17,280 | 41 | — | 85 | — | 100 | 13,631 | — | ||||||||||||||||||||||||
|
Magno
|
Sep-09
|
8,686 | 36 | — | 72 | — | 100 | 13,145 | — | ||||||||||||||||||||||||
|
Sorocaba
|
Jun-09
|
7,046 | 45 | — | 69 | — | 100 | 11,847 | — | ||||||||||||||||||||||||
|
Terraças
Tatuape
|
Jun-08
|
14,386 | 37 | — | 67 | 10 | 100 | 11,703 | — | ||||||||||||||||||||||||
|
Details
|
Oct-08
|
7,802 | 47 | — | 57 | — | 100 | 11,472 | — | ||||||||||||||||||||||||
|
Vila
Nova São José – F1a
|
Oct-08
|
20,741 | 4 | — | 64 | — | 100 | 10,537 | — | ||||||||||||||||||||||||
|
Verdemar
– Phase 2
|
Jan-09
|
12,593 | 43 | — | 38 | — | 100 | 8,664 | — | ||||||||||||||||||||||||
|
Brink
f2 – Campo Limpo
|
Mar-09
|
8,576 | 41 | — | 66 | — | 100 | 7,016 | — | ||||||||||||||||||||||||
|
Ecolive
|
Aug-08
|
12,255 | 23 | — | 75 | 43 | 100 | 6,839 | — | ||||||||||||||||||||||||
|
Mont
Blanc
|
Jul-08
|
30,479 | 42 | — | 33 | 21 | 100 | 5,254 | — | ||||||||||||||||||||||||
|
Supremo
Ipiranga
|
Jun-09
|
13,904 | 20 | — | 51 | 100 | 5,065 | — | |||||||||||||||||||||||||
|
Alegria
Phase 1
|
Sep-08
|
29,199 | 20 | — | 61 | 41 | 100 | 4,442 | — | ||||||||||||||||||||||||
|
Manhattan
Home Soho
|
Jun-08
|
28,926 | 18 | — | 45 | 19 | 50 | 4,142 | — | ||||||||||||||||||||||||
|
Manhattan
Home Tribeca
|
Jun-08
|
37,879 | 18 | — | 33 | 38 | 50 | 3,839 | — | ||||||||||||||||||||||||
|
Total
|
1,218,156 | 951,808 | |||||||||||||||||||||||||||||||
|
ALPHAVILLE
BRAND
|
|||||||||||||||||||||||||||||||||
|
Others
|
18,063 | 42,839 | |||||||||||||||||||||||||||||||
|
Jacuhy
1 & 2
|
Dec-07
|
651,209 | 73 | 29 | 97 | 96 | 65 | 42,839 | 30,744 | ||||||||||||||||||||||||
|
Recife
|
Aug-06
|
270,833 | 100 | 93 | 99 | 93 | 65 | 5,371 | 19,118 | ||||||||||||||||||||||||
|
Salvador
2
|
Feb-06
|
351,154 | 100 | 97 | 97 | 97 | 55 | 510 | 19,057 | ||||||||||||||||||||||||
|
Rio
das Ostras 1 & 2
|
Sep-07
|
515,928 | 79 | 35 | 100 | 96 | 58 | 35,368 | 16,613 | ||||||||||||||||||||||||
|
Campo
Grande
|
Mar-07
|
225,269 | 99 | 90 | 93 | 75 | 67 | 4,884 | 15,732 | ||||||||||||||||||||||||
|
Santana
Residencial
|
Mar-05
|
259,544 | 100 | 97 | 48 | 33 | 50 | 7,955 | 9,398 | ||||||||||||||||||||||||
|
Londrina
2
|
Dec-07
|
214,592 | 72 | 34 | 99 | 49 | 63 | 12,516 | 5,655 | ||||||||||||||||||||||||
|
Cuiabá
II
|
May-08
|
150,896 | 78 | 24 | 79 | 33 | 60 | 10,107 | 4,423 | ||||||||||||||||||||||||
|
Manaus
|
Jun-08
|
166,938 | 25 | 6 | 82 | 78 | 63 | 6,080 | 4,111 | ||||||||||||||||||||||||
|
João
Pessoa
|
Mar-08
|
97,759 | 72 | 12 | 100 | 100 | 100 | 10,189 | 1,556 | ||||||||||||||||||||||||
|
Barra
da Tijuca
|
Dec-08
|
268,259 | 74 | — | 73 | — | 35 | 12,899 | — | ||||||||||||||||||||||||
|
Caruaru
|
Mar-09
|
113,219 | 16 | — | 98 | — | 70 | 4,340 | — | ||||||||||||||||||||||||
|
Litoral
Norte II
|
Sep-08
|
159,259 | 20 | — | 57 | — | 66 | 3,347 | — | ||||||||||||||||||||||||
|
Total
|
180,552 | 169,247 | |||||||||||||||||||||||||||||||
|
TENDA
BRAND
|
|||||||||||||||||||||||||||||||||
|
Tenda
|
726,098 | 71,503 | |||||||||||||||||||||||||||||||
|
Total
|
726,098 | 71,503 | |||||||||||||||||||||||||||||||
|
Total:
|
2,124,806 | 1,192,559 | |||||||||||||||||||||||||||||||
Operating
costs
Operating
costs, as a percentage of net operating revenue, increased to 71.7% in the first
nine months of 2009 as compared to 68.3% in first nine months of 2008. This
greater increase in operating costs compared to the increase in revenue for the
comparable period, was mainly due to the full consolidation of Tenda’s operating
costs in the nine-month period ended September 30, 2009 and a higher operating
cost from operating revenue in lower income real estate
market.
Gross
profit
As a
result, gross profit in first nine months of 2009 totaled R$601.2 million,
representing an increase of 58.9%, as compared to R$378.4 million in first nine
months of 2008. In first nine months of 2009, the gross margin generated from
Gafisa’s operations decreased to 28.3% as compared to 31.7% in first nine months
of 2008, mainly due to the impact of the SAP implementation described
above.
Selling
expenses
Selling
expenses in first nine months of 2009 totaled R$153.3 million, a 75.2% increase
as compared to R$87.5 million in first nine months of 2008. This increase was
primarily due to the acquisition of a 60% interest in Tenda in
2008. If, as expected, Tenda’s sales revenues increase in the next
few months, its sales platform costs will be diluted and its fixed cost ratios
will improve.
General
and administrative expenses
General
and administrative expenses totaled R$172.8 million in first nine months of
2009, representing an increase of 64.6%, as compared to R$105.0 million in first
nine months of 2008, mainly due to the consolidation of Tenda’s results and
unique sales model, as well as Gafisa’s expansion and business diversification
strategy. As compared to the first nine months of 2008, the
consolidated general and administrative expenses/net revenue ratio improved in
the first nine months of 2009, decreasing by approximately 80 basis
points.
Depreciation
and amortization
Depreciation
and amortization in the first nine months of 2009 totaled R$24.2 million,
representing a decrease of R$5.0 million, as compared to R$29.6 million in
first nine months of 2008. The decrease is mainly due to the introduction of
CPC(O)02 which prohibits goodwill amortization starting in 2009.
Financial
income and expenses, net
Net
financial expense totaled R$52.9 million in the first nine months of 2009 as
compared to net financial income of R$40.1 million in the first nine months of
2008. Financial expenses during the first nine months of 2009 totaled R$159.3
million, an increase of R$135.0 million over R$24.3 million in the first nine
months of 2008 mainly due to a higher net debt position, lower interest
capitalization and a higher spread between the interest paid and
received.
The
outstanding debt as of September 30, 2009, was R$2,531.7 million, a 84.6%
increase as compared to September 30, 2008, mainly due to the consolidation of
Tenda. Financial income increased from R$64.4 million in the first
nine months of 2008 to R$106.4 million in the first nine months of 2009, mainly
due to higher cash position, partially offset by a lower interest
rate.
Taxes
on income
Income
and social contribution taxes in the first nine months of 2009 totaled R$64.9
million, a 28.6% increase as compared to the first nine months of 2008 of R$50.5
million. In the first nine months of 2009, the combined effective income and
social contribution tax rates was 23.5% as compared to 27.6% in the same period
of 2008.
Net
income
In the
first nine months of 2009 Gafisa reported net income of R$158.2 million (R$211.7
million before noncontrolling interests), a 63.0% increase as compared to a net
income of R$97.1 million (R$132.6 million before noncontrolling interests) in
the first nine months of 2008, mainly due to the improved results and the merger
of Tenda.
Liquidity
and Capital Resources
Our transactions are financed mainly
through the contracting of real estate financing, securitization of
receivables and placement
of debentures. When
necessary and in accordance with market demands, we carry out long-term
financing for the sale of our developments. In order to turn over our capital
and accelerate its return, we try to transfer to banks and sell to the market
the receivables portfolio of our completed units. In March 2009 and June 2009,
we completed securitization of receivables from completed units for
total net proceeds of R$140.0 million.
We consistently review opportunities for
acquisition and investments. We consider different types of investments, either
direct or through our subsidiaries and jointly-controlled entities. We finance
such investments using capital market financings, capital increases or a
combination thereof.
The current climate in global credit
markets has impacted our ability to secure financing at favorable interest rates.
However, construction
financing lines of credit are available and we have fulfilled substantially all
of our construction financing needs for 2009 at rates that have increased an
average of up to 100 basis points per year since 2008. In order to mitigate the
effects of the current global credit crisis, the Brazilian government has
announced additional lines of credit to assist the construction industry and its
customers, including R$6 billion from the FGTS (a government severance indemnity
fund for employees). In addition, the Brazilian government has indicated that it
will finance up to 20% of construction costs through the Brazilian Saving and
Loan System (Sistema Brasileiro
de Poupança e Empréstimo –
SBPE).
The turmoil in credit markets has not
had a material impact on our customers’ ability to obtain bank mortgage loans
throughout 2008 and the beginning of 2009. Furthermore, since mid-2009 the
credit markets have improved and interest rates have gone down about 250 basis
points, from 10.5% to 8%. Delinquency rates among our customers have
not increased materially in the first nine months of 2009 as compared to the
same period in 2008.
The following table shows the balance of
our receivables from clients’ portfolio for the development and sale
of properties for the periods presented:
|
As
of September 30,
(in
thousands of reais)
|
||||||||
|
2009
|
2008
|
|||||||
|
Real
estate development receivables:
|
||||||||
|
Current
|
1,718,110 | 828,369 | ||||||
|
Non-current
|
1,662,300 | 733,764 | ||||||
|
Total
|
3,380,410 | 1,562,133 | ||||||
|
Receivables
to be recognized on our balance sheet according to percentage of
completion method:
|
||||||||
|
Current
|
1,574,407 | 632,058 | ||||||
|
Non-current
|
1,407,036 | 1,311,768 | ||||||
|
Total
|
2,981,443 | 1,943,826 | ||||||
|
Total
clients’ portfolio
|
6,361,853 | 3,505,959 | ||||||
Loans made to our clients are generally
adjusted on a monthly basis: (1) during the construction phase, by the INCC in
São Paulo, Rio de Janeiro and other Brazilian cities; and otherwise, (2) on the
stated date in the contract, by the IGP-M plus 12% per
annum.
We limit our exposure to credit risk by
selling to a broad customer base and by continuously analyzing the credit of our
clients. As of September 30, 2009, our clients’ defaults amounted to 3.7% of our
accounts receivable. We recorded a provision of R$18.8 million as an allowance for doubtful
accounts.
Cash Flows
Operating
activities
Net cash used in operating activities
totaled R$445.9 million in the first nine months of 2009 as compared to R$620.4
million in the same period of 2008 mainly due to inventory reduction, partially
offset by the acquisition of land to support future launches, the higher level
of ongoing construction projects and the increase of accounts
receivable.
Investment
activities
Net cash used in investment activities,
including the acquisition of property, equipment and new investments, totaled
R$109.4 million in the first nine months of 2009 as compared to R$32.7
million in the same period of 2008.
Our disbursements in the first nine
months of 2009 was mainly related to restricted cash for loan guarantees in the
amount of R$74.4 million and investments in property and equipment in the amount
of R$35.0 million.
Financing
activities
Net cash provided by financing
activities in the first nine months of 2009 totaled R$975.1 million, an increase
of R$62.0 million, compared to the net cash provided by financing activities in
the same period of 2008 of R$913.1 million. The cash provided in the first nine
months of 2009 was mainly attributable to an increase in loans and
financing.
In January 2008, we formed an
unincorporated venture represented by 13,084,000 Class A quotas fully paid by us
and 300,000,000 Class B quotas from our venture partner, which represented a
R$300.0 million investment in the venture by our venture partner. The venture,
which will use these funds to acquire equity investments in real estate
developments, has a term that ends on January 31, 2017 at which time we are
required to fully redeem our venture partner’s interest. The venture partner receives
an annual dividend substantially equivalent to the variation in the Interbank
Certificate of Deposit (CDI) rate. The venture’s charter provides that we must comply
with certain covenants, including the maintenance of minimum net debt and
receivables, in our capacity as lead partner. We and the venture are currently
in compliance with these covenants. The redemption of Class B quotas will start
on January 31, 2012.
Pledged mortgage receivables and cash
and cash equivalents
As of September 30, 2009, substantially
all of our mortgage receivables totaling R$ 3.5 billion are pledged. In addition,
R$151.3 million of our cash
and cash equivalents are restricted as they have been
pledged.
Indebtedness
When appropriate, we have incurred
indebtedness
with SFH, which offers
lower interest rates than the private market. When our customers obtain a
mortgage, we use the proceeds to amortize our SFH indebtedness. We intend to
continue our strategy of maintaining low levels of debt comprised mainly of
transactions within SFH or long-term transactions.
As of September 30, 2009 we had
outstanding debt in the total amount of R$2,531.7 million, an increase of
83.9% as compared to the same period in
2008. Our indebtedness
including the accrued interest consists of: (1) debenture issuance totaling
R$1,324.8 million; (2) working capital loans in the total amount of R$733.3
million; and (3) other loans (mainly SFH) in the total amount of R$473.6
million and which
excludes the R$300.0 million payable to our
unincorporated venture partners.
In order to mitigate interest rate and
exchange rate volatility risks, we have entered into cross-currency interest
rate swap contracts in the total amount of our fixed-rate loans denominated in
foreign currency, which amounted to the notional amount of R$100.0 million as of
September 30, 2009.
The table below sets forth information
on our loans, financing and debentures as of September 30,
2009:
|
Maturity
Schedule
|
||||||||||||||||||||
|
Total
|
Less
than 1 year
|
1-3
years
|
3-5
years
|
More
than 5 years
|
||||||||||||||||
|
(in
thousands of reais)
|
||||||||||||||||||||
|
Loans
and financing
|
733,331 | 382,900 | 348,106 | 2,325 | — | |||||||||||||||
|
Debentures
|
1,324,781 | 80,781 | 944,000 | 300,000 | — | |||||||||||||||
|
Housing
Finance System
|
473,615 | 187,407 | 286,208 | — | — | |||||||||||||||
|
Others
|
— | — | — | — | — | |||||||||||||||
|
Total
|
2,531,727 | 651,088 | 1,578,314 | 302,325 | — | |||||||||||||||
In addition to the loans listed above,
we received contributions from venture partners of R$300.0 million in 2008 which
will be fully redeemed by us in 2014.
Debenture program
Our first debenture program was approved
by and registered with the CVM on April 29, 2005. This enabled us to make public
offerings of non-convertible debentures, secured on property and/or with
guarantees subordinated to our general creditors. The offer of debentures
through the program was limited to a maximum value of R$200
million.
On December 1, 2005, we issued R$112.5
million aggregate principal amount of debentures due December 1, 2010 under our
first debenture program. This third issuance consisted of 11,250 nominal,
non-convertible debentures with a face value of R$10,000 each and guaranteed by
certain real estate credit rights held by us. The debentures provide for the
payment of annual interest corresponding to 100% of the CDI rate, calculated
from the date of issuance, plus a 2% annual spread. As of December 31, 2008,
there was no outstanding balance under this second issuance.
On September 29, 2006, our second public
offering of debentures was approved by the CVM. Under the second debenture
program we can issue up to R$500.0 million in debentures that are not
convertible into shares. The debentures are subordinated, and may be secured or
unsecured.
We issued one series of debentures under
the second debenture program for R$240.0 million aggregate principal amount due
September 1, 2011. This is our fourth issuance which consists of 24,000 nominal,
non-convertible debentures with a face value of R$10,000 each with subordinated
guarantees. The debentures provide for the payment of annual interest
corresponding to 100% of CDI rate, calculated from the date of issuance, plus a
1.3% annual spread (based on a 252 business-day year).
The first issuance under the second
debenture program provides that the following indices and limits be calculated
on a semi-annual basis by the trustee based on our consolidated financial
statements, drawn-up according to Brazilian GAAP, that we file with the CVM: (1)
total debt minus SFH debt minus cash does not exceed 75% of
shareholders’ equity; (2) total receivables plus
post-completion inventory is equal to or greater than 2.0 times total debt; and
(3) total debt minus available funds is less than R$1.0
billion, as adjusted for inflation, where:
available funds is the sum of our cash,
bank deposits and financial investments;
|
|
·
|
SFH
debt is the sum of all our loan agreements that arise from resources of
the SFH;
|
|
|
·
|
total
receivables is the sum of our short and long-term “development and sale of
properties” accounts, as provided in our financial
statements;
|
|
|
·
|
post-completion
inventory is the total value of units already completed for sale, as
provided on our balance sheet; and
|
|
|
·
|
total
debt is the sum of our outstanding debt, including loans and financing
with third parties and fixed income securities, convertible or not, issued
in local or international capital
markets.
|
Our indenture under the debenture
program contains various covenants including, among other
things:
|
|
·
|
limitations
on our ability to incur debt;
|
|
|
·
|
limitations
on the existence of liens on our
properties;
|
|
|
·
|
limitations
on transactions with related parties, which generally must be on terms no
less favorable than those that could be obtained in a comparable
arm’s-length transaction; and
|
|
|
·
|
maintenance
of certain financial ratios calculated based on Brazilian
GAAP.
|
Considering that we are now a much
larger company, and the absolute covenant that established that we could not
have net debt over R$1 billion did not correspond to the current size and equity
position of our company we renegotiated this covenant with bondholders,
obtaining a 97.6% rate of approval. The prior covenant defined as net debt
(excluding SFH debt)/equity < 75% was changed to net debt (excluding
project debt)/(equity + minority shareholders) < 75%. Project debt includes SFH and FGTS
funding, thus reducing the covenant measure to 14,8% allowing the company significant
additional financing flexibility.
In exchange for the changes to the
existing covenants, Gafisa’s interest payment increased to CDI +
3.25% from CDI + 1.3% as of July 31, 2009, a rate that is in line with current
market rates and represents an average increment of R$2.4 million in interest
payment per year. Additionally, the debentures may be redeemed at any time by
the Company with a 2.5% premium from July 31, 2009 to maturity date, calculated
pro rata temporis from the date of redemption until the maturity date. In June
2008, the CVM approved our third debenture program under which we can issue up
to R$1.0 billion in non-convertible debentures. The first issuance under the
third debenture program consisted of 25,000 nominal, non-convertible debentures
with a face value of R$10,000, which were issued in two series totaling R$250
million. The debentures provide for the payment of annual interest corresponding
to 107.2% of the CDI rate, calculated from the subscription date, with a
maturity of 10 years.
We issued
two series of debentures for R$250.0 million aggregate principal amount due in
2011. This is
our sixth issuance which consists of 25 nominal, non-convertible debentures with
a face value of R$10,000,000 each with subordinated guarantees. The debentures
provide for the payment of annual interest corresponding to 100% of CDI rate,
calculated from the date of issuance, plus 2.0% (for the first series of 15
debentures) to 3.25% (for the second series of 10 debentures) annual spread
(based on a 252 business-day year).
Tenda’s
first debenture program was approved by and registered with the CVM in April
2009. Tenda’s first debenture program enabled Tenda to make public offerings of
non-convertible debentures, secured on property and/or with guarantees
subordinated to its general creditors. The offer of debentures through the
program was limited to a maximum value of R$600 million.
In April
2009, Tenda issued R$600 million aggregate principal amount of debentures due in
2014 under its first debenture program. This first issuance consisted of one single nominal,
non-convertible debenture(s) with a face value of R$600 million and guaranteed
by certain real estate credit rights held by Tenda. The debenture(s) provides
for the payment of annual interest corresponding to 100% of the TR rate,
calculated from the date of issuance, plus an 8% annual spread.
Certain
covenants contained in the agreements governing our debenture programs restrict
our ability to take certain actions, including incurring additional debt and may
require us to repay or refinance our indebtedness if we are unable to meet
certain ratios. Our second and third debenture programs have cross default
provisions whereby an event of default or prepayment of any other debt above
R$5.0 million and R$10.0 million, respectively, could require us to prepay the
indebtedness under the second or third debenture program. The ratios and minimum
or maximum amounts generally required by those covenants and our performance
against those minimum or maximum levels are summarized below:
|
Actual
|
||||||||
|
September
30, 2009
|
December
31, 2008
|
|||||||
|
Second
program - first issuance
|
||||||||
|
Total
debt minus project debt minus cash does not exceed 75% of shareholders’
equity plus noncontrolling shareholders
|
15 | % | N/A | |||||
|
Total
receivables plus post-completion inventory is equal to or greater than 2.0
times total debt
|
2.6 | 3.3 | ||||||
|
Third
program - first issuance
|
||||||||
|
Total
debt minus SFH debt minus cash does not exceed 75% of shareholders’
equity
|
54 | % | 35 | % | ||||
|
Total
receivables plus post-completion inventory is equal to or greater than 2.2
times net debt
|
4.5 | 5.5 | ||||||
We expect
to comply with the covenants in the agreements governing our outstanding
indebtedness which may limit our long-term growth prospects by hindering our
ability to incur future indebtedness or grow through acquisitions.
Financing through the Housing Finance
System (SFH)
Most of our financing is incurred
directly or through our subsidiaries or jointly-controlled entities from the
principal banks that operate within SFH. On December 31, 2008, the interest
rates on these loans generally varied between 6.2% and 11.4% per annum, plus TR,
and the loans generally mature through December 2010. This financing is secured
by mortgages on property and by security interests on the receivables from
clients. On December 31, 2008 we had 77 loan agreements in effect, with a
balance of R$372.3 million. At the same date we also had R$1,128.2
million in aggregate principal amount of financing agreements with SFH, the
funds of which will be released through the date of completion as construction
of the corresponding developments progress.
Securitization Fund –
FIDC
On March 31, 2009, we entered into a
securitized receivables transaction, whereby we assigned a portfolio of select
residential and commercial real estate receivables to “Gafisa FIDC” which issued senior and subordinated
quotas. This first issuance of senior quotas was made through an offering
restricted to qualified investors. Subordinated quotas, equivalent to 21% of the
amount issued, were subscribed exclusively by Gafisa S.A. Gafisa FIDC acquired
the present value of the portfolio based on an agreed discount
rate. We provide Gafisa FIDC with administrative and accounting
services including the reconciliation and analysis of receivables and
collections and can be replaced by another collection agent in the event of
non-fulfillment with contractual parameters. The senior and subordinated quotas
are remunerated based on the IGP-M index plus interest of 12% per year. Because
the subordinated quotas have a disproportional percentage of the expected
losses, Gafisa FIDC was considered a variable interest entity and was fully
consolidated in our financial statements as at March 31,
2009.
The receivables portfolio assigned
totaled R$119.6 million of which we received the equivalent of the present value
of R$88.7 million in cash. We consolidated receivables of R$88.7
million assigned to Gafisa FIDC in our financial statements at March 31, 2009
and recorded the mandatorily redeemable equity interest in the securitization
fund of R$69.7 million as noncontrolling interests. The balance of our subordinated quotas
was eliminated on consolidation.
Securitization Fund –
CCI
On June 26, 2009, we entered into a
securitization transaction by means of which we assigned part of our receivables
in the total amount of R$89.1 million to third parties in exchange for cash, at
the transfer date, discounted to present value, in the total amount R$ 69.3
million, recorded as
“Other creditors - credit
assignment.” As a result of the
securitization, eight CCI
an average of R$8.7 million
each were issued backed by our receivables with installments due on and up to June 26,
2014 (“CCI-Investor”).
Pursuant to Article 125 of the Brazilian
Civil Code, CCI-Investor have general guarantee represented by
statutory lien on real estate units, as soon as the condition included in the registration
takes place, in the record of the
respective real estate units, (i) of the
assignment of Receivables from the Assignors to SPEs, as provided for in Article
167, item II, (21) of Law No. 6,015, of December 31, 1973; and (ii) of the issue
of CCI – Investor by SPEs, as provided for in Article 18, paragraph 5 of Law No.
10,931/04.
Gafisa was hired and will be remunerated
for performing, among other duties, the conciliation of the receipt of
receivables, guarantee the CCIs, and the collection of past due receivables. The
transaction structure provides for the substitution of Gafisa as collection
agent in case of non-fulfillment of the responsibilities described in the
collection service contract.
Tabular
Disclosure of Contractual Obligations
The table
below presents the maturity of our significant contractual obligations as of
September 30, 2009. The table does not include deferred income tax
liability.
|
Maturity
Schedule
|
||||||||||||||||||||
|
Total
|
Less
than
1
year
|
1-3
years
|
3-5
years
|
More
than
5
years
|
||||||||||||||||
|
(in
thousands of R$)
|
||||||||||||||||||||
|
Loans
and financing
|
1,206,946 | 570,307 | 634,314 | 2,325 | — | |||||||||||||||
|
Debentures
|
1,324,781 | 80,781 | 944,000 | 300,000 | — | |||||||||||||||
|
Interest(1)
|
619,408 | 200,210 | 349,806 | 69,392 | — | |||||||||||||||
|
Real
estate development obligations(2)
|
2,808,848 | 2,227,028 | 581,820 | — | — | |||||||||||||||
|
Obligations
for land purchase
|
427,039 | 183,522 | 188,503 | 55,013 | — | |||||||||||||||
|
Obligation
to venture partners(3)
|
300,000 | — | 100,000 | 200,000 | — | |||||||||||||||
|
Credit
assignments
|
128,712 | 60,819 | 67,645 | 248 | — | |||||||||||||||
|
Obligations
from operating leases
|
27,236 | 4,870 | 12,102 | 10,264 | — | |||||||||||||||
|
Acquisition
of investments
|
26,976 | 26,976 | — | — | — | |||||||||||||||
|
Other
accounts payables
|
55,419 | 12,309 | 43,110 | — | — | |||||||||||||||
|
Total
|
6,625,665 | 3,366,822 | 2,921,300 | 637,242 | — | |||||||||||||||
|
(1)
|
Estimated interest payments are
determined using the interest rate at December 31, 2008. However, our
long-term debt is subject to variable interest rates and inflation
indices, and these estimated payments may differ significantly from
payments actually made.
|
|
(2)
|
Including obligations not
reflected in the balance—CFC Resolution No. 963. Pursuant to Brazilian
GAAP, and since the adoption of CFC Resolution No. 963, the total costs to
be incurred on the units launched but not sold are not recorded on our
balance sheet. As of December 31, 2008, the amount of “real estate development
obligations” related to units launched but not
sold was R$1,167.5 million.
|
|
(3)
|
Obligation to venture partners
accrues a minimum annual dividend equivalent to the variation in CDI,
which is not included in the table above. The contribution of R$300.0
million received in 2008 will be redeemed by us in
2014.
|
We have a commitment to purchase the
remaining 40% of Alphaville’s capital, not yet measurable and
consequently not recorded, which will be based on a fair value appraisal of
Alphaville prepared at the future acquisition dates. The acquisition agreement
provides that we will purchase the remaining 40% of Alphaville by January 2012
(20% within three years from the acquisition date and the remaining 20% within
five years from the acquisition date) in cash or shares, at our sole
discretion.
We also have provisions for
contingencies in relation to labor, tax and civil lawsuits in the total
aggregate amount of
R$70.0 million, net of
court deposits in the total
amount of R$50.3 million,
as of September 30, 2009.
Working
Capital
We
believe that our current working capital is sufficient for our present
requirements and that our sources of funds, including third party loans, are
sufficient to meet the financing of our activities and cover our need for funds
for at least the next twelve months.
Off Balance Sheet
Arrangements
We currently do not have any off-balance
sheet arrangements or significant transactions with unconsolidated entities not
reflected in our consolidated financial statements. All of our interests in
and/or relationships with our subsidiaries or jointly-controlled entities are
recorded in our consolidated financial statements.
Quantitative and Qualitative Disclosures
About Market Risks
We are exposed to market risks arising
during the normal course of our business. These market risks mainly involve the
possibility that changes in interest rates may impact the value of our financial
liabilities. See “Part Three: Risk Factors.”
Interest
Rate Risks
Our revenue and profitability are
affected by changes in interest rates due to the impact that these changes have
on financial expenses under its variable-rate debt instruments, interest revenue
from receivables and any interest revenue generated from its investments. As of
September 30, 2009, our indebtedness totaled R$2,531.7 million, all of which was indexed to
certain indices, specifically CDI and the Reference Rate index (Taxa
Referencial), or TR. In the
event of an increase in interest rates corresponding to 10% of the rates
currently applicable to our indebtedness, our annual financial expenses and
costs as of September 30, 2009 would have increased by approximately
R$25.7 million.
Inflation Risks
Our revenue and profitability may be
affected by changes in the inflation rate due to the impact that these changes
have on our receivables, especially on adjustment of installments, monetary
variation and level of default.
Liquidity Risks
We manage our liquidity risks through a
conservative financial management based on capital structure with reduced
leveraging. In addition, our management constantly monitors its
assets and liabilities.
Legal Proceedings
As of September 30, 2009, the
provisions for
contingencies for civil lawsuits included R$71.3 million related to legal cases
in which the Company was cited as a successor in foreclosure actions in which
the original debtor was a former shareholder of the Company; Cimob Companhia
Imobiliária (“Cimob”), among other shareholder related
parties. The plaintiff claims that the Company should be held liable for
the debts of Cimob. During the nine-month period ended September 30, 2009, the
Company recorded additional provision in the amount of R$ 65.6 million following unfavorable
judicial decisions, which led the Company to seek new legal opinions and
reevaluate the estimate of probable loss. Guarantee insurance provides coverage
for R$17.6 million, a further R$36.9 million is deposited in escrow, in
connection with the blocking of Gafisa’s bank accounts, and there is also the retaining of
Gafisa’s treasury shares to guarantee the
foreclosure. The Company has filed appeals against all decisions, as it believes
that reference to Gafisa in the lawsuits is not legally justifiable, and
Management is confident that its position will prevail enabling the escrow
deposits to be released. In other similar cases, the Company has obtained
favorable decisions in which it was awarded final and unappealable decisions overturning claims where the
Company was initially found to be liable for certain debts of Cimob. The
ultimate outcome of the Company’s appeal, however, cannot be predicted
at this time.
U.S.
GAAP Reconciliation
We
prepare our financial statements in accordance with Brazilian GAAP, which
differs in significant respects from U.S. GAAP. Our net income, in accordance
with Brazilian GAAP, was R$109.9 million, R$91.6 million and R$44.0 million, for
the years ended December 31, 2008, 2007 and 2006, respectively. Our net income,
in accordance with Brazilian GAAP, was R$ 158.2 million and R$ 97.1 million, for
the nine-month periods ended September 30, 2009 and 2008, respectively. Under
U.S. GAAP, we would have reported a net income of R$299.7
million,
R$63.5 million and R$24.8 million for the years ended December 31, 2008, 2007
and 2006, respectively. Our net
income (loss), in accordance with US GAAP, was R$(53.5) million and R$142.5 million,
for the nine-month periods ended September 30, 2009 and 2008,
respectively.
Our
shareholders’ equity, in accordance with Brazilian GAAP, was R$1,612.4 million
as of December 31, 2008, R$1,498.7 million as of December 31, 2007 and R$807.4
million as of December 31, 2006. Under U.S. GAAP, we would have reported
shareholders’ equity of R$2,174.4 million, R$1,481.4 million and R$795.3 million
as of December 31, 2008, 2007 and 2006, respectively. Our shareholders’ equity,
in accordance with Brazilian GAAP, was R$ 1,783.4 million at September 30, 2009.
Our shareholders’ equity, in accordance with US GAAP, was R$2,198.9 million at
September 30, 2009.
The
following items generated the most significant differences between Brazilian
GAAP and U.S. GAAP in determining net income and shareholders’
equity:
|
|
·
|
revenue
recognition;
|
|
|
·
|
stock
option plans;
|
|
|
·
|
business
combinations;
|
|
|
·
|
effects
of deferred taxes on the differences above;
and
|
|
|
·
|
noncontrolling interests.
|
For a
discussion of the principal differences between Brazilian GAAP and U.S. GAAP as
they relate to our financial statements and a reconciliation of net income and
shareholders’ equity see the notes to our consolidated financial statements
included elsewhere or incorporated by reference in this prospectus/information
statement.
The
following discussion of Tenda’s financial condition and results of operations
should be read together with its audited financial statements prepared in
accordance with Brazilian GAAP, as of December 31, 2008 and 2007, and for the
years ended December 31, 2008, 2007, and 2006 included elsewhere in this
preliminary prospectus/information statement, and with Tenda’s unaudited interim
financial statements, prepared in accordance with Brazilian GAAP, as of
September 30, 2009 and for the nine-month periods ended September 30, 2009 and
2008 and the corresponding notes thereto. This section includes forward-looking
statements that are subject to risks and uncertainties. Tenda’s actual results
may differ materially from those expressed in these forward-looking statements
as a result of several factors, including, but not limited to, those included in
“Part Three: Risk Factors.”
Overview
On
September 1, 2008, the management of Tenda and Gafisa entered into an agreement
by means of which a wholly owned subsidiary of Gafisa, FIT was to be merged into
Tenda.
On October 21, 2008, the merger of FIT into Tenda was approved at an EGM
of Tenda. As a result of the merger, 240,391,470 new nominative book-entry
common shares without par value were issued and were fully subscribed and
paid-in by the shareholders of FIT, on behalf of and for the account of the only
shareholder of the merged company, Gafisa. The merged net assets and capital of
Tenda increased by R$62.5 million to R$ 755.2 million, represented by
400,652,450 common shares. The following discussion of Tenda’s
results of operations include the operations of FIT starting from October 21,
2008.
Critical
Accounting Policies and Estimates
Tenda’s
financial statements included elsewhere in this preliminary
prospectus/information statement were prepared in accordance with Brazilian
GAAP. The preparation of financial statements in accordance with Brazilian GAAP
requires management to make judgments and estimates that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Estimates are used for, among
other things, the
selection
of the useful lives of movable assets and equipment, provisions necessary for
contingent liabilities, taxes, budgeted costs and other similar charges.
Although Tenda believes that its judgments and estimates are based on reasonable
assumptions that are subject to several risks and uncertainties and are made in
light of information available to it, Tenda actual results may differ from these
judgments and estimates.
Tenda
sets forth below summarized information related to its critical accounting
policies. See the notes to Tenda’s financial statements included elsewhere in
this preliminary prospectus/information statement for further information on
these and other accounting policies Tenda adopts.
Development
and sale of real estate
Real
estate sales results are calculated considering the contractual revenues plus
monetary variations less the following costs: expenditures on purchase and
regularization of land, and direct and indirect costs related to construction.
Real estate sales results are recognized considering the following:
|
(1)
|
For
completed units: results are recognized when the sale is made, regardless
of the receipt of the contractual
amount;
|
|
(2)
|
For
uncompleted units, the results are recognized according to the criteria
established by the CFC (Federal Accounting Council) Resolution No. 963/03
as follows:
|
|
|
·
|
Sales
revenue and land and construction costs inherent to the respective
developments are recognized in income based on the
percentage-of-completion method of each venture, this percentage being
measured based on the incurred cost corresponding to the total estimated
cost of respective ventures, including costs of
land;
|
|
|
·
|
The
sales revenue recognized according to item (1), including interest and
inflation-indexation charges, net of installments received, are recorded
in receivables from clients. Any amount received that exceeds the amount
of revenues recognized is recorded as advances from
clients.
|
|
|
·
|
Fixed
interest rates are recognized in income on an accrual basis, regardless of
their receipt; and
|
|
|
·
|
financial
charges on accounts payable from the acquisition of land and real estate
credit operations incurred during the construction period are included in
the costs incurred, and recognized in Tenda’s results upon the sale of the
units of the venture to which they are directly
related.
|
Taxes on
the difference between revenues from real estate development and taxable
accumulated revenues are calculated and recognized when the difference in
revenues is recognized. Other income and expenses, including advertising and
publicity, are included in results as they are incurred using the accrual basis
of accounting.
Allowance
for doubtful accounts
Allowances
for doubtful accounts are provided in an amount considered sufficient by
management for credits for which recovery is considered doubtful.
Consolidation
Tenda
structures some of its projects through either its subsidiaries or
jointly-controlled entities in partnership with third parties both incorporated
as special purposes vehicles. Tenda’s consolidated financial statements include
its accounts and those of all its subsidiaries, with separate disclosure of the
participation of noncontrolling shareholders. The consolidated
financial statements of Tenda are prepared in conformity with applicable
consolidation practices and legal provisions. Accordingly, intercompany
investments and transactions are eliminated upon consolidation, including
accounts, income and expenses and unrealized results. Jointly-controlled
investees are consolidated based on the proportion of equity interest held by
the Company.
Properties
for sale
Tenda’s
properties for sale are recorded at construction or acquisition cost, or market
value, whichever is lower. In the case of uncompleted units, the portion in
inventories corresponds to the costs incurred in units that have not yet been
sold.
Property
cost is composed of expenditures for the following: purchase of land (cash or
barter stated at fair value), materials, labor and development expenses, as well
as financial charges during construction.
Land is
recorded at acquisition cost. Tenda acquires portions of land through swaps
where, in exchange for the land acquired, it undertakes to deliver real estate
units of developments in progress. Land acquired through barter transactions are
recorded at fair value.
When
construction costs exceed the undiscounted cash flows expected from sales of
completed units, properties under construction or land under development, an
impairment loss is recorded in the period in which it is determined that the
carrying amount is not recoverable.
Tenda
properties for sale are considered long-lived assets and Tenda annually reviews
the net book value of assets with the purpose of evaluating events or changes in
economic, operating or technological circumstances that may indicate impairment
or impairment loss.
Tenda has
evaluated all of its developments for impairment and has not identified any
cases of impairment for any of its properties for sale and no impairment
provisions have been recorded for any of its developments for the years ended
December 31, 2008, 2007 or 2006.
Adjustment
to present value of assets and liabilities
The INCC
inflation-indexed receivables from installment sales of unfinished units, which
are generated prior to delivery of the units and do not accrue interest, are
discounted to present value. The present value adjustment is accreted to net
operating revenue as we finance our clients through to the delivery of the
units. Monetary assets and liabilities are adjusted to present value in the
initial recognition of the transaction, taking into consideration the
contractual cash flows, the interest rate established, and those that are
implicit in certain cases, of the respective assets and liabilities, and rates
used in the market for similar transactions.
Taxes
on income
As
permitted by tax legislation, gross operating revenue is taxed on a cash basis
and not according to the criterion that was for recognizing this. Taxes on
income in Brazil comprise a federal statutory income tax rate of 15% plus 10%
and social contribution of 9%. The effects of income tax and social
contributions are recorded considering the temporary differences from
recognition of revenues and expenses for accounting and tax
purposes.
New Developments and Contracted
Sales
New
developments
The table
below presents detailed information on Tenda’s new developments for the periods
indicated, including developments launched by its jointly-controlled entities in
partnership with third parties:
|
As
of September 30,
|
As
of and for the year ended December 31,
|
|||||||||||||||||||
|
2009
|
2008
|
2008
|
2007
|
2006
|
||||||||||||||||
|
New
developments
|
||||||||||||||||||||
|
Number
of projects launched
|
18 | 92 | 101 | 119 | 16 | |||||||||||||||
|
Number
of units launched (1) (2)
|
3,951 | 20,274 | 22,274 | 25,892 | 1,863 | |||||||||||||||
|
Potential
sales volume (thousand)
|
480,453 | 1,728,101 | 1,944,472 | 1,997,673 | 122,763 | |||||||||||||||
|
Percentage
of Tenda investment
|
89 | % | 95 | % | 92 | % | 100 | % | 100 | % | ||||||||||
|
(1)
|
The
units delivered in exchange for land pursuant to swap agreements are not
included.
|
|
(2)
|
It
does not include launched usable area for FIT’s developments for the years
ended December 31, 2007 and 2006.
|
In the
nine months period ended September 30, 2009, Tenda launched 18 residential
developments with a total potential sales value of R$480.5 million, representing
a decrease of 72.2% when compared to the same period of 2008. This
relevant reduction was a direct consequence of the uncertain macroeconomic
scenario in the second half of 2008 and continuing through the beginning of
2009, forcing Tenda to maintain a conservative posture in the first 5 months of
the 2009 and adjust its launch schedule to match prevailing consumer demand and
target an optimization of inventory levels. Tenda’s
investments, as a percentage of total launches, have decreased from 95% to 89%
as the number of FIT developments structured through jointly-controlled entities
in partnership with third parties has increased.
In 2008,
Tenda launched 101 residential developments with a total potential sales value
of R$1,944.5 million. This sales potential value was approximately 2.7% lower
than that achieved in 2007, during which Tenda launched residential developments
totaling R$ 1,997.7 million. The slightly lower launches on a year-over year
basis was mostly a consequence of the uncertain macroeconomic scenario in the
second half of 2008 forcing the company to adopt a conservative posture lowering
the pace of launches while targeting on the sale of inventories.
The
affordable entry-level business accounted for 83.2% of Tenda’s total sales for
the year ended December 31, 2008. In the year ended December 31, 2007, the
affordable entry-level business represented approximately 95.1% of Tenda’s total
sales.
In 2007,
Tenda launched 119 residential developments with a total potential sales value
of R$1,997.7 million. This potential sales value was 1,527.3% higher than that
achieved in 2006, during which Tenda launched residential developments totaling
R$122.8 million. This increase is a reflection of the better market
conditions in 2007 and company’s increased capitalization through an initial
public offering. During 2007, 37% of Tenda’s total potential sales
value was generated from launches outside the states of São Paulo and Rio de
Janeiro. The affordable entry-level business accounted for 99% of
Tenda’s total sales value for the year ended December 31, 2007. In
2006, we launched 16 projects in the states of São Paulo and Minas Gerais,
totaling 1,863 units.
Tenda’s
average launching price per square meter in the nine-month period ended
September 30, 2009 was approximately R$2,260 as compared to approximately
R$1,570 in the same period in 2008. This increase was mainly due to
the merger of FIT into Tenda which historically charged higher prices for its
products.
Our
average launching price per square meter in 2008, 2007 and 2006 was
approximately R$1,590, R$1,540 and R$1,330, respectively. Our average launching
price per square meter over these three years was approximately R$1,490. The
change in our sales price per square meter is due to commencement of operations
in new regions, the introduction of products with higher sale prices per square
meter and an increase in our sale prices.
Contracted
sales
Since we
recognize revenues only as each project evolves physically and financially, even
if we have already completely sold all of the units in the project, we hold a
portfolio of sales (contracted sales) that may be recognized by as revenues in
the future.
The
following table shows the development of Tenda’s contracted sales by the type of
development and price bracket.
|
Nine
Months period
September
30,
|
For
the year ended December 31,
|
|||||||||||||||||||
|
Type
of development
|
2009
|
2008
|
2008
|
2007
|
2006
|
|||||||||||||||
|
(in
thousands of reais, unless otherwise
stated)
|
||||||||||||||||||||
|
Garden
|
86,738 | 54,672 | 40,763 | 52,790 | 20,332 | |||||||||||||||
|
Due
|
10,678 | 11,907 | 21,170 | 58,172 | 15,181 | |||||||||||||||
|
Life
|
540,760 | 342,298 | 375,252 | 462,088 | 116,044 | |||||||||||||||
|
Nine
Months period
September
30,
|
For
the year ended December 31,
|
|||||||||||||||||||
|
Type
of development
|
2009
|
2008
|
2008
|
2007
|
2006
|
|||||||||||||||
|
(in
thousands of reais, unless otherwise
stated)
|
||||||||||||||||||||
|
Tower
|
90,797 | 52,775 | 69,868 | 83,105 | 24,297 | |||||||||||||||
|
Tenda
Premium
|
202,346 | 271,579 | 394,040 | 47,143 | — | |||||||||||||||
|
Super
6
|
46,760 | — | — | — | — | |||||||||||||||
|
Total
contracted sales
|
978,079 | 733,231 | 901,093 | 703,300 | 175,854 | |||||||||||||||
|
Nine
Months period
September
30,
|
For
the year ended December 31,
|
|||||||||||||||||||
|
Price
Bracket
|
2009
|
2008
|
2008
|
2007
|
2006
|
|||||||||||||||
|
(in
thousands of reais, unless otherwise
stated)
|
||||||||||||||||||||
|
Up
to R$ 60,000
|
88,220 | 69,226 | 135,630 | 109,654 | 70,383 | |||||||||||||||
|
From
R$ 60,000 to 90,000
|
525,491 | 371,239 | 291,707 | 409,687 | 90,048 | |||||||||||||||
|
From
R$ 90,000 to R$ 130,000
|
243,215 | 196,040 | 322,437 | 149,476 | 13,117 | |||||||||||||||
|
Above
R$ 130,000
|
121,153 | 96,726 | 151,319 | 34,483 | 2,306 | |||||||||||||||
|
Total
contracted sales
|
978,079 | 733,231 | 901,093 | 703,300 | 175,854 | |||||||||||||||
During
the nine months period ending September 30, 2009, Tenda sold 11,638 units
representing R$ 978.1 million, an increase of approximately 33.4% compared to
same period in 2008, when only 9,007 units were sold, representing R$733.2
million.
In 2008,
Tenda sold approximately 40% of the units launched that year, which together
with the sales of units launched during prior periods, resulted in total
contracted sales of R$901.1 million, an increase of approximately 28.1% compared
to 2007. In 2007, Tenda sold approximately 30% of the units launched during that
year. This, together with the sales of units launched during prior
periods, resulted in a total contracted sales of R$703.3 million, a 300%
increase over 2006. The increase in 2008 is a result, among others,
of better economic conditions, Tenda’s target segment strategy (primarily a
focus on the affordable entry-level segment) and better financing structures
provided to Tenda’s customers by public banks.
The
following table sets forth the growth of Tenda’s contracted sales to be
recognized, as well as the amount corresponding to the cost of units sold, and
the expected margin, all of them to be recognized in future periods, for the
periods presented:
|
As of September
30,
|
As
of and for the year ended December 31,
|
|||||||||||||||||||
|
2009
|
2008
|
2008
|
2007
|
2006
|
||||||||||||||||
|
(in
thousands of reais, unless otherwise
stated)
|
||||||||||||||||||||
|
Sales
to be recognized
|
||||||||||||||||||||
|
Net
sales(1)
|
1,244,707 | 736,875 | 1,043,807 | 623,421 | 179,565 | |||||||||||||||
|
Cost
of units sold to be recognized
|
(838,722 | ) | (445,912 | ) | (697,896 | ) | (375,315 | ) | (136,109 | ) | ||||||||||
|
Expected
profit—yet to be recognized(2)
|
405,985 | 290,963 | 345,911 | 248,106 | 43,456 | |||||||||||||||
|
Expected
margin
|
32.6 | % | 39.5 | % | 33.1 | % | 39.8 | % | 24.2 | % | ||||||||||
|
(1)
|
Excludes
indirect PIS and COFINS taxes of
3.65%.
|
|
(2)
|
Based
on management’s estimates.
|
Gross
Operating Revenues
Tenda’s
revenues are derived from the development and sale of real
estate. Real estate development revenues, including inflation
adjustments and interest from credit sales, make up revenues from the sales of
units in the residential buildings Tenda develops.
Operating
Costs
Tenda’s
operating costs consist of real estate development costs, which consist of costs
of land, construction (which includes costs for a broad variety of raw materials
and labor), capitalized interest (financial costs) from project specific
financing, projects, foundations, structuring and furnishing, as well as costs
for outsourced labor.
Land
acquisition costs on the low income segment recently represented 7 to 9% of the
contracted sale. Land can be acquired for cash, through the exchange of units
once the building is constructed, through a financial exchange (whereby a
portion of sales is given to the owner of land as a form of financing for the
land), or through a combination of the three options.
No single
raw material alone represents a significant portion of Tenda’s total costs of
development, but in total over the last three fiscal years, raw materials used
in Tenda’s construction represented, on average, approximately 53% of Tenda’s
total cost of development. The index that measures construction cost variation,
the INCC, increased by 2.8% in the nine months period ended September 30, 2009
and 11.9%, 6.2% and 5.0% in 2008, 2007 and 2006, respectively.
Over the
last three fiscal years, Tenda has incurred most of its construction costs from
the 1st to the 18th month
of construction of a development, as shown in the table below:
|
Period
of construction
|
Percentage
of costs incurred(1)
|
|||
|
1st
to 6th month
|
24 | % | ||
|
7th
to 12th month
|
70 | % | ||
|
13th
to 18th month
|
100 | % | ||
|
(1)
|
Including
cost of land.
|
Operating
Expenses
Tenda’s
operating expenses include selling, general and administrative expenses and
depreciation and amortization expenses and revenues.
Selling
expenses
Selling
expenses include operational expenses with Tenda’s own stores, real estate fair,
commissions paid, advertising, promotion, brokerage fees and similar
expenses.
General
and administrative expenses
General
and administrative expenses principally include the following: employee
compensation and related expenses; fees for outsourced services, such as legal,
auditing, consulting and others; management fees and social expenses; stock
option plan expenses; overhead corporate expenses; and legal expenses related to
public notaries and commercial registers, among others.
Depreciation
and amortization
Depreciation
expenses consist of depreciation of property and equipment. In 2008,
amortization expenses are related to the amortization of goodwill.
Financial
Income and Expenses
Financial
income generally includes income from financial investments. Interest revenues
are recognized based on the accrual method. Financial expenses generally consist
of interest payable on loans, financings and debentures.
Taxes
on Income
In
general, taxes on income in Brazil consist of federal income tax (25%) and
social contribution (9%); the composite statutory tax rate being 34%. Tenda
calculates its income and social contribution taxes according to the “taxable
profit” regime. Tenda’s subsidiaries and jointly-controlled entities, however,
with annual billings lower than a specified amount, may calculate their
respective income and social contribution taxes through either this “taxable
profit” regime or through the “presumed profit” regime, depending on its tax
planning. For the companies that opt for the “presumed profit” regime, the
income tax basis is calculated as 8% of gross revenues and the social
contribution basis is calculated as 12% of gross revenues, to which income tax
and social contribution rates of 25% and 9%, respectively, are
applied.
Results
of Operations
The
following discussion of Tenda’s results of operations is based on its
consolidated financial statements prepared in accordance with the Brazilian
GAAP. References to increases or decreases in any given period relate to the
corresponding preceding period, except unless otherwise indicated.
Results
of Operations for the nine-month period ended September 30, 2009 and
2008
|
Consolidated
Statement of Income
|
Nine-Month
Period Ended September 30,
|
%
Variation
|
||||||||||||||||||
|
2009
|
Total
%
|
2008
|
Total
%
|
9M09
/ 9M08
|
||||||||||||||||
|
(in
thousand of
reais)
|
||||||||||||||||||||
|
Gross
operating revenue
|
||||||||||||||||||||
|
Revenue
from real estate developments and sales
|
751,080 | 103.9 | % | 332,782 | 104.7 | % | 125.7 | % | ||||||||||||
|
Taxes
and rates
|
(27,943 | ) | 3.9 | % | (15,027 | ) | 4.7 | % | 86.0 | % | ||||||||||
|
Net
operating revenue
|
723,137 | 100.0 | % | 317,755 | 100.0 | % | 127.6 | % | ||||||||||||
|
Operating
costs
|
||||||||||||||||||||
|
Expenses
from real estate developments and sales
|
(493,401 | ) | 68.2 | % | (213,437 | ) | 67.2 | % | 131.2 | % | ||||||||||
|
Gross
profit
|
229,736 | 31.8 | % | 104,318 | 32.8 | % | 120.2 | % | ||||||||||||
|
Operating
income (expense)
|
||||||||||||||||||||
|
Selling
expenses
|
(78,897 | ) | 10.9 | % | (59,175 | ) | 18.6 | % | 33.3 | % | ||||||||||
|
General
and administrative expenses
|
(69,396 | ) | 9.6 | % | (64,080 | ) | 20.2 | % | 8.3 | % | ||||||||||
|
Net
financial result
|
1,387 | 0.0 | % | 7,456 | 2.3 | % | (81.4 | )% | ||||||||||||
|
Depreciation
and amortization
|
(10,940 | ) | 1.5 | % | (5,220 | ) | 1.6 | % | 109.6 | % | ||||||||||
|
Other
operating expenses, net
|
109
|
0.0 | % | (29,149 | ) | 9.2 | % | (100.4 | )% | |||||||||||
|
Total
operating income (expense)
|
(157,737 | ) | 21.8 | % | (150,168 | ) | 47.3 | % | 5.0 | % | ||||||||||
|
Operating
results before income tax and social contribution
|
71,999 | 10.0 | % | (45,850 | ) | 14.4 | % | (257.0 | )% | |||||||||||
|
Income
tax and social contribution
|
(16,288 | ) | 2.3 | % | (11,164 | ) | 3.5 | % | 45.9 | % | ||||||||||
|
Net
income (loss) for the period
|
55,711 | 7.7 | % | (57,014 | ) | 17.9 | % | (197.7 | )% | |||||||||||
Net
operating revenue
Net
operating revenue increased by 127.6%, from R$317.8 million in the first nine
months of 2008 to R$723.1 million in the same period of 2009. Gross revenues
generated from the sales of real estate properties totaled R$751.1 million, an
increase of R$418.3 million or 125.7% as compared to the same period of 2008,
when revenues totaled R$332.8
million, reflecting a higher volume of contracted sales and a lower number of
sale cancellations. Tenda’s
higher
net operating revenue for the first nine months of 2009 as compared to the same
period of 2008, also reflects the merger of FIT into Tenda, which occurred in
October 2008 and further contributed to the geographic diversification of
Tenda’s operations.
Operating
costs
Operating
costs in first nine months of 2009 totaled R$ 493.4 million, an increase of
131.2% as compared to R$213.4 million in the first nine months of 2008. The
increase is due to the greater volume of units sold and under construction. In
the first nine months of 2009 Tenda had 103 active construction sites, totaling
21,087 units under construction. Operating costs, as a percentage of
net operating revenue, increased to 68.2% in first nine months of 2009 as
compared to 67.2% in first nine months of 2008.
Gross
profit
Gross
profit in first nine months of 2009 totaled R$229.7 million, representing an
increase of 120.2%, as compared to R$104.3 million in first nine months of 2008.
This increase was mainly attributable to higher gross revenue from a greater
number of developments under construction and sold. In the first nine months of
2009, the gross margin generated from Tenda’s operations decreased to 31.8% as
compared to 32.8% in first nine months of 2008.
Selling
expenses
Selling
expenses in the first nine months of 2009 totaled R$78.9 million, a 33.3%
increase as compared to R$59.2 million in first nine months of
2008. The increase was primarily due to Tenda’s growth during the
period, as well as the integration of FIT’s selling activities with Tenda’s
operations and higher marketing efforts particularly after the announcement of
the government housing program.
General
and administrative expenses
General
and administrative expenses totaled R$69.4 million in the first nine months of
2009, representing an increase of 8.3% as compared to R$64.1 million in first
nine months of 2008, mainly due to the integration of FIT’s operations, as well
as business expansion after the announcement of the government housing
program.
Depreciation
and amortization
Depreciation
and amortization in the first nine months of 2008 totaled R$10.9 million,
representing an increase of R$5.7 million, as compared to R$5.2 million in first
nine months of 2008. The increase is mainly due to the increase in
depreciation as a result of the integration of FIT’s operations, especially the
depreciation of the model unit and the writing off of leasehold improvements to
FIT’s former headquarters.
Financial
income and expenses, net
Net
financial expense totaled R$1.4 million in the first nine months of 2009 as
compared to a net expense of R$ 7.5 million in the first nine months of 2008.
Financial expenses during the first nine months of 2009 totaled R$23.1 million,
an increase of 193.2% over R$7.8 million in the first nine months of 2008 due to
higher debt position as a result of Tenda’s first debenture
program.
The
outstanding debt as of September 30, 2009, was R$747 million, an increase of
R$642 million as compared to September 30, 2008, mainly due to the R$ 600.0
million debenture contracted with Caixa in May 2009. Financial income
increased from R$15.3 million in the first nine months of 2008 to R$24.5 million
in the first nine months of 2009, mainly due to interest received on higher
average cash position.
Taxes
on income
Income
and social contribution taxes in the first nine months of 2009 totaled R$16.3
million, a 45.9% increase as compared to the first nine months of 2008 of R$11.2
million. In the first nine months of 2009 and 2008, the
combined
effective income and social contribution tax rates, calculated as a percentage
of income before taxes on income, were 22.6% and 24.3%,
respectively.
Net
income
In the
first nine months of 2009 we reported a net income of R$55.7 million, a compared
to a net loss of R$57.1 million in the first nine months of 2008, mainly due to
the expansion of Tenda’s business in 2009.
Results
of Operations for the Years Ended December 31, 2008 and 2007
|
Consolidated
Statement of Income
|
Year
Ended December 31,
|
%
Variation
|
||||||||||||||||||
|
2008
|
Total
%
|
2007
|
Total
%
|
2008/2007
|
||||||||||||||||
|
(in
thousand of
reais)
|
||||||||||||||||||||
|
Gross
operating revenue
|
||||||||||||||||||||
|
Revenue
from real estate developments and sales
|
504,502 | 104.0 | % | 277,514 | 104.4 | % | 81.8 | % | ||||||||||||
|
Taxes
and rates
|
(19,254 | ) | 4.0 | % | (11,657 | ) | 4.4 | % | 65.2 | % | ||||||||||
|
Net
operating revenue
|
485,248 | 100.0 | % | 265,857 | 100.0 | % | 82.5 | % | ||||||||||||
|
Operating
costs
|
||||||||||||||||||||
|
Expenses
from real estate developments and sales
|
(317,852 | ) | 65.5 | % | (181,942 | ) | 68.4 | % | 74.7 | % | ||||||||||
|
Gross
profit
|
167,396 | 34.5 | % | 83,915 | 31.6 | % | 99.5 | % | ||||||||||||
|
Operating
income (expense)
|
||||||||||||||||||||
|
Selling
expenses
|
(87,603 | ) | 18.1 | % | (29,776 | ) | 11.2 | % | 194.2 | % | ||||||||||
|
General
and administrative expenses
|
(113,718 | ) | 23.4 | % | (30,071 | ) | 11.3 | % | 278.2 | % | ||||||||||
|
Net
financial result
|
9,645 | 2.0 | % | 920 | 0.3 | % | 948.5 | % | ||||||||||||
|
Depreciation
and amortization
|
(11,499 | ) | 2.4 | % | (2,638 | ) | 1.0 | % | 335.9 | % | ||||||||||
|
Other
operating expenses, net
|
(22,163 | ) | 4.6 | % | 1,039 | 0.4 | % | (2233.1 | )% | |||||||||||
|
Total
operating income (expense)
|
(225,338 | ) | 46.4 | % | (60,526 | ) | 22.8 | % | 272.3 | % | ||||||||||
|
Operating
results before income tax and social contribution
|
(57,942 | ) | 11.9 | % | 23,389 | 8.8 | % | (347.7 | )% | |||||||||||
|
Income
tax and social contribution
|
19,733 | 4.1 | % | (4,657 | ) | 1.8 | % | 523.7 | % | |||||||||||
|
Net
income (loss) for the period
|
(38,209 | ) | 7.9 | % | 18,732 | 7.0 | % | (304.0 | )% | |||||||||||
Net
operating revenue
Net
operating revenue increased by 82.5%, from R$265.9 million in the year ended
December 31, 2007 to R$485.2 million in the year ended December 31, 2008. Gross
revenues generated from the sales of real estate developments totaled R$504.5
million, an increase of R$227.0.0 million or 81.8% as compared to the same
period in 2007, when revenues generated from the sales of real estate properties
totaled R$277.5 million. This increase is mainly due to the recognition of
revenues from sales contracted in prior periods, Tenda’s geographic expansion,
which was accomplished upon the completion of the merger of FIT into Tenda and
the evolution of the construction work.
Operating
costs
Operating
costs in 2008 totaled R$317.9 million, an increase of 74.7% as compared to
R$181.9 million in 2007. The increase is due to the greater volume of units sold
and under construction, as well as the recognition of FIT’s operating
costs in the last two months of the year due to its merger into Tenda.
Consequently, as a percentage of net operating revenue, operating costs
decreased to 65.5% in 2008 as compared to 68.4% in 2007.
Gross
profit
Gross
profit in 2008 totaled R$167.4 million, representing an increase of 99.5% as
compared to R$83.9 million of gross profit in 2007. This increase was mainly
attributable to the integration of FIT into Tenda’s operations. In
2008, the gross margin generated from Tenda’s activities increased to 34.5% as
compared to 31.6% in 2007.
Selling
expenses
Selling
expenses in 2008 totaled R$87.6 million, representing an increase of 194.2% as
compared to R$29.8 million in 2007. This increase is mainly due to the growth of
Tenda’s operations and the consolidation of FIT’s selling expenses and also
reflects Tenda’s growth soon after the conclusion of the initial public offering
of shares in the fourth quarter of 2007. As of December 31, 2008,
Tenda had 37 stores and a sales force comprised of 310 people.
General
and administrative expenses
General
and administrative expenses totaled R$113.7 million in 2008, representing an
increase of 278.2%, as compared to R$30.1 million in 2007. In
addition to the increment on operations, this increase is significantly impacted
by (1) additional expenses related to FIT’s operations, (2) non-recurring
expenses related to the process of integration of FIT’s legal merger and further
re-structuring of Tenda’s activities which generated mainly financial advisory
services, audit services and legal fees, and (3) the establishment in October
2008 of an additional provision for potential civil and labor
contingencies.
Depreciation
and amortization
Depreciation
and amortization in 2008 totaled R$11.5 million, representing an increase of
R$8.9 million, as compared to R$2.6 million in 2007. The increase is mainly due
to the increase in depreciation as a result of integration of FIT’s operations
and the writing off of leasehold improvements relating to FIT’s former
headquarters.
Financial
income and expenses, net
Net
financial results totaled an income of R$9.6 million in 2008 as compared to R$
0.9 million in 2007. Financial expenses during 2008 totaled R$11.5 million, an
increase of 21.1% over R$9.5 million in 2007. This increase is mainly due to the
growth of Tenda’s indebtedness. Tenda’s outstanding debt as of December 31, 2008
was R$126.4 million, representing an increase of 425% as compared to December
31, 2007. Financial income increased from R$21.2 million in 2008 to
R$10.4 million in 2007 mainly due to interest received on higher average cash
balances.
Taxes
on income
Income
and social contribution tax expense in 2007 totaled R$4.7 million, compared to a
tax benefit of R$19.7 million in 2008. In 2007, the combined effective income
and social contribution tax rates, calculated as a percentage of income before
taxes on income, was 19.9%.
Net
income (loss)
Net loss
in 2008 totaled R$38.2 million as compared to a net income of R$18.7 million in
2007.
Results
of Operations for the Years Ended December 31, 2007 and 2006
|
Consolidated
Statement of Income
|
Year
Ended December 31,
|
%
Variation
|
||||||||||||||||||
|
2007
|
Total
%
|
2006
|
Total
%
|
2007/2006
|
||||||||||||||||
|
(in
thousands of R $)
|
||||||||||||||||||||
|
Gross
operating revenue
|
||||||||||||||||||||
|
Revenue
from real estate developments and sales
|
277,514 | 104.4 | % | 81,213 | 105.0 | % | 241.7 | % | ||||||||||||
|
Taxes
and rates
|
(11,657 | ) | 4.4 | % | (3,898 | ) | 5.0 | % | 199.1 | % | ||||||||||
|
Net
operating revenue
|
265,857 | 100.0 | % | 77,315 | 100.0 | % | 243.9 | % | ||||||||||||
|
Operating
costs
|
||||||||||||||||||||
|
Expenses
from real estate developments and sales
|
(181,942 | ) | 68.4 | % | (52,303 | ) | 67.6 | % | 247.9 | % | ||||||||||
|
Gross
profit
|
83,915 | 31.6 | % | 25,012 | 32.4 | % | 235.5 | % | ||||||||||||
|
Operating
income (expense)
|
||||||||||||||||||||
|
Selling
expenses
|
(29,776 | ) | 11.2 | % | (1,616 | ) | 2.1 | % | 1,742.6 | % | ||||||||||
|
General
and administrative expenses
|
(30,071 | ) | 11.3 | % | (7,526 | ) | 9.7 | % | 299.6 | % | ||||||||||
|
Net
financial result
|
920 | 0.3 | % | (2,368 | ) | 3.1 | % | (138.9 | )% | |||||||||||
|
Depreciation
and amortization
|
(2,638 | ) | 1.0 | % | (2,590 | ) | 3.3 | % | 1.9 | % | ||||||||||
|
Other
operating expenses, net
|
1,039 | 0.4 | % | (2,379 | ) | 3.1 | % | (143.7 | )% | |||||||||||
|
Total
operating income (expense)
|
(60,526 | ) | 22.8 | % | (16,479 | ) | 21.3 | % | (267.3 | )% | ||||||||||
|
Operating
results before income tax and social contribution
|
23,389 | 8.8 | % | 8,533 | 11.0 | % | 174.1 | % | ||||||||||||
|
Income
tax and social contribution
|
(4,657 | ) | 1.8 | % | (5,657 | ) | 7.3 | % | (17.7 | )% | ||||||||||
|
Net
income (loss) for the period
|
18,732 | 7.0 | % | 2,876 | 3.7 | % | 551.3 | % | ||||||||||||
Net
operating revenue
Net
operating revenue increased by 243.9%, from R$77.3 million in 2006 to R$265.9
million in 2007. Gross revenues generated from the sales of real estate
developments totaled R$277.5 million in 2007, an increase of R$196.3 million or
241.7% as compared to the same period in 2006, when revenues generated from the
sales of real estate developments totaled R$81.2 million. This increase is
mainly due to (1) an increase on average sales prices, resulting from the
increase in demand for Tenda’s products; (2) an increase in Tenda’s product
sales in São
Paulo as percentage of total contracted sales; and (3) a higher volume of
contracted sales and faster pace of construction.
Operating
costs
Operating
costs in 2007 totaled R$181.9 million, an increase of 247.9% as compared to
R$52.3 million in 2006. The increase is due to the greater volume of units sold
that resulted in an increase on units under construction. On December 31, 2007
we had 90 construction sites, with 12,400 units under
construction. Operating costs, as a percentage of net operating
revenue, was stable at 68.4% in 2007 as compared to 67.6% in 2006.
Gross
profit
Gross
profit in 2007 totaled R$83.9 million, representing an increase of 235.5%, as
compared to R$25.0 million in 2006. This increase was mainly attributable to
higher gross revenue from a greater number of developments under construction
and sold. In 2007, the gross margin generated from Tenda’s activities
was 31.6%, which was similar to the 32.4% gross margin reported in
2006.
Selling
expenses
Selling
expenses in 2007 totaled R$29.8 million, representing an increase of R$28.2
million from the R$1.6 million in 2006, primarily due to the greater use of
marketing campaigns and the expansion of the sales team, with an increase in the
number of stores to 39 stores at the end of 2007 in connection with the
expansion of operations to metropolitan regions, outside São Paulo and Minas
Gerais.
General
and administrative expenses
General
and administrative expenses totaled R$30.1 million in 2007, representing an
increase of 299.6%, as compared to R$7.5 million in 2006, primarily due to (1)
an increase in personnel expenses resulting from the hiring
of
additional administrative personnel as part of Tenda’s internal
restructuring occurred in 2007; (2) increase in general expenses related to the
growth strategy; and (3) nonrecurring expenses related to its corporate and
operational restructuring, such as expenses with legal advisors, consultants,
auditors and banks.
Depreciation
and amortization
Depreciation
and amortization in 2006 totaled R$2.6 million, slightly above the R$2.6 million
reported in 2007.
Financial
income and expenses, net
Net
financial results totaled an income of R$0.9 million in 2007 compared to a net
expense of R$ 2.4 million in 2006, primarily due to the interest paid on cash
invested after the Tenda’s initial public offering of shares.
Taxes
on income
Income
and social contribution taxes in 2007 totaled R$4.7 million, 18% below the R$5.7
million in 2006. In 2007, the combined effective income and social contribution
tax rates, calculated as a percentage of income before taxes on income, was
19.9%, as compared to 66.3% in the same period of 2006, when non-deductible
expenses and deferred taxes increased the effective rate.
Net
income
As a
result of the foregoing, in 2007 Tenda reported a net income of R$18.7 million,
compared to a net income of R$2.9 million in 2006.
Liquidity
and Capital Resources
Tenda’s
transactions are financed mainly through the down payments of units sold,
advances from customers for installments not yet due and payable, transfers to
CEF (Caixa Economica
Federal) that Tenda had extended to clients to finance their unit
purchases and financing for construction of projects.
Tenda
consistently reviews opportunities for acquisition and investments. Tenda
considers different types of investments, either direct or through its subsidiaries
and jointly-controlled entities. Tenda finances such investments using capital
market financings, capital increase or through a combination
thereof.
In April
2009, the Brazilian government announced additional lines of credit to assist
the construction industry and its customers, including R$3 billion from the FGTS
(a Government Severance Indemnity Fund for Employees). Recently, the government
has added an additional R$3 billion to its original commitment for financing to
homebuilders for a total of R$6 billion. Finally, the Brazilian
government will finance up to 20% of construction costs, to be financed by the
Brazilian Saving and Loan System (Sistema Brasileiro de Poupança e
Empréstimo – SBPE).
Tenda
secured funds early in the process and was the first homebuilder to issue a
debenture to CEF. In April 2009, Tenda raised R$600 million at a rate
of TR + 8%.
The
following table shows the balance of Tenda’s receivables from clients’ portfolio
for the development and sale of properties for the periods
presented:
|
As
of
September
30,
|
As
of December 31,
|
|||||||||||
|
2009
|
2008
|
2007
|
||||||||||
|
(in
thousands)
|
||||||||||||
|
Real
estate development receivables:
|
||||||||||||
|
Current
|
784,097 | 262,732 | 327,398 | |||||||||
|
Non-current
|
1,379,803 | 971,863 | 582,167 | |||||||||
|
Total
|
2,163,900 | 1,234,595 | 909,565 | |||||||||
|
As
of
September
30,
|
As
of December 31,
|
|||||||||||
|
2009
|
2008
|
2007
|
||||||||||
|
(in
thousands)
|
||||||||||||
|
Receivables
to be recognized on Tenda’s balance sheet according to percentage of
completion method:
|
||||||||||||
|
Current
|
636,499 | 273,329 | 191,053 | |||||||||
|
Non-current
|
655,361 | 810,020 | 455,926 | |||||||||
|
Total
|
1,291,860 | 1,083,349 | 646,979 | |||||||||
|
Total
clients’ portfolio
|
35,368 | 20,872 | 14,203 | |||||||||
The total
clients’ portfolio balances have the following maturity profile:
|
As
of September 30,
2009
|
||||
|
(in
thousands)
|
||||
|
Maturity
|
||||
|
2009
|
113,498 | |||
|
2010
|
814,959 | |||
|
2011
|
1,091,684 | |||
|
Thereafter
|
143,759 | |||
|
Total
|
2,163,900 | |||
Loans
made to Tenda’s clients are generally adjusted on a monthly basis: (1) during
construction, by the INCC in São Paulo, Rio de Janeiro and other Brazilian
cities; and (2) for those clients that Tenda directly finance after the deliver
of the units stated date in the contract, by the IGP-M plus 12% per annum in all
markets.
Tenda
limits its exposure to credit risk by selling to a broad customer base and by
continuously analyzing the credit of its clients. As of September, 30, 2009,
Tenda clients’ default level was approximately 4.3% of its accounts receivable.
Tenda recorded a provision that totaled R$18.8 million as of September 30, 2009
(R$18.8 million as of December 31, 2008) which its management considered
sufficient to cover future losses on the realization of accounts
receivable.
Cash
Flows
Operating
activities
Net cash
used in operating activities totaled R$261.2 million in the first nine months of
2009 as compared to R$381.1 million in the same period in 2008, mainly due to a
reduction in the pace of construction of ongoing construction projects as Tenda
adjusted its cash disbursements to face cash and credit constraints at beginning
of the year.
Net cash
used in operating activities totaled to R$707.0 million in 2008 as compared to
R$ 240.6 million in 2007 mainly due to the higher level of ongoing construction
projects, the acquisition of land to support future launches and the increase of
accounts receivable.
In 2007,
there was a significant increase in the operating expenditures as compared to
2006 mainly due to the business expansion.
Investment
activities
Tenda
does not make significant investments in fixed assets. Net cash used in
investment activities, including the acquisition of property, equipment and new
investments, was R$14.7 million, R$16.6 million and R$10.4 million in the first
nine months of 2009, full year 2008 and 2007, respectively.
Tenda’s
expenditure in first nine months of 2009 was mainly related to investments in
property and equipment in the amount of R$11.7 million, including investments in
information technology equipment and software and new office facilities in São
Paulo.
Tenda’s
expenditure in 2008 was related to the acquisition of investments in property
and equipment in the amount of R$13.7 million.
Tenda’s
expenditure in 2007 was related to the acquisition of property, equipment and
other investments particularly related to opening several sales centers
throughout Brazil in the amount of R$7.6 million.
Financing
activities
Net cash
provided by financing activities in the first nine months of 2009 totaled
R$586.4 million, an increase of R$510.3 million, compared to the net cash
provided by financing activities in the first nine months of 2008 of R$76.1
million. The cash increase in the first nine months of 2009 was mainly
attributable to the debenture issuance placed with Caixa Economica Federal
amounting to R$600 million which occurred in April.
In 2008,
net cash provided by financing activities totaled R$504.7 million, a significant
decrease of 22.5% compared to R$651.0 million in 2007 due to the initial public
offering of Tenda’s shares in 2007. The decrease of Tenda’s net cash provided by
financing activities in 2008 is mainly due to a restriction in credit lines
observed in the last quarter of the year, as result of the global financial
crisis when access to corporate debt and working capital for many companies in
the real estate sector became short.
Pledged
mortgage receivables and cash and cash equivalents
As of
September 30, 2009, substantially all of Tenda’s mortgage receivables totaling
R$781.7 million were pledged. A further R$82.0 million of cash and
cash equivalents were restricted as they have been pledged.
Material
Agreements
As part
of Tenda’s capitalization policy, funds raised through the financial contracts
described below are used to meet Tenda’s working capital and investment needs.
Tenda’s indebtedness (other than the debenture) consists of a small number of
financial contracts, which principal objective is to provide Tenda with working
capital. Tenda does not rely on any specific financial contract, but its working
capital depends on external funding. Tenda’s principal financial contracts are
described below.
Indebtedness
In the
past three years Tenda has attempted to maintain a low level of indebtedness by
financing its operations with cash flow from its activities.
The
following table sets forth Tenda’s indebtedness and net debt as of September 30,
2009 and 2008 and as of December 31, 2008, 2007 and 2006:
|
As
of September 30,
|
As
of December 31,
|
|||||||||||||||||||
|
2009
|
2008
|
2008
|
2007
|
2006
|
||||||||||||||||
|
(in
thousands of R$)
|
||||||||||||||||||||
|
Current
loans and financing
|
91,446 | 26,642 | 52,584 | 23,304 | 1,505 | |||||||||||||||
|
Non-current
loans and financing
|
655,584 | 78,222 | 73,866 | 794 | 4,014 | |||||||||||||||
|
(-)
Cash and cash equivalents
|
492,233 | 92,995 | 181,660 | 400,512 | 509 | |||||||||||||||
|
Net
debt
|
(254,797 | ) | (11,869 | ) | 55,210 | 376,414 | (5,010 | ) | ||||||||||||
|
Shareholders’
equity
|
1,121,373 | 629,645 | 1,062,214 | 683,677 | 8,254 | |||||||||||||||
|
Net
debt to shareholders’ equity
|
22.7 | % | (1.8 | )% | 5.2 | % | 55.1 | % | (25.6 | )% | ||||||||||
Net debt
consists of loans and financings minus cash and cash equivalents. Net debt is
not a Brazilian GAAP measurement. Other companies may calculate net debt in a
different manner.
Guarantees
Financing
is usually secured by mortgages on property and by security interests on the
receivables from clients.
Debenture
program
In April
2009, Tenda’s first debenture program was approved, under which it received
R$600 million in non-convertible debentures. The debentures provide for payment
of annual interest at a spread of 8% + TR, calculated from the subscription
date, with a maturity in five years. Proceeds from the issuance of debentures
will be issued solely in the financing of real estate ventures focused
exclusively on the popular segment that meet the eligibility
criteria.
Guarantees
comprise assignments of receivables and bank accounts. Additionally,
certain covenants contained in the agreement governing Tenda’s debenture program
restrict its ability to take certain actions, including incurring additional
debt and may require Tenda to repay or refinance the debenture, if Tenda is
unable to meet certain financial ratios. The ratios and minimum or maximum
amounts required by those financial covenants and Tenda’s performance against
those minimum or maximum levels such as: (1) coverage debt service defined as
EBIT divided by net financial expenses can not exceed 1.3 times, (2) debt index
defined as (receivables + inventory) divided by (net debt – collateralized debt)
can not exceed 2.0 times or be lower than zero, and (3) (net debt –
collateralized debt) divided by shareholders equity can not exceed 50%. In
addition, Tenda will seek approval of its debenture holders for the
Restructuring and delisting from BM&FBOVESPA’s Nova Mercado. Acceleration of
the debentures may result if either debenture holders decide without
justification not to approve the Restructuring or if the debenture holders do
not approve the delisting of Tenda from BM&FBOVESPA’s Novo
Mercado.
As of
September 30, 2009, Tenda understands that it has been in compliance with all
the above mentioned ratios.
Financing
through the Housing Finance System (SFH)
Most of
Tenda’s financing is incurred directly from the principal banks that operate
within SFH. On September 30, 2009, the interest rates on these loans generally
varied between 8% and 11% per annum, plus TR, and the loans generally mature
through September 2011. That financing is secured by mortgages on property and
by security interests on the receivables from clients. On September 30, 2009,
Tenda had nine loan agreements in effect, with a balance of R$62
million. At the same date Tenda also had R$13 million in aggregate
principal amount of financing agreements
with SFH, the funds of which will be released through the date of completion as
construction of the corresponding developments progress.
Working
Capital
Tenda
believes that its current working capital is sufficient for its present
requirements and that its sources of funds from financing activities are
sufficient to meet the financing of its activities and cover its need for funds
for at least the next twelve months.
New
Accounting Pronouncements
Law No.
11,638/07 enacted on December 28, 2007 introduced changes to the Brazilian
corporate law to be applied to financial statements in 2008. To ensure
consistent presentation of Tenda’s financial statements in prior periods, Tenda
has retroactively applied changes to Brazilian GAAP introduced by the newly
formed CPC and the provisions of Law No. 11,638/07 from January 1, 2006 and has
elected for tax purposes to adopt Provisional Measure No. 449/08, or “MP No.
449/08,” which was converted into Law No. 11,941/09. As a result,
there is no tax impact during 2006 and 2007 following retroactive adoption of
these accounting policy changes. See note 2 to Tenda’s financial
statements included elsewhere in this preliminary prospectus/information
statement for this amendment and other reclassifications to Tenda’s financial
statements.
Tenda
revised its Brazilian GAAP financial statements as of and for the years ended
December 31, 2007 and 2006 when it adopted, beginning January 1, 2006, according
to the changes introduced by Law 11,638/07 and the new accounting standards
issued by the CPC in 2008. Brazilian GAAP encourages companies to
make such revisions from the date the accounting changes were introduced in
order to provide comparative information within the financial
statements. See note 2 to Tenda’s financial statements included
elsewhere in this preliminary prospectus/information statement for this
amendment and other reclassifications to its Brazilian GAAP financial
statements. However, selected financial information presented as of
and for the years ended December 31, 2005 and 2004 has not been presented on the
basis of the new accounting policies introduced in 2008, as the cost and time
required to prepare such information would be prohibitive. As a
result, such information is not comparative to the financial information
reported herein as of and for the years ended December 31, 2008, 2007 and
2006.
Assets
and liabilities
Tenda
adjusts on a present value basis the assets and liabilities arising from
non-current transactions. As set forth in CPC 01, “Real Estate Development
Entities,” for inflation-indexed receivables arising from installment sales of
unfinished units, the receivables
generated prior to delivery of the units that does not accrue interest, were
discounted to present value. The present value adjustment is accreted to
Tenda’s net operating revenue as the company
finances its clients through delivery of the units. As interest from
funds used to finance the acquisition of land for development and
construction is capitalized, the accretion of the present value adjustment arising from the obligation
is recorded in real estate development operating costs or against inventories of
properties for sale, as the case may be, until the construction phase of the
venture is completed.
Warranty
provision
Tenda
records a provision for warranties, unless a third party provides warranties for
the services rendered during construction. The warranty term is five years from
the delivery of the unit.
Barter
transactions
Under CPC
01, for barter transactions of land in exchange for units, the value of land
acquired by Tenda is calculated based on the fair value of real estate units to
be delivered, and recorded in inventories of properties for sale against
liabilities for advances from clients, at the time the barter agreement is
signed. The percentage-of-completion criteria adopted for appropriation of
income is also applied to these transactions.
Expenditures
on sales stands, facilities, model apartments and related
furnishings
Expenditures
incurred for the construction of sales stands, facilities, model apartments and
related furnishings are capitalized as property and equipment. Depreciation
commences upon launch of the development and is recorded over the average term
of one year and subject to periodical analysis of asset impairment.
Stock
options
Tenda has
executive stock compensation plans. Options, calculated at the grant
date, must be recognized as an expense against shareholders’ equity, over the
period the services are rendered through the vesting date.
Capital
Expenditures
Due to
the nature of the real estate industry, Tenda does not make significant
investments on fixed assets. Tenda’s investments amounted to R$11.7 million,
R$13.7 million and R$7.6 million in the first nine months of 2009, full year of
2008 and 2007, respectively. Tenda’s capital expenditures are all
made in Brazil and are usually funded by internal sources. Tenda currently does
not have any significant capital expenditures in progress.
Tabular
Disclosure of Contractual Obligations
The table
below presents the maturity of Tenda’s significant contractual obligations as of
September 30, 2009. The table does not include deferred income tax
liability.
|
Maturity
Schedule
|
||||||||||||||||||||
|
Total
|
Less
than 1 year
|
1-3
years
|
3-5
years
|
More
than 5 years
|
||||||||||||||||
|
(in
thousands of R$)
|
||||||||||||||||||||
|
Loans
and financing
|
127,169 | 71,585 | 55,584 | — | — | |||||||||||||||
|
Debentures
|
600,000 | — | — | 600,000 | — | |||||||||||||||
|
Interest
(1)
|
217,482 | 53,494 | 101,938 | 62,050 | — | |||||||||||||||
|
Real
estate development obligations (2)
|
838,722 | 691,718 | 147,004 | — | — | |||||||||||||||
|
Obligations
for land purchase (3)
|
57,676 | 45,043 | 12,633 | — | — | |||||||||||||||
|
Acquisition
of investments
|
44,637 | 8,679 | 29,758 | 6,199 | — | |||||||||||||||
|
Total
|
1,885,686 | 870,519 | 346,917 | 668,249 | — | |||||||||||||||
|
(1)
|
Estimated
interest payments are determined using the interest rate at September 30,
2009. However, Tenda’s non-current debt is subject to variable interest
rates and inflation indices, and these estimated payments may differ
significantly from payments actually
made.
|
|
(2)
|
Including
obligations not reflected in the balance—CFC Resolution No. 963. Pursuant
to Brazilian GAAP, and since the adoption of CFC Resolution No. 963, the
total costs to be incurred on the units launched but not sold are not
recorded on Tenda’s balance sheet. As of September 30, 2009, the amount of
“real estate development obligations” related to units launched but not
sold was R$584.0 million.
|
|
(3)
|
Refers
to the acquisition of Cotia Empreendimento Imobiliário
Ltda.
|
Tenda
made provisions for contingencies in relation to labor, tax and civil lawsuits
in the amounts of R$25.8 million in non-current liabilities, as of September 30,
2009.
Off-Balance
Sheet Transactions
Tenda
currently does not have any off-balance sheet arrangements or significant
transactions with unconsolidated entities not reflected in its consolidated
financial statements included elsewhere in this preliminary
prospectus/information statement. All of Tenda’s interests in and/or
relationships with its subsidiaries or jointly-controlled entities are recorded
in its consolidated financial statements.
Quantitative
and Qualitative Disclosures About Market Risks
Tenda is
exposed to market risks arising during the normal course of its business. These
market risks mainly involve the possibility that changes in interest rates may
impact the value of its financial liabilities. See “Part Three: Risk
Factors.”
Interest
Rate Risks
Tenda’s
revenue and profitability are affected by changes in interest rates due to the
impact that these changes have on financial expenses under its variable-rate
debt instruments, interest revenue from receivables and any interest revenue
generated from its investments. As of September 30, 2009, Tenda’s indebtedness
totaled R$747.0
million,
all of which was indexed to certain indices, specifically CDI and the Reference
Rate index (Taxa
Referencial), or TR. In the event of an increase in interest rates
corresponding to 10% of the rates currently applicable to Tenda’s indebtedness,
its annual financial expenses and costs as of September 30, 2009 would have
increased by approximately R$ 1.4 million.
The
Company has not made investments for speculative purposes in derivatives or any
other risky assets and is not exposed to foreign exchange risks.
Inflation
Risks
Tenda’s
revenue and profitability may be affected by changes in the inflation rate due
to the impact that these changes have on its receivables, especially on
adjustment of installments, monetary variation and level of
default.
Liquidity
Risks
Tenda
manages its liquidity risks through a conservative financial management based on
capital structure with reduced leveraging. In addition, Tenda’s management
constantly monitors its assets and liabilities.
Tenda
U.S. GAAP Reconciliation
Tenda’s
consolidated financial statements as of December 31, 2008 and 2007, and for each
of the three years in the period ended December 31, 2008, included in the
registration statement to which this preliminary prospectus/information
statement is a part, have been prepared in accordance with the accounting
practices adopted in Brazil, which differ in certain significant respects from
accounting principles generally accepted in the United States, or U.S.
GAAP. Note 27 to Tenda’s consolidated financial statements included
in the registration statement to which this preliminary prospectus/information
statement is a part describe the principal differences between Brazilian GAAP
and U.S. GAAP as they relate to Tenda, and provide a reconciliation to U.S. GAAP
of Tenda’s shareholders’ equity as of December 31, 2008. A
reconciliation from Brazilian GAAP to U.S. GAAP for Tenda’s shareholders’ equity
as of December 31, 2007 and the results of its operations for all other periods
presented herein is not available.
Tenda
prepares its financial statements in accordance with Brazilian GAAP, which
differs in significant respects from U.S. GAAP. Tenda’s net income, in
accordance with Brazilian GAAP, was R$ 55.7 million for the nine-month period
ended September 30, 2009. Under U.S. GAAP, Tenda would have reported a net loss
of R$ 10.7 million for the nine-month period ended September 30, 2009. A
reconciliation of net income from Brazilian GAAP to U.S. GAAP is not available
for any annual period prior to 2009 as Tenda has not previously been subject to
reporting requirements in the United States.
Tenda’s
shareholders’ equity, in accordance with Brazilian GAAP, was R$ 1,121.4 million
as of September 30, 2009, and R$ 1,062.4 million as of December 31, 2008. Under
U.S. GAAP, Tenda would have reported shareholders’ equity of R$ 1,026.7 million
as of September 30, 2009, and R$ 1,037.5 million as of December 31, 2008. A
reconciliation of shareholders’ equity from Brazilian GAAP to U.S. GAAP is not
available for any date prior to December 31, 2008 as Tenda has not previously
been subject to reporting requirements in the United States.
The
following items generated the most significant differences between Brazilian
GAAP and U.S. GAAP in determining net income or loss and shareholders’
equity:
|
|
·
|
revenue
recognition;
|
|
|
·
|
stock
option plans;
|
|
|
·
|
business
combinations; and
|
|
|
·
|
effects
of deferred taxes on the differences
above.
|
A more
comprehensive discussion of the principal differences between Brazilian GAAP and
U.S. GAAP as they relate to Tenda’s financial statements and reconciliations of
net income for the nine-month period ended September 30, 2009, and shareholders’
equity as of September 30, 2009 and December 31, 2008, is included in Tenda’s
unaudited interim consolidated financial statements included in this preliminary
prospectus/information statement.
The
following is a description of the material terms of the Restructuring. While
Gafisa and Tenda believe that the following description covers the material
terms of the Restructuring, the description may not contain all the information
that is important to you. Gafisa and Tenda encourage you to carefully read this
entire document and the exhibits to the registration statement of which this
preliminary prospectus/information statement forms a part, for a complete
understanding of the Restructuring.
Background
– Brazilian Law
Each of
Gafisa and Tenda is a Brazilian company and thus Brazilian law and the rules of
the CVM govern the shareholder approvals required to authorize the
Restructuring, which shareholders are entitled to vote with respect to the
Restructuring and how shareholder voting takes place. Brazilian law
and the rules of the CVM also govern the duties and obligations of the Companies
and their respective boards of directors in connection with the
Restructuring. Under Brazilian law, an EGM must be held to consider
and vote upon transactions such as the Restructuring. At an EGM,
shareholders that have voting rights under a company’s by-laws are entitled to
appear in person at the meeting and cast their votes. Alternatively,
these shareholders may use a power of attorney to appoint a substitute to appear
in their place at the EGM and vote their shares. The power of attorney must have
been granted no more than one year and can only be granted to another
shareholder, an officer of the company, or to a lawyer. Shareholders that are
legal entities may be represented by their officers or as otherwise provided in
their by-laws. Brazilian law generally imposes on a board of directors a
fiduciary duty to assure that contracts with related parties be on arm’s length
terms. Nevertheless, in connection with the Restructuring, Brazilian
law does not (1) establish any specific, minimum or maximum exchange ratio, (2)
require that the board of any of Gafisa or Tenda formally determine that the
terms of the Restructuring as a whole are “fair,” either procedurally or
financially, to its shareholders in the case of Gafisa and to its
noncontrolling shareholders in the case of Tenda, although requiring
certain fiduciary and loyalty duties, (3) require that either Gafisa or Tenda
establish any special independent committee or otherwise alter its corporate
governance rules in connection with the Restructuring or (4) impose any
prohibition or limitation on the voting rights of the controlling shareholder,
notwithstanding the fact that the controlling shareholder shall have duties and
responsibilities towards the other shareholders of the corporation, towards
those who work for the corporation and towards the community in which it
operates. However, CVM has recently issued a recommendation through CVM Release
No. 35, regarding corporate reorganizations involving controlling and controlled
companies, with one of the recommendations being the creation, by the controlled
company, of an independent committee, as described below.
Brazilian
corporate law requires, for corporate restructurings involving controlling and
controlled companies, that certain appraisals of the net value of the
controlling shareholder and the controlled company be prepared by independent
appraisers and that the conclusions reached by the appraisers be disclosed to
shareholders. Specifically, Brazilian law requires that a licensed
appraiser (1) determine the net value of the shares of the controlling
shareholder and the controlled company, in each case by determining the value of
the assets and liabilities of the companies at market value, or according to
another criteria indicated by CVM for publicly held corporations, and as of the
same date and (2) based on the net value per share of the controlling
shareholder and the controlled company determined in this manner, determine the
implied exchange ratio relating to shares owned by the noncontrolling
shareholders of the controlled corporation. This exchange ratio
must be disclosed in order to provide the noncontrolling shareholders
with a parameter against which to judge the proposed transaction and to make a
decision.
Although
existing law provides certain protections, the CVM recently issued a CVM Release
No. 35 containing recommendations regarding corporate reorganizations involving
controlling and controlled companies. One of CVM’s recommendations is
that a special committee be established to protect the interests of the
noncontrolling shareholders of the subsidiary or affiliated company
and to negotiate with the controlling company the terms and conditions of these
types of transactions. Tenda and Gafisa have elected voluntarily to follow the
recommendations of CVM set forth in this release.
Background --
The Restructuring
On
October 21, 2008, Tenda's shareholders approved the merger of Tenda into the
company of FIT Residential Empreendimentos Imobiliários Ltda., or FIT. The
purpose of this merger, or the FIT Merger, was to combine the businesses of
Tenda and FIT, enable Tenda to expand its entry-level home-building business
into new Brazilian markets and caused Tendra to become become one of the most
diversified affordable or entry-level home-building in Brazil. The
FIT Merger was implemented in accordance with the terms of a merger agreement
negotiated between Tenda and FIR and approved by the board of directors of each
of these companies. Prior to the FIT Merger, Gafisa held a
contolling interest in FIT and did not hold any shares of Tenda. As a
result of the level of Gafisa’s pre-transaction ownership in FIT and the the FIT
Merger exchange ratio, the FIT Merger resulted in Gafisa becoming the
controlling shareholder of Tenda, owning 60% of Tenda’s voting
shares.
The
primary effect of the FIT Merger was to combine the entry-level home-building
businesses of Tenda and FIT and, to
the knowledge of Gafisa and Tenda, no discussions took place at that time
regarding, and no consideration was given at that time to, a possible
further combination of the entry-level home-building business of Tenda with the
premium-level home-building business of Gafisa. In view
of the short time period since the completion of the FIT Merger, Tenda’s
management is not able to fully assess the present or potential future
impact of the FIT Merger on Tenda; however, both the financial and
operating results of Tenda generally have improved since the date of the FIT
Merger, whether as a result of the merger, the effect, if any, of Gafisa’s
control of Tenda, changes in market or competetitive conditions or due to
other factors.
Since
completion of the the FIT Merger, Tenda has remained a publicly listed and
publicly traded company in Brazil despite the fact of Gafisa’s controlling stake
in the company. As two separate public companies engaged in different
lines of the home-building business, each of the boards of Gafisa and Tenda has
managed each company in the best interest of that company and its
shareholders. Moreover, since the time of the FIT Merger, Tenda and
Gafisa have continued to comply with all applicable Brazilian governance laws
and principles applicable to listed companies and Gafisa has complied with all
U.S. securities laws and NYSE regulations applicable to foreign private
issuers. Consequently, it is speculative as to whether the FIT Merger
and Gafisa’s resulting ownership interest in Tenda have had any material
effect on Tenda’s business. The
boards of directors of Gafisa and Tenda did not consider the consummation of the
FIT Merger or its particular impact on Tenda as a material factor in reaching
their conclusions with respect to the Restructuring. Instead, each board
considered Tenda and its value as of the time that it made its decisions
concerning the Restructuring. For information concerning
transactions between Gafisa and Tenda or concerning transactions by Gafisa
relating to the Tenda shares, see “Part Five –
The Restructuring – Past Contacts, Transactions, Negotiations and
Agreements” and Gafisa’s Annual Report on Form 20-F for the year ended
December 31, 2008, which is incorporated by reference herein.
In the normal course of our business, we
are continuously performing analyses and studies of our current and
potential investments. Given that (1) a material portion of Gafisa’s consolidated operating results are
derived from Tenda and (2) Tenda is a publicly-traded company in which Gafisa
holds a controlling stake, the management of Gafisa evaluates on an ongoing
basis its equity investment in Tenda and the opportunities for increasing value
generation in Tenda when possible. These general considerations were
the underlying reasons for Gafisa studying its strategic options for its equity investment in
Tenda.
On
September 10, 2009, Gafisa hired Estáter to study strategic options for its
equity stake in Tenda. Based in part on Estáter’s advice, Gafisa concluded
on October 16, 2009, that the Restructuring was the preferable option to be
pursued. Moreover, we believe that the
Restructuring (i.e., share swap) was the preferable option to be pursued
because, in management’s view, it generated an equitable
treatment for both Tenda and Gafisa shareholders. The Restructuring allows
shareholders from both
companies (1) to participate in the transaction and benefit from all the value
generated from the transaction, as discussed further in “Part Five—The Restructuring” or (2) not to participate in the
transaction and either (a) sell their shares in the market or (b) exercise
their withdrawal rights.
Representatives
of Gafisa did not discuss the concept of the Restructuring with, or disclose any
proposed terms for the Restructuring to, representatives of Tenda until after
the closing of the market on October 21, 2009, at which time Gafisa’s officers,
including Gafisa’s Chief Executive Officer and Investor Relations Officer,
informed two of Tenda’s board members, Messrs. Mauricio Luchetti and Henrique
Alves Pinto, of the proposed transaction. On October 22, 2009,
Tenda’s Investors Relations Officer therefore decided to issue the first Tenda
announcement in compliance with CVM’s regulations.
On
October 22, 2009, the Companies announced their intention to consummate the
Restructuring and stated that they would retain the services of specialized
appraisal companies required under Brazilian corporate law to prepare the
necessary reports and that they had retained and would retain other appropriate
financial advisory services to assist in the determination of the Exchange Ratio
and other terms of the Restructuring, as recommended by the CVM. In
these public announcements of the Restructuring, the Companies also indicated
that they would voluntarily comply with a recently issued CVM Release No. 35,
making recommendations with respect to the negotiation and conduct of
transactions between affiliated companies and suggesting the establishment of
special committees in connection with these transactions, all in order to
enhance minority shareholder protection.
The
Special Committee
CVM
Release No. 35 contains several recommended methods for how a board of directors
may select the members of a special committee. These methods are (1)
selecting only members of the board of directors, so long as a majority of these
members are independent members pursuant to the regulations of the Novo Mercado,
(2) selecting members that are not part of the board of directors, so long as
they would all be considered independent pursuant to the regulations of the Novo
Mercado, or (3) selecting two directors to serve as members of the special
committee, one of these directors having been elected to the board by the
minority shareholders, and having a third
member of
the special committee selected by the first two members of the special
committee. For a description of what constitutes an independent member of the
board of directors pursuant to the regulations of the Novo Mercado, please see
“Part Six − Description of Tenda Capital Stock − Composition of Tenda’s Board of
Directors pursuant to Novo Mercado Regulations."
The
Special Committee was formed in accordance with the third recommended method in
CVM Release No. 35. A majority of the board of directors of Tenda chose two
members, Mr. Maurício Luis Luchetti and Mr. Henrique de Freitas Alves Pinto,
both “independent members,” as such term is defined by the rules and regulations
of the BM&FBOVESPA. Ms Henrique is a minority shareholder of
Tenda and was appointed to the board of directors of Tenda by the
noncontrolling shareholders thereof. Messrs. Henrique de
Freitas Alves Pinto and Mauricio Luis Luchetti then selected Mr. Eduardo B.
Gentil as the third member of the Special Committee. A description of Mr.
Gentil’s
professional qualifications is set forth below. Although Mr. Gentil is not
a member of the board of directors of either Gafisa or Tenda or an employee of
either of the Companies and he is not otherwise affiliated with the Companies,
the Special Committee is formed pursuant to
Tenda’s bylaws and, therefore, Mr. Gentil is
subject to the same fiduciary duties applicable to Tenda’s directors, including the duty of
loyalty pursuant to Article 160 of Brazilian corporate law. CVM
Release No. 35 provides for the extension of fiduciary
duties to members of a special committee who are not also directors, by
requiring companies to provide for the existence of such special committee in
the bylaws, as has been done by Tenda in regards to the Special Committee. By following a CVM
recommended procedure and appointing these persons as the members of the Special
Committee, Tenda assured that there would exist an independent group to
negotiate with Gafisa regarding the terms of the Restructuring. Mr. Thomas
McDonald recused himself from voting as a member of both the Tenda and the
Gafisa board of directors. Mr. Gary Garrabrant recused himself from voting as a
member of the Gafisa board of directors. Messrs. Wilson Amaral de Oliveira,
Alceu Duilio Calciolari, Rodrigo Osmo and Fernando Cesar Calamita, recused
themselves from voting as members of the Tenda board of
directors. Mr. Garrabrant and Mr. McDonald are senior executives of
Equity International, LLC, a sponsor of private investment
funds. Equity International, together with the funds it sponsors,
beneficially owns approximately 6.96% of Tenda's capital stock and approximately
13.72% of Gafisa’s capital stock. Mr. Garrabrant and Mr. McDonald
serve as directors of Gafisa, and Mr. McDonald serves as a director of
Tenda. Recognizing that such ownership in both companies and, in the
case of Mr. McDonald, his position as a director of both companies, implies that
they represent both parties to the Restructuring, they decided that they
preferred not to participate in the votes of the boards of directors of either
party to the Restructuring. Brazilian counsel advised Mr. Garrabrant
and Mr. McDonald that pursuant to Brazilian law they would have been permitted
to participate in these votes; however, Mr. Garrabrant and Mr. McDonald decided
that the process by which board approval of the Restructuring was procured would
be viewed as more transparent without their participation.
Messrs.
Henrique Freitas Alves and Mauricio Luis Luchetti are members of the board of
directors of Tenda. For biographical
information regarding Messrs. Henrique Freitas Alves and Mauricio Luis
Luchetti see
“—Management of Tenda.”
Mr.
Eduardo B. Gentil. Mr. Gentil holds a
bachelor’s degree in economics and history from Princeton University and
an MBA in Finance from New York University. He worked for JPMorgan Chase in 1983
and 1990 he became head of merger and acquisition department of JPMorgan Chase
in Brazil. He served as executive officer of Goldman Sachs from 1994 to 2001, as
an executive officer of BNDES in 2002, as chairman of Visa do Brasil from 2004
to 2007 and as executive officer of the investment banking group of Credit
Suisse in Brazil in 2007.
Special
Committee Meetings
In
connection with the Restructuring:
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The
members of the Special Committee − Messrs. Henrique de Freitas Alves,
Mauricio Luis Luchetti and Eduardo B. Gentil − first met on October 26,
2009. Mr. Percio de Souza, a representative of Estáter, the financial
advisor retained by Gafisa, also attended the meeting. At that
meeting, the Special Committee
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was
formally created and the members of the Special Committee discussed their
duties and the steps to be taken by the Committee in satisfying these
duties. The Special Committee received a report of some of the
initial financial considerations provided to Gafisa by its financial
advisor. The Special Committee discussed the financial, legal
and other advisors proposed to be retained by the Special Committee and
concluded that the proposed advisors had the professional qualifications,
experience and knowledge necessary to provide the advice and services for
which they were being retained. The Special Committee also noted that
Tenda had agreed to pay the fees and expenses of these advisers and
accordingly, that Tenda would execute on behalf of the Special Committee
any necessary or appropriate documentation with these advisers, all as
approved by the Special Committee. Accordingly, the Special
Committee concurred in the retention by the Special Committee of (1) Banco
Itaú BBA S.A., or Itaú BBA, to provide a valuation report to the Special
Committee for the purpose of assisting the Special Committee in assessing
the appropriate exchange ratio (or range thereof) for the Restructuring
and providing its recommendation to the Board of Directors of Tenda, and
(2) Ulhôa Canto, Rezende e Guerra Advogados to act as Brazilian legal
counsel to the Special
Committee.
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The
second meeting of the Special Committee was held on October 27, 2009 with
the following persons in attendance: (i) the members of the Special
Committee − Messrs. Henrique de Freitas Alves, Mauricio Luis Luchetti and
Eduardo B. Gentil; (ii) Messrs. Percio de Souza, Eleonora Chagas Antici
and Raul Aristakessian, representatives of Estáter; (iii) Rodrigo Osmo, a
representative of Gafisa; (iv) Renato Anastasia Polizzi Filho, Mirella
Maria Sakamoto, Ana Carolina Furlani Shibata, Felippe Andrade Ferreira
Bento and Sérgio Mychkis Goldstein, representatives of Itaú BBA, the
financial advisor retained by the Special Committee; and (v) Marcelo Maria
Santos and Pedro Chueiri, representatives of Ulhôa Canto, Rezende e Guerra
Advogados, legal counsel of the Special Committee. Estáter presented its
financial analyses in connection with the Restructuring for the valuation
of both Gafisa and Tenda and the criteria used to determine the exchange
ratio. Estáter explained that the financial analyses were prepared by
using the methodologies most frequently used for financial and economic
valuations in the real estate market: (1) market metrics; (2) balance
sheet metrics; and (3) multiples. The presentation concluded with a
proposal of an exchange ratio of 0.189 Gafisa share per Tenda common
share. The Estáter presentation was made available to everyone at the
meeting. Mr. Eduardo B. Gentil questioned the reasons why the financial
analysis of Estáter had not
also been prepared using the discounted cash flow methodology. The
representatives of Estáter and Itaú BBA agreed that such valuation
methodology is common, but that it is not generally used in
transactions related to real estate companies, since the specific
variations of real estate companies do not allow for the reasonable
estimates necessary in the calculation of the discounted cash flow
methodology. The members of the Special Committee then met separately with
their own financial and legal advisors and concluded that the valuations
of Tenda and Gafisa should be performed according to the following
methodologies: (1) market value (quotation and target price); (2)
liquidation value; (3) book value; and (4) adjusted book value. The
Special Committee and Estáter agreed that the financial analyses of
Estáter would be revised accordingly and the Special Committee instructed
its financial adviser, Itaú BBA, to prepare a valuation report for the
Special Committee on that
basis.
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On
October 28, 2009, the Special Committee held a conference call and the
following members attended via telephone: (i) the members of the Special
Committee − Messrs Henrique de Freitas Alves, and Mauricio Luis
Luchetti; (ii) Renato Anastasia Polizzi Filho, Mirella Maria
Sakamoto, Ana Carolina Furlani Shibata, Felippe Andrade Ferreira Bento,
representatives of Itaú BBA, the financial advisor retained by the Special
Committee; and (iii) Adriana Baroni Santi Barstad, Marcelo Maria Santos
and Pedro Chueiri, representatives of Ulhôa Canto, Rezende e Guerra
Advogados, legal counsel of the Special Committee. The aim of the
conference call was to discuss a preliminary draft of the valuation report
prepared by Itaú BBA to guide the Special Committee for the purposes of
establishing the exchange ratio. The draft of the valuation report
prepared by Itaú BBA was sent to the parties who attended the
conference call before the conference call was held. Since Mr. Eduardo B.
Gentil could not join the conference call due to other appointments, he
sent his preliminary comments to Itaú BBA by mail, before the beginning of
the conference call. During the conference call, the representatives of
Itaú BBA explained the structure of the transaction and the methodology
used to establish the proposed exchange ratio. After the comments to
the
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preliminary
draft were presented, it was agreed that a new draft of the valuation report
would be presented by the financial advisor and discussed during the next
conference call, which was held on October 29, 2009.
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On
October 29, 2009, the Special Committee held another conference call, with
the following persons in attendance via telephone: (i) the members of the
Special Committee − Messrs. Henrique de Freitas Alves Pinto and Eduardo B.
Gentil; (ii) Fernando Fontes Iunes, Renato Anastasia Polizzi Filho,
Mirella Maria Sakamoto, Ana Carolina Furlani Shibata and Felippe Andrade
Ferreira Bento, representatives of Itaú BBA, the financial advisor
retained by the Special Committee; and (iii) Adriana Baroni Santi Barstad,
Marcelo Maria Santos, Pedro Chueiri and Carlos Eduardo Pivoto Esteves,
representatives of Ulhôa Canto, Rezende e Guerra Advogados, legal counsel
of the Special Committee. The aim of the conference call was to
further discuss the valuation report prepared by Itaú BBA for the purposes
of establishing an exchange ratio and the changes made by Itaú BBA to its
original report. The new draft of the valuation report was sent to the
parties who attended the conference call before the conference call
was held. The representatives of Itaú BBA explained the three valuation
methodologies used in the report (market metrics, book value metrics and
trading multiples). In respect to the trading multiples metric, they
explained that the difference in the values obtained when compared to the
values obtained using the other methodologies was due to the use of the
multiple of peer Rossi. The members of the Special Committee then
requested that such difference be further explained in the report and that
the choice not to use certain methodologies be justified in the
report. Then, Mr. Henrique de Freitas Alves Pinto stressed that
the minority shareholders of Tenda would be moving from one of the few
real estate companies operating in the low income real estate sector and
would receive shares issued by a company that operates in other real
estate sectors that are more competitive than the low income sector and
asked the representatives of Itaú BBA if it would be correct to state that
the use of the trading multiples methodology should be considered as the
second most important towards defining the exchange ratio and that should
reflect the greater multiples associated with the low income sector. This
subject was further discussed in the next meeting of the Special
Committee. The members of the Special Committee also discussed with the
representatives of Itaú BBA about prioritizing the valuation methodologies
used. The representatives of Itaú BBA explained that usually the metrics
are not ranked or prioritized because each methodology provides unique
information that cannot easily be compared against the results of other
methodologies. Mr. Eduardo B. Gentil requested that Itaú BBA deliver to
the Special Committee a conclusion based on its report in order to enable
the Special Committee to independently (not beholden to the opinion of
Itaú BBA) make its recommendation to Tenda’s Board of Directors in
respect of the best exchange ratio for the purposes of the
Restructuring.
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On
October 30, 2009, the Special Committee met and the following persons
attended the meeting: (i) the members of the Special Committee − Messrs.
Henrique de Freitas Alves Pinto, Mauricio Luis Luchetti and Eduardo B.
Gentil; (ii) Sérgio Mychkis Goldstein, Renato Anastasia Polizzi Filho,
Mirella Maria Sakamoto, Ana Carolina Furlani Shibata and Felippe Andrade
Ferreira Bento, representatives of Itaú BBA, the financial advisor
retained by the Special Committee; (iii) Adriana Baroni Santi Barstad and
Carlos Eduardo Pivoto Esteves, representatives of Ulhôa Canto, Rezende e
Guerra Advogados, legal counsel of the Special Committee. Mr. Eduardo B.
Gentil suggested that they review fully the valuation report
prepared by Itaú BBA during the meeting. Itaú BBA explained
that the purposes of the work requested by the Special Committee was to
present valuation methodologies to guide the discussions, negotiations and
the ultimate decision of the Special Committee regarding its
recommendation to Tenda’s Board of Directors on the exchange ratio in
connection with the Restructuring. Mr. Eduardo B. Gentil explained that
for the Special Committee to advise Tenda’s Board of Directors it would be
important to have a conclusion from Itaú BBA in respect of the
valuations carried out. Mr. Sérgio Mychkis Goldstein explained that he
would try to obtain the internal approvals of Itaú BBA necessary to comply
with the request of the Special Committee. The Special Committee further
reviewed and discussed with its advisors the preliminary valuation report
prepared by Itaú BBA, including the methodologies used for the valuation.
During the meeting, Itaú BBA reaffirmed to the Special Committee that the
discounted cash flow analysis is an adequate methodology for valuing real
estate companies. All the valuation criteria used by Itaú BBA (market
metrics, book value metrics and trading multiples) were discussed again.
It was agreed that a new meeting should be held on November 3,
2009.
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The
following persons attended the meeting held on November 3, 2009, at 3:00
pm: (i) the members of the Special Committee − Messrs. Henrique de Freitas
Alves Pinto, Mauricio Luis Luchetti and Eduardo B. Gentil; (ii) Sérgio
Mychkis Goldstein, Fernando Fontes Iunes, Ana Carolina Furlani Shibata and
Felippe Andrade Ferreira Bento, representatives of Itaú BBA, the financial
advisor retained by the Special Committee; (iii) Adriana Baroni Santi
Barstad and Carlos Eduardo Pivoto Esteves, representatives of Ulhôa Canto,
Rezende e Guerra Advogados, legal counsel of the Special Committee. During
the meeting, the Special Committee and Itaú BBA discussed Itaú BBA’s
preliminary valuation report and its conclusion that an indicative range
for the exchange ratio in the Restructuring should be between 0.196 to
0.210 Gafisa shares for each Tenda share. Following these discussions,
which included discussions as to the metrics, methodologies and
assumptions of the report, Itaú BBA indicated that it would change certain
assumptions in the report, and this would likely lead to an upward
revision in the indicative exchange ratio range when it delivered its
final valuation report. Itaú BBA together with the Special
Committee decided that it was reasonable to exclude two of the
methodologies from the calculation of the exchange ratio (weighted average
price and adjusted book value) for the following reason: (i) the simple (not
weighted) and the weighted average price methodologies provide the same
results and the use of the weighted average price methodology would result
in double counting this metric’s importance in the overall
valuation; and (ii) Tenda and Gafisa have different
operational cycles and as a result the adjusted book value methodology was
likely to not capture the fair value of both companies. Based
on these changes, Itaú BBA estimated that the new range
would be between 0.200 to 0.220 Gafisa shares for each Tenda share. Then,
based on the analysis of the valuation report and on the discussions held
in the previous meetings, the members of the Special Committee,
independently and taking into account the various
factors considered in
the process of establishing an appropriate valuation for Tenda shares,
including (i) the valuation report, and/or (ii) any opinion
that may have been issued by its financial advisors, concluded that the
proposal of the Special Committee to be negotiated with Gafisa should be
0.210 shares issued by Gafisa for each share issued by
Tenda.
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The
following persons attended the meeting held on November 3, 2009, at 5:00
pm: (i) the members of the Special Committee − Messrs. Henrique de Freitas
Alves Pinto, Mauricio Luis Luchetti and Eduardo B. Gentil; (ii) Messrs.
Percio de Souza, Eleonora Chagas Antici and Raul Aristakessian,
representatives of Estáter, the financial advisor retained by Gafisa;
(iii) Rodrigo Osmo and Alberto de Oliveira Neto, representatives of
Gafisa; (iv) Fernando Fontes Iunes, Ana Carolina Furlani Shibata and
Felippe Andrade Ferreira Bento, representatives of Itaú BBA, the financial
advisor retained by the Special Committee; and (v) Adriana Baroni Santi
Barstad and Carlos Eduardo Pivoto Esteves, representatives of Ulhôa Canto,
Rezende e Guerra Advogados, legal counsel of the Special Committee. During
the meeting Itaú BBA presented its final valuation report and confirmed
its previous estimate that, in its view, the indicative range of exchange
ratios for the Restructuring was between 0.200 and 0.220 Gafisa shares for
each Tenda common share. The Special Committee then informed
the representatives of Gafisa and Estáter that, based on the advice of its
financial adviser and on the Special Committee’s own views, it recommended
an exchange ratio of 0.210 Gafisa shares for each Tenda common share. The
Special Committee indicated that the median point on the range of exchange
ratios indicated by Itaú BBA in its report was justified because (1) the
higher future potential value of the low income sector which was likely
not fully captured in the relative market value of Tenda given the lower
liquidity of its shares as compared to the liquidity of the Gafisa shares,
and/or (2) the less frequent coverage of the low income market by
analysts. The Special Committee also based its recommendation on the fact
that as a result of the Restructuring,
shareholders of Tenda, which is a company focused on the low income segment only, would
become shareholders of Gafisa, which is a company active in
broader real estate business in
Brazil. The representatives of Gafisa and Estáter did not
agree with the justifications related to the higher future potential value
and stated that they considered Tenda’s market price to be reflective of
its value. In addition, they also questioned certain elements
of the analysis made by Itaú BBA, primarily Itaú BBA’s assumption
regarding market coverage by analysts and the effects thereof and Itaú
BBA’s use of average market prices based on a period of 180 days. These
issues were discussed at the meeting and each party presented its
rationale and arguments. The parties agreed to hold another meeting on
November 4, 2009 in order to further discuss the
issues.
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The
following persons attended the meeting held on November 4, 2009: (i) the
members of the Special Committee − Messrs. Henrique de Freitas Alves
Pinto, Mauricio Luis Luchetti and Eduardo B. Gentil; (ii) Messrs. Percio
de Souza, Eleonora Chagas Antici and Raul Aristakessian, representatives
of Estáter, the financial advisor retained by Gafisa; (iii) Rodrigo Osmo
and Alberto de Oliveira Neto, representatives of Gafisa; (iv) Fernando
Fontes Iunes, Renato Anastasia Polizzi Filho, Ana Carolina Furlani Shibata
and Mirella Maria Sakamoto, representatives of Itaú BBA, the financial
advisor retained by the Special Committee; and (v) Adriana Baroni Santi
Barstad and Carlos Eduardo Pivoto Esteves, representatives of Ulhôa Canto,
Rezende e Guerra Advogados, legal counsel of the Special Committee. During
the meeting, the representatives of Estáter presented the financial
analyses prepared by Estáter for the purposes of the valuation of Gafisa
and Tenda. Rodrigo Osmo stated that the estimated range of
exchange ratios of 0.200 to 0.220 indicated in Itaú BBA’s report
would result in an estimated range of exchange ratios of 0.192
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to 0.217 if the valuation was adjusted to reflect Gafisa and
Estáter’s views on the matter. Therefore, Mr. Osmo proposed an
exchange ratio of 0.200, which corresponded to the highest estimated value
within the range originally proposed by the board of directors of Gafisa and
disclosed on October 22, 2009 in the initial announcement by Gafisa of its
intention to complete the Restructuring. The members of the Special Committee
then met separately and decided to negotiate an exchange ratio higher than
0.200. The parties agreed to hold a new meeting on November 5, 2009
in order to further discuss the subject.
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The
following persons attended the meeting held on November 5, 2009, at 1:00
pm: (i) the members of the Special Committee − Messrs. Henrique de Freitas
Alves Pinto, Mauricio Luis Luchetti and Eduardo B. Gentil; (ii) Fernando
Fontes Iunes, Renato Anastasia Polizzi Filho, Ana Carolina Furlani Shibata
and Felippe Andrade Ferreira Bento, representatives of Itaú BBA, the
financial advisor retained by the Special Committee; and (iii) Adriana
Baroni Santi Barstad and Carlos Eduardo Pivoto Esteves, representatives of
Ulhôa Canto, Rezende e Guerra Advogados, legal counsel of the Special
Committee. During the meeting, the Special Committee and its advisors
reviewed all the valuations, questions and arguments raised during the
previous meetings of the Special Committee and during the meetings of the
Special Committee with the representatives of Gafisa and
Estáter. The Special Committee reviewed the initial
announcement of the Restructuring dated October 22, 2009 and considered:
(1) the timing of the proposal, (2) the potential synergies that may be
obtained from a combination of Gafisa and Tenda, (3) that the
Restructuring would result in Tenda’s shareholders being issued shares in
a company that is part of the BM&F Bovespa’s Index, and (4) that
Gafisa is the only Brazilian real estate company that is listed on the
NYSE. At the end of the meeting, the Special Committee concluded that the
exchange ratio should be higher than the 0.200 Gafisa shares for each
Tenda share that was being offered by
Gafisa.
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The
following persons attended the meeting held on November 5, 2009, at 2:30
pm: (i) the members of the Special Committee − Messrs. Henrique de Freitas
Alves Pinto, Mauricio Luis Luchetti and Eduardo B. Gentil; (ii) Messrs.
Percio de Souza, Eleonora Chagas Antici and Raul Aristakessian,
representatives of Estáter, the financial advisor retained by Gafisa;
(iii) Rodrigo Osmo and Alberto de Oliveira Neto, representatives of
Gafisa; (iv) Fernando Fontes Iunes, Renato Anastasia Polizzi Filho, Ana
Carolina Furlani Shibata and Felippe Andrade Ferreira Bento,
representatives of Itaú BBA, the financial advisor retained by the Special
Committee; and (v) Adriana Baroni Santi Barstad and Carlos Eduardo Pivoto
Esteves, representatives of Ulhôa Canto, Rezende e Guerra Advogados, legal
counsel of the Special Committee. During the meeting, Mr. Eduardo B.
Gentil explained to the representatives of Gafisa and Estáter that the
members of the Special Committee had reviewed all the valuations,
questions and arguments raised in the previous meetings and the initial
announcement by Gafisa dated October 22, 2009 and that the Special
Committee had concluded that the exchange ratio should be higher than
0.200. The representatives of Gafisa stated that the initial proposal (an
exchange ratio of 0.189 Gafisa shares for each Tenda share) had already
been raised to 0.200. However, the representatives of Gafisa
asked the Special Committee to present a final offer to be analyzed by
Gafisa. The Special Committee proposed an exchange ratio of 0.205 Gafisa
shares for each Tenda share. The Special Committee explained
that this exchange ratio was the median point of the estimated range of
exchange ratios of 0.192 to 0.217 obtained by Gafisa after adjustments had
been made to Itaú BBA’s valuation report and yet still fell within the
estimated range of exchange rates provided to the Special Committee by
Itaú BBA. The Special Committee stated that, based on these
facts, it could recommend a 0.205 exchange ratio to the Tenda
board. The representatives of Gafisa then met separately and,
after returning to the meeting room, explained that after having spoken
with other representatives of Gafisa, they would submit the Special
Committee’s latest proposal for consideration to the entire Gafisa board
of directors. Therefore, the Special Committee decided to formally
recommend to the board of directors of Tenda the adoption of an exchange
ratio of 0.205 Gafisa shares for each Tenda
share.
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On
November 6, 2009, a joint meeting between the Special Committee and the
Fiscal Council of Tenda took place. The following persons attended the
meeting: (i) the members of the Special Committee − Messrs. Henrique
de Freitas Alves Pinto (by phone), Mauricio Luis Luchetti and Eduardo B.
Gentil; (ii) members of the Fiscal Council of Tenda − Messrs. Luiz
Fernando Moreira Cruz; Vitor Hugo dos Santos Pinto (by phone) and Laercio
Lampiasi. During the meeting, Mr. Eduardo B. Gentil explained that the
purpose of the meeting was to describe to the Fiscal Council of Tenda all
the work that had been performed by the Special Committee, including the
financial analyses reviewed by the Special Committee, the discussions held
between the Special Committee with its advisors and the discussions and
negotiations with representatives of Gafisa and Estáter. He also explained
that the Special Committee had analyzed the valuation report prepared by
Itaú BBA, the financial analyses prepared by Estáter, the
methodologies used by the financial advisors to provide such reports, the
ranges presented in each report, and the range disclosed by Gafisa in its
press release dated October 22, 2009. Mr. Eduardo B. Gentil indicated that
the Special Committee had also analyzed certain other reports prepared by
independent analysts on the Restructuring. Then, Mr. Eduardo B.
Gentil detailed all the discussions that had been held among the Special
Committee and its advisors and among the Special Committee and the
representatives of Gafisa, in order to evaluate the financial analyses and
negotiate and recommend the adoption of an exchange ratio for the
Restructuring. He explained that, as a result of these activities, the
Special Committee had concluded than an exchange ratio of 0.205 Gafisa
shares for each Tenda share would be appropriate. After that, the Fiscal
Council stated that all information related to the establishment of the
exchange ratio had been made available to them, including the valuation
report of Tenda prepared by Apsis, and that they felt comfortable with the
presentation made by the Special Committee and with its conclusion to
recommend to the board of directors of Tenda the adoption of an exchange
ratio of 0.205 Gafisa shares per Tenda common
share.
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On
November 6, 2009, the Special Committee submitted a written recommendation
to the Tenda board of directors. After describing some of the prior work
undertaken by them, the Special Committee recommended that the Tenda board
of directors adopt an exchange ratio of 0.205 Gafisa shares for each Tenda
common share in the Restructuring.
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While the
Special Committee was appointed in compliance with one of the procedures
recommended by CVM and took an active role in assisting in the negotiations of
the financial terms of the Restructuring and in advising the board of directors
of Tenda, U.S. holders of Tenda shares should understand that the role of the
Special Committee differs in certain aspects from that of a traditional special
committee appointed by U.S. companies in connection with transactions similar to
the Restructuring. In particular:
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the
Special Committee is not comprised entirely of persons having no
relationship with Gafisa or any of its
affiliates;
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two
of the three members of the Special Committee are members of the board of
directors of Tenda and one of these two was elected to that position by
the noncontrolling shareholders of Tenda;
and
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the
Special Committee worked independently and made a recommendation to the
board of directors of Tenda on the exchange ratio and the Tenda board of
directors accepted the Special Committee’s recommendation but the Special
Committee did not have the authority to act on behalf, or in place of the
Tenda board of directors.
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See “Part
Two: Summary—General Terms and Effects of the Restructuring” and “Part Two:
Summary—Effects of the Restructuring on Unaffiliated Shareholders” for a
discussion of the benefits and actual or potential adverse effects of the
Restructuring on Gafisa, Tenda, their affiliates and unaffiliated
shareholders.
General
The
Restructuring must be approved at separate EGMs of the shareholders of Gafisa
and Tenda. Subject to the prior effectiveness of the registration statement of
which this preliminary prospectus/information statement is a part, these
EGMs are scheduled to be held on December 30, 2009. In addition, Tenda will seek
approval of its debenture holders for the Restructuring and delisting from
BM&FBOVESPA’s Novo Mercado. Early maturity of the debenture may be a
consequence if debenture holders decide not to approve the Restructuring. See
“Part Four: Information on Tenda and Gafisa—Management’s Discussion and Analysis
of Financial Condition and Results of Operations of Tenda—
Indebtedness.”
No holder
of Gafisa ADSs may vote at the applicable meeting, although if you hold Gafisa
ADSs, subject to compliance with certain timing and other related requirements,
you have a right to instruct the Gafisa Depositary how to vote the Gafisa common
shares represented by your ADSs.
If the
Restructuring is approved, holders of common shares of Tenda will receive,
without any further action by them, except that if they are not a resident of
Brazil, they will need to comply with Instruction
No. 325 and Resolution No. 2,689, or Law No. 4,131, as the case may be, as
described above under “Part Two: Summary—General Terms and Effects of the
Restructuring,” 0.205 common share, no par value, of Gafisa for each Tenda
common share they hold, plus, in each case, cash instead of any fractional
shares.
Gafisa
will undergo a capital increase in the amount of R$448,549 as a result of the
Restructuring. The Restructuring is being effected pursuant to the terms
of the merger agreement governed by Brazilian law, a copy of which is
filed as an exhibit to the registration statement of which this
prospectus/information statement is a part.
Under
Brazilian law, there are no conditions for the completion of the Restructuring
other than approval by the shareholders of Gafisa and the shareholders of Tenda.
Under U.S. law, however, the registration statement of which this preliminary
prospectus/information statement forms a part, must be declared effective by the
SEC before the Tenda shareholders approve the Restructuring. Nevertheless, the
Companies do not intend to proceed with the EGMs or the completion of
the Restructuring or the Restructuring until the registration
statement of which this preliminary prospectus/information statement is a part
by the SEC and the distribution of this preliminary prospectus/information
statement to the shareholders of Tenda and the shareholder and ADS holders of
Gafisa.
The
approval of the Restructuring by the CVM is not a condition to the
Restructuring. However, the CVM has the authority to interrupt for up to 15 days
the course of the time period between the call notice and the date of the EGM if
it believes such an interruption is necessary to enable it to analyze the
transaction and verify that it does not breach applicable laws and regulations.
See “Part Three: Risk Factors—Risks Relating to the Restructuring—The CVM, the
Brazilian securities regulator, may suspend for up to 15 days the shareholders’
meetings scheduled to approve the Restructuring.”
Date,
Time and Place of the Meetings
The EGMs
of Gafisa and Tenda are currently scheduled to be held as follows:
Gafisa
S.A., December 30, 2009 2:00 p.m. (São Paulo time)
Av.
Nações Unidas No. 8,501, 19th floor, 05425−070 − São Paulo, SP −
Brazil
Construtora
Tenda S.A., December 30, 2009 9:00 a.m. (São Paulo time)
Av.
Engenheiro Luiz Carlos Berrini No. 1,376, 10th floor, 04571−000 − São Paulo, SP
− Brazil
Notwithstanding
the currently scheduled dates, the EGMs of Tenda and Gafisa will not take place
until after the SEC declares effective the registration statement of which this
preliminary prospectus/information statement is a part. If either EGM
is not convened due to a lack of quorum, because the SEC shall not have declared
the registration statement effective before the scheduled date of the EGM for
any other reason, the relevant EGM will be convened on a later date and call
notice will be released at least eight days notice in advance of the rescheduled
date of such EGM. Any changes to the abovementioned dates shall be disclosed in
Brazil in accordance with Brazilian corporate law and by the issuance of a press
release and the filing of an amendment to this prospectus/information statement
with the SEC.
Voting
Rights under Brazilian Law
Under
Brazilian law, in order to vote at an EGM, you must either appear in person and
vote your shares or appoint another shareholder, an executive officer of the
applicable company or an attorney as your attorney in fact and that appointed
person must appear at the meeting and vote your shares. Also, under
Brazilian law, you may be required to show documents proving your identity to
gain admittance to the meeting, provided you are entitled to
attend
the meeting. If you appoint an attorney-in-fact to vote on your behalf at the
meeting that person will be required to show original or certified copies of the
documents that grant him or her powers of representation.
There is
no record date for purposes of determining direct holders of common shares of
Gafisa and Tenda entitled to vote. Thus, any person holding Gafisa or Tenda
shares as of the date of the relevant EGM may participate in the vote.
Abstentions are counted for purposes of establishing a quorum but are not
counted as votes for or against any matter voted on at a meeting.
The
following rules apply with respect to who may vote at the EGMs:
Gafisa
If you
hold common shares, you may attend and vote at the Gafisa meeting. If you hold
Gafisa ADSs, you are not entitled to attend or vote at the Gafisa meeting,
although you are entitled to instruct the depositary how to vote the amount of
underlying Gafisa common shares in the manner described below.
Tenda
If you
hold common shares, you may attend and vote at the Tenda meeting.
None of
Gafisa, Tenda nor any of their affiliates nor any members of their respective
boards of directors or the boards of directors of those affiliates is soliciting
any proxy from you or requesting that you send a proxy or its equivalent to any
of them. However, if you are entitled to vote at one of the EGMs and
you wish to exercise your voting rights but you do not want to, or are unable
to, appear at the EGM in person, you may appoint a person to act on your behalf
at the meeting and vote your shares. If you grant a power of attorney under
Brazilian law to someone to act for you at the meeting, your appointee will be
required to show original or certified copies of the documents that grant him or
her powers of representation. The power of attorney should be deposited in
properly notarized and consularized form at the head office of Gafisa or Tenda,
as the case may be, no later than 48 hours before the occurrence of the
applicable EGM and may be revoked in accordance with Brazilian
law. While the form of power of attorney attached as Exhibit 99.7 to
the registration statement of which this preliminary prospectus/information
statement is a part provides an example of a power of attorney, shareholders
should confirm, with Brazilian counsel if necessary, that any power of attorney
or revocation thereof satisfies the requirements of Brazilian law, as Gafisa and
Tenda will not accept such forms or revocations if they do not comply with
Brazilian law. Shareholders that have given a power of attorney may revoke it by
issuing an instrument of revocation and depositing it, in properly notarized and
consularized form at the head office of Gafisa or Tenda.
Voting
by Gafisa ADS Holders
For
purposing of determining Gafisa ADS holders entitled to vote at the EGM of
Gafisa that will decide on the Restructuring, Gafisa Depositary has settled
November 13, 2009 as the record date. The Gafisa Depositary will distribute to
all registered holders of Gafisa ADSs as of the record date a notice, the form
of which notice will be in the sole discretion of the Gafisa Depositary,
containing:
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such
notice of meeting received by the Gafisa Depositary from Gafisa (or a
summary in English of the notice of the
meeting);
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a
statement that the Gafisa ADS Owners as of the close of business on the
record date referenced above will be entitled, subject to any applicable
law, the provisions of the Deposit Agreement, the by-laws of Gafisa and
the provisions of the deposited securities, to instruct the Gafisa
Depositary as to the exercise of the voting rights pertaining to the
common shares represented by their respective Gafisa
ADSs; and
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a
statement as to the manner in which such instructions may be
given.
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In lieu
of distribution of the materials provided to the Depositary in connection with
any meeting of, or solicitation of consents or proxies from Gafisa ADS Owners,
the Depositary may distribute to the Gafisa ADS
Owners a
notice that provides them with a means to retrieve such materials or receive
such materials upon request (i.e. by reference to a website).
Upon the
receipt, on or before the deadline established by the Gafisa Depositary for that
purpose, of written instructions from any person who was a Gafisa ADS Owner on
the record date, in the manner specified by the Gafisa Depository, the Gafisa
Depositary will endeavor, insofar as practicable and permitted under applicable
law, the provisions of the Deposit Agreements, the bylaws of Gafisa and the
provisions of the deposited securities, to vote or cause to be voted the
deposited securities represented by the such person’s Gafisa ADSs in accordance
with those instructions. If the Gafisa Depositary timely receives voting
instructions from a Gafisa ADS Owner which fail to specify the manner in which
the Gafisa Depository is to vote the deposited securities represented by such
Gafisa ADS Owner’s ADSs, the Gafisa Depositary will deem such Gafisa ADS Owner
(unless otherwise specified in the notice distributed to Gafisa ADS Owners) to
have instructed the depositary to vote in favor of the items set forth in such
voting instructions. Deposited securities represented by ADSs for which no
timely instructions are received by Gafisa Depositary from Gafisa ADS Owners
shall not be voted. However, the Gafisa Depositary shall, if so requested in
writing by Gafisa, represent all deposited securities (whether or not voting
instructions have been received in respect of such deposited securities from
Gafisa ADS Owners as of the record date referenced above) for the sole purpose
of establishing a quorum. Gafisa will reimburse the Gafisa Depositary for any
fees it incurs in processing such requests.
The
Gafisa Depositary may change the record date and the related deadlines
established for the purposes of requesting voting instructions from Gafisa ADS
Owners if the date of the Gafisa EGM changes. If the record date or
the deadline date is changed by the Gafisa Depositary, the Gafisa Depositary
will distribute to Gafisa ADS Owners written notice of such
changes.
Ownership
of a Gafisa ADS does not entitle the holder to attend meetings of Gafisa
shareholders. A Gafisa ADS Owner wishing to do so must surrender its ADSs and
obtain delivery of the underlying shares, registered in the name of that Gafisa
ADS Owner, before the record date for attendance at the meeting.
It
is important to remember that powers of attorney granted by the shareholders of
Gafisa for representation at the meeting must be deposited, in properly
notarized and consularized form at the head office of Gafisa, located at Av.
Nações Unidas No. 8,501, 19th floor, 05425−070 − São Paulo, SP − Brazil,
preferably at least 48 hours prior to the occurrence of the shareholders’
meeting. The powers of attorney granted by the shareholders of Tenda for
representation at the meeting must be deposited, in properly notarized and
consularized form, at the head office of Tenda, located at Av. Engenheiro Luiz
Carlos Berrini No. 1,376, 9th floor, 04571-000 − São Paulo, SP − Brazil,
preferably at least 48 hours prior to the occurrence of the shareholders’
meeting.
General
Terms
If the
Restructuring is consummated and you are a direct holder of common shares of
Tenda, you will receive 0.205 common share of Gafisa for each common share, with
no par value, of Tenda that you hold, plus cash instead of any fractional
shares.
If you
are a resident of Brazil and hold common shares of Tenda, no further action by
you is required. An entry or entries will be made in the share registry of
Gafisa to evidence the common shares of Gafisa you receive in the Restructuring.
At that time, Gafisa also will pay you cash instead of any fractional Gafisa
shares to which you would have been entitled as a result of the
Restructuring.
If you
are not a resident of Brazil, you will be required to comply with Instruction
No. 325 and Resolution No. 2,689, or Law No. 4,131, as the case may be, as
described above under “Part Two: Summary—General Terms and Effects of the
Restructuring.” Upon compliance with one of these Brazilian legal
regimes, an entry or entries will be made in
the share registry of Gafisa to evidence the common shares of Gafisa you receive
in the Restructuring. At that time, Gafisa also will pay you cash instead of any
fractional Gafisa shares to which you would have been entitled as a result of
the Restructuring.
If you
are a holder of Gafisa common shares or Gafisa ADSs, you will continue to hold
these securities after the Restructuring.
Although
the Restructuring will be effective by operation of law once the requisite
shareholder approvals have been obtained at the EGMs, the common shares of
Gafisa and Tenda will continue to trade on the BM&FBOVESPA under their
existing ticker symbols until the later of:
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a
couple of days after the end of the period for the exercise of withdrawal
rights by those Tenda shareholders to whom withdrawal rights are available
(which period will end 30 days after publication of the minutes of the
EGMs called to approve the Restructuring, as described in “—Withdrawal
Rights” below); and
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the
end of the period during which management of the companies is permitted
pursuant to Brazilian law to unwind the Restructuring. Under Brazilian
law, if management of the companies believes that the total value of the
withdrawal rights exercised by shareholders of the Tenda may put at risk
the financial stability of the companies, management may, within 10 days
after the end of the withdrawal rights period, call an extraordinary
general meeting of shareholders to unwind the
Restructuring.
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Once such
transitional period has elapsed, the shares of Gafisa issued as a result of the
Restructuring will trade under the ticker symbol for Gafisa’s common shares,
“GFSA3.” The Gafisa ADSs will continue to trade on the NYSE under their existing
ticker symbol, and Gafisa will continue to file periodic reports with the SEC
pursuant to the Securities Exchange Act
If you
hold common shares of Tenda and the application of the exchange ratio in the
Restructuring would entitle you to receive a fractional Gafisa share,
the number of Gafisa common shares that you will receive in the Restructuring
will be rounded down to the closest whole number, and we will auction on the
open market the fractional Gafisa common shares to which you would otherwise be
entitled. You will receive instead of the fractional Gafisa shares to
which you would otherwise be entitled, cash based on the net proceeds after
deducting applicable fees and expenses, including the fees charged by the
BM&FBOVESPA and the sales commissions charged by the brokerage firms that
Gafisa will hire) from the sale on the BM&FBOVESPA of the aggregate number
of fractional entitlements to Gafisa common shares, as applicable. Payments for
interests in fractional shares of Gafisa will be made within 30 business days
from the date of the receipt by Gafisa of the proceeds of such sale. The sale of
such fractional interests in auctions on the BM&FBOVESPA will occur as soon
as practicable after the completion of the Restructuring.
You do
not have to pay in cash any fees or commissions to Gafisa or Tenda for the sale
of your fractional common shares since fees and expenses will have already been
deducted from any amounts you receive.
The cash
payment made to you on account of the fractional shares may give rise to a
potential capital gain in Brazil, which would be taxed in accordance with the
rules described under “Part Five: The Restructuring—Material Tax
Considerations—Brazilian Tax Considerations.” Current
holders of Tenda common shares receiving cash payments on account of fractional
shares of Gafisa should consult their own tax advisor concerning the respective
Brazilian tax implications related thereto.
Under
Brazilian corporate law, any person who was a record holder of Tenda common
shares on October 21, 2009, the date on which Gafisa and Tenda first announced
the Restructuring, has the right to dissent from the Restructuring and exercise
withdrawal rights. Withdrawal rights may be exercised by any Tenda
shareholder who votes against the Restructuring, refrains from voting at the
Tenda EGM or fails to attend the Tenda EGM. Such right may be exercised during
the 30-day period following the date of publication of the minutes of the EGM of
Tenda in the newspaper “Valor Econômico” and in the São Paulo Official Gazette,
according to procedures which will be indicated by the Companies in due course
by means of a notice to shareholders to be published following Gafisa’s EGM, in
the newspapers “Estado de São Paulo” and “Valor Econômico” and in the São Paulo
Official Gazette, and on the websites of the CVM and
BM&FBOVESPA. Upon publication of the minutes, the Company will
also issue a press release in the United States and file a Form 6-K with the SEC
reflecting this. The failure to vote on the Restructuring at Tenda’s
EGM by a shareholder who would otherwise be entitled to exercise withdrawal
rights will not constitute a waiver of that shareholder’s withdrawal
rights.
Restructuring
at Tenda’s EGM by a shareholder who would otherwise be entitled to exercise
withdrawal rights will not constitute a waiver of that shareholder’s withdrawal
rights.
Further, under Brazilian corporate law,
a shareholder who exercises a withdrawal right generally is entitled to receive
from the company cash in an amount equal to the net asset value of its shares
determined based on the book value of the company’s assets and liabilities as of the date
of the company’s most recent balance sheet approved by
its shareholders, unless they request the Company to
drawn up a more
recent balance sheet as of
no more than 60 days from the date of the EGM that approved the
Restructuring.
Based on the latest balance sheet of
Tenda approved by the Tenda shareholders and audited by TGT, which is dated as of December 31,
2008, Tenda’s net book value per share amounted to R$2.65 as calculated by Tenda. Therefore, if there are any dissenting Tenda
shareholders and if these dissenting holders request a balance sheet more recent
than the 2008 balance sheet for purposes of determining the
value of their withdrawal rights, the value of the withdrawal rights of the
holders of record of Tenda shares on October 21, 2009 may be greater than R$2.65
per Tenda share or it may be less than this amount.
If you have withdrawal rights, your
withdrawal rights will lapse 30 days after publication of the minutes of the EGM
of Tenda called to approve the Restructuring. If you are a Tenda
shareholder and have withdrawal rights with respect to your Tenda shares, you
cannot exercise those withdrawal rights if you vote in favor of the
Restructuring.
The common shares of Gafisa and Tenda
will continue to be listed on the BM&FBOVESPA during this 30-day period.
Gafisa ADSs will continue to be listed on the NYSE during that
period.
The exercise of withdrawal rights may
give rise to a potential capital gain in Brazil, which would be considered to be earned outside of a
stock exchange environment in Brazil and taxed in accordance with the rules
described under “—Material Tax Considerations—Brazilian
Tax Considerations.” Holders of Tenda common shares
exercising withdrawal rights should consult their own tax advisors concerning
the respective Brazilian tax aspects related thereto.
Gafisa
and Tenda do not generally publish their business plans and strategies or make
external disclosures of their anticipated financial position or results of
operations. The assumptions and estimates underlying the prospective financial
information are inherently uncertain and, though considered reasonable by the
management of Tenda as of the date of its preparation, are subject to a wide
variety of significant business, economic, and competitive risks and
uncertainties that could cause actual results to differ materially from those
contained in the prospective financial information, including, among other
things, risks and uncertainties. See “Part Three: Risk Factors.” Accordingly,
there can be no assurance that the prospective results are indicative of the
future performance of Gafisa and/or Tenda or that actual results will not differ
materially from those presented in the prospective financial information.
Neither Gafisa nor Tenda intend to update or otherwise revise the prospective
financial information to reflect circumstances existing since its preparation or
to reflect the occurrence of unanticipated events, even in the event that any or
all of the underlying assumptions are shown to be in error. Furthermore, Gafisa
and Tenda do not intend to update or revise the prospective financial
information to reflect changes in general economic or industry conditions. Any
prospective financial information described in “—Valuation Reports of Itaú BBA,”
“—Financial Analyses of Estáter,” “—Valuation Report of Rothschild” and
“—Valuation Reports of APSIS” was not prepared with a view toward public
disclosure or with a view toward complying with the guidelines established by
the American Institute of Certified Public Accountants with respect to
prospective financial information.
Valuation
Report of Itaú BBA
The
Special Committee retained Itaú BBA as a financial advisor to perform certain
valuation analyses in connection with the Restructuring in order to assist the
Special Committee in its analysis and recommendation to the board of directors
of Tenda. On November 3, 2009, Itaú BBA presented its valuation report to the
Special Committee for its exclusive use in analyzing and evaluating the
Restructuring and for no other purpose.
Itaú
BBA’s valuation report is not, and may not be interpreted by any person
obtaining access to the valuation report to constitute a fairness opinion or any
indication of fairness from Itaú BBA in relation to the Restructuring. Itaú
BBA’s valuation report was not intended to be and does not constitute a
recommendation to any of Gafisa, Tenda or their respective shareholders or the
Special Committee as to any matters relating to the Restructuring. The following
summary of Itaú BBA’s valuation report is qualified in its entirety by reference
to, and should be reviewed together with, the full text of the valuation report,
including the information in the section entitled “Important Notes.” You are
urged to read the Itaú BBA valuation report and consider it
carefully. The Itaú BBA valuation report is not an expert opinion and
should not be the basis of any decision in connection with the
Restructuring.
The full
text of Itaú BBA’s valuation report, which sets forth the assumptions made,
matters considered, general procedures followed and qualifications and
limitations on the scope of the review undertaken by Itaú BBA for the exclusive
benefit of the Special Committee, is included as an exhibit to this preliminary
prospectus/information statement. You can obtain a copy of the Valuation Report
as described below in “Part Seven: Additional Information for Shareholders—Where
You Can Find More Information”.
Itaú
BBA’s valuation report was made to the Special Committee for the use and benefit
of the Special Committee. Itaú BBA was not asked to, and did not,
deliver or express, and its valuation report should not be considered or
construed as, an opinion, view or recommendation with respect to the
Restructuring, its term and conditions or the Exchange Ratio, including its
fairness (financial or otherwise), nor with respect to the fairness (financial
or otherwise) of the amount or nature or any other aspect of any compensation
payable to or to be received by any officers, directors, or employees of any
parties to the Restructuring, or any class of such persons, or with respect to
any other transaction or matter. Itaú BBA did not, and its valuation
report did not, address the merits of the underlying decision of the Special
Committee to recommend the Exchange Ratio for the Restructuring to the board of
directors of Tenda or of the underlying decision of Tenda to engage in the
Restructuring, and did not constitute, nor was it intended to be construed as, a
recommendation to any shareholder as to how the shareholder should vote with
respect to the Restructuring or any matters related thereto. Any
decisions that were taken or may be taken by each of Tenda, Gafisa and their
respective shareholders or the Special Committee, in connection with the
Restructuring, are their sole and exclusive responsibilities.
In
rendering its valuation report, Itaú BBA:
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held
meetings with certain senior officers, members of the Special Committee
and other representatives and advisors of each of Gafisa and Tenda
concerning the business, operations and prospects of Gafisa and
Tenda;
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examined
certain publicly available business and financial information relating to
each of Gafisa and Tenda and certain of their subsidiaries as well as
certain financial forecasts of certain subsidiaries and investments and
other information and data relating to each of Gafisa and Tenda, their
subsidiaries and investments, which were provided by Tenda or Gafisa to
Itaú BBA;
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examined
the audited consolidated financial statements of Tenda and Gafisa for the
fiscal years ended December 31, 2007 and December 31, 2008;
and
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considered
such other financial studies and analyses as Itaú BBA deemed appropriate,
including financial, economic and market
criteria.
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In
preparing its valuation report, Itaú BBA assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to it,
discussed with or reviewed by or for it, or publicly available. Itaú
BBA did not assume any responsibility for independently verifying this
information and did not undertake an independent evaluation or appraisal of any
of the assets or liabilities (whether contingent or not) of Tenda or Gafisa and
was not furnished with any such evaluation or appraisal, nor did Itaú BBA
evaluate the solvency or fair value of Tenda or Gafisa under any laws related to
bankruptcy, insolvency or similar matters. In addition, Itaú BBA did
not assume any obligation to conduct any physical inspection of the properties
or facilities of Tenda or Gafisa. With respect to the financial
forecast information furnished to or discussed with Itaú BBA by Tenda or Gafisa,
Itaú BBA assumed that the information had been reasonably prepared and reflected
the best currently available estimates and judgment of Tenda’s management as to
the expected future financial performance of Tenda. Itaú BBA
expressed no view as to such forecasts or the assumptions on which they were
based. Itaú BBA has not provided any legal, tax or accounting advice
to the Special Committee, Tenda or Gafisa in connection with the
Restructuring.
Itaú
BBA’s valuation report was necessarily based upon the market, economic and other
conditions as they existed and could be evaluated on, and on the information
made available to Itaú BBA as of the date of its presentation. Due to
the limitations described above, Itaú BBA has not and will not provide, either
expressly or implicitly, any representation or warranty in relation to any
information or forecasts used to prepare the valuation report. If any of such
information or forecasts, or assumptions underlying such information or
forecasts, is not fulfilled or if the information or forecasts prove to be
incorrect, incomplete or inaccurate, the conclusions of the valuation report may
be changed in a material manner. Itaú BBA has no obligation to update
or otherwise revise its valuation report.
The
preparation of a valuation report is a complex process that involves an array of
approaches to evaluate the most appropriate and relevant financial analysis
methods as well as the application of such methods. Neither the reference to a
specific analysis nor its order of appearance in the summary below is meant to
indicate that the analysis was given more weight than any other
analysis. The following summary is not a complete description of all
of the analyses performed and factors considered by Itaú BBA, but rather is a
summary of the material financial analyses performed and factors considered by
Itaú BBA. Selecting portions of the analyses or of the summary below,
without considering
the analyses as a whole, could create an incomplete view of the processes
underlying Itaú BBA’s analyses. With respect to the comparable
company analysis summarized below, such analysis reflects selected companies,
and not necessarily all companies, that may be considered relevant in evaluating
the Restructuring. In addition, no company used as a comparison is
either identical or directly comparable to Tenda or Gafisa. These
analyses involve complex considerations and judgments concerning financial and
operating characteristics and other factors that could affect the public trading
or acquisition values of the companies concerned.
The Itaú
BBA valuation report provides an estimate, in Itaú BBA’s sole discretion, of the
value obtained from applying certain valuation methodologies typically used in
financial evaluations of companies, and does not evaluate any other aspect or
implication of the Restructuring or any contract, agreement or understanding
entered into in relation to the Restructuring. Itaú BBA did not, and
its valuation report does not, express any opinion or view as to the value of
Gafisa shares that will be issued in connection with the Restructuring or the
prices at which shares of Tenda or Gafisa actually will or could be privately
sold or publicly traded in the securities markets at any time following the
announcement or consummation of the Restructuring. In addition, the
Itaú BBA valuation report is not and should not be interpreted by any person
obtaining access to the valuation report to constitute a fairness opinion or any
indication of fairness from Itaú BBA in relation to the Restructuring.
Furthermore, the valuation report does not deal with the strategic and
commercial merits of the Restructuring, nor does it deal with any possible
strategic and commercial decision of either Gafisa or Tenda to carry out the
Restructuring. The results presented in the Itaú BBA valuation report refer to
the Restructuring only and cannot be applied to any other present or future
decision or operation related to Gafisa or Tenda, the economic group to which
they belong or the markets in which
they
operate. The Itaú BBA valuation report does not constitute a judgment, opinion
or recommendation to the management of Tenda and the Special Committee or to any
third party, including the shareholders of Tenda or Gafisa, in relation to the
Restructuring, as it is not intended to serve as a basis for any investment
decision.
Itaú
BBA’s analyses do not include operating, tax or other benefits or losses of any
type whatsoever, including any possible premium, nor do they include any
synergies, incremental value and/or costs, if any, as of the closing of the
Restructuring, if closed, or of any other transaction. Itaú BBA’s analyses are
not and should not be considered as a recommendation in relation to how the
Special Committee and the shareholders of each of Gafisa and Tenda should vote
in connection with the Restructuring. Itaú BBA has not been requested
to take part and will not take part in the negotiation or structuring of the
Restructuring, since its work was limited to providing assistance to the Special
Committee in the analyses and negotiation of the exchange ratio with Gafisa in
connection with the Restructuring.
Tenda has
agreed to reimburse Itaú BBA for certain expenses and to indemnify Itaú BBA and
certain of its officers and directors from any and all liabilities for losses,
damages, expenses and judicial claims, directly or indirectly, as a result of
Itaú BBA’s engagement to produce the valuation report. Itaú BBA does
not take responsibility and shall not be held liable for any direct or indirect
damage and/or loss or loss of profit that may arise from the valuation
report. Itaú BBA will receive a fee in relation to the preparation of
the valuation report regardless of the results of the proposed
Restructuring.
In the
normal course of its business, Itaú BBA has provided investment banking and
banking services and financial services, in general, as well as other financial
services to Tenda and to Gafisa and to their respective affiliates from time to
time in the past, for which Itaú BBA was compensated, and may, in the future,
provide such services to Tenda and to Gafisa and to their respective affiliates,
for which Itaú BBA expects to be compensated. Itaú BBA and its affiliates
provide a variety of financial services and other services related to
securities, brokerage and investment banking. In the usual course of its
activities, Itaú BBA may purchase, hold or sell, on its behalf or on the behalf
and at the behest of its customers, shares and other securities and financial
instruments (including bank loans and other liabilities) of Tenda and Gafisa and
of any other companies that may be involved in the Restructuring, and Itaú BBA
may provide investment banking services and other financial services to such
companies and their respective subsidiaries or parent companies. The
professionals of the securities analyses department (research) and other
divisions of Itaú Group, including Itaú BBA, may base their analyses and
publications on different operating and market assumptions and on different
analysis methodologies when compared with those used in the preparation of
the Itaú BBA valuation report, so that the research reports and other
publications prepared by them may contain results and conclusions that are
different from those described in the Itaú BBA valuation report,
considering that such analyses and reports are performed by analysts who are
independent from any relationship with the professionals involved in the
preparation of the Itaú BBA valuation report. Itaú BBA adopts
policies and procedures designed to protect the independence of securities
analysts, whose views may differ from those of the investment banking
department. Itaú BBA also adopts policies and procedures designed to protect the
independence between the investment banking and the other areas and departments
of Itaú BBA and other companies of Itaú Group, including but not limited to
asset management, proprietary share trading desk, debt instruments, securities
and other financial instruments.
The
financial calculations contained in the valuation report may not always result
in an accurate sum due to rounding.
The
following discussion is a summary of the valuation report furnished by Itaú BBA
to the Special Committee, but it does not purport to be a complete description
of the analyses performed by Itaú BBA or its presentation to the Special
Committee. Considering the data below without considering the full narrative
description of the financial analyses described in the valuation report,
including the methodologies and assumptions underlying the analyses, could
create a misleading or incomplete view of Itaú BBA’s valuation report. The
following quantitative information, to the extent it is based on market data,
is, except as otherwise indicated, based on market data as it existed at or
prior to October 20, 2009, and is not necessarily indicative of current or
future market conditions.
Presentation
of Financial Analyses
Itaú BBA
prepared a valuation report to estimate the economic value ranges of Tenda and
Gafisa based on the methodologies that Itaú BBA believes are the most frequently
used for economic-financial valuations in the real estate sector. The main
methodologies analyzed in the Itaú BBA valuation report were:
Market
Price Metrics
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a.
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Simple average – market
price. Itaú BBA analyzed the share prices of each of
Tenda and Gafisa for the 30, 60, 90, 120 and 180-day periods prior to the
release of the Tenda’s Material Fact related to the Restructuring dated as
of October 22, 2009, and calculated an exchange ratio based on simple
averages utilizing the average closing price per share of Tenda and Gafisa
for these periods. This methodology resulted in an exchange ratio range of
0.188 to 0.196 shares of Gafisa per share of
Tenda.
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b.
|
Weighted average – market
price. Itaú BBA analyzed the share prices of each
of Tenda and Gafisa for the 30, 60, 90, 120 and 180-day periods prior to
the release of the Tenda’s Material Fact related to the Restructuring
dated as of October 22, 2009, and calculated a weighted average exchange
ratio based on the volume-weighted average price per share of Tenda and
Gafisa for these periods. This methodology resulted in an exchange ratio
range of 0.188 to 0.196 shares of Gafisa per share of
Tenda.
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c.
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Target
price. Itaú BBA calculated the exchange ratio based on
the target prices of equity research analysts. Itaú BBA analyzed equity
research reports released within the period between July and October of
2009. Itaú BBA calculated the exchange ratio based on the minimum and
maximum target prices for Tenda and Gafisa. The calculation resulted in an
exchange ratio range of 0.222 to 0.224 shares of Gafisa per share of
Tenda. The minimum target prices were based on the reports of JP Morgan,
in the case of Tenda, and Bank of America Merrill Lynch, in the case of
Gafisa. The maximum target prices were based on the reports of
Brascan Corretora, in the case of Tenda, and Barclays, in the case of
Gafisa.
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Balance
Sheet Metrics
Itaú BBA
also analyzed relevant and frequently used metrics in the real estate sector
such as Book Value, Adjusted Book Value and Net Asset Value, or “NAV”, or
Liquidation Value.
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a.
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Book
value. Itaú BBA calculated the exchange ratio based on
the Book Value per share of Tenda and Gafisa. Book Value was
calculated based on the earnings releases of Tenda and Gafisa for the
second quarter of 2009. The number of shares used did not consider
treasury shares and was based on the most recent information available.
This methodology resulted in an exchange ratio of 0.209 shares of Gafisa
per share of Tenda.
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b.
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Adjusted Book
value. Itaú BBA also calculated the exchange ratio based
on the Adjusted Book Value per share of Tenda and Gafisa. Adjusted Book
Value was calculated based on the earnings releases of Tenda and Gafisa
for the second quarter of 2009. The Adjusted Book Value was calculated as
the sum of the Book Value and the Backlog. The Backlog is the difference
between sales and costs to be recognized. This methodology resulted in an
exchange ratio of 0.185 shares of Gafisa per share of
Tenda.
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c.
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NAV. Itaú
BBA also calculated the exchange ratio based on the NAV per share of Tenda
and Gafisa. Itaú BBA calculated the NAV or Liquidation Value based on the
earnings releases of Tenda and Gafisa for the second quarter of 2009. NAV
was calculated based on the following methodology: the sum of (i)
receivables, inventories and sales to be recognized, less (ii) costs to be
recognized, land bank to be paid, net debt and
noncontrolling interests. This methodology resulted in an
exchange ratio of 0.148 shares of Gafisa per share of
Tenda.
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Trading
Multiples
Itaú BBA
analyzed the principal trading multiples, including Price to Book Value,
or “P/BV”, Price to Adjusted Book Value, or “P/Adj BV”, and Price to NAV,
or “P/NAV”, for a selected sample of comparable companies. Itaú
BBA
considered MRV Engenharia e Participações S.A. and PDG Realty S.A.
Empreendimentos e Participações as Tenda’s comparables due to their focus on
low-income housing and their relevant size and liquidity. Itaú BBA considered
Cyrela Brazil Realty S.A. Empreendimentos e Participações and Rossi Residencial
S.A., or “Rossi”, as Gafisa’s comparable companies due to their diversified
portfolio and their relevant size and liquidity. Itaú BBA did not use net income
multiples or other income statement-related metrics due to the (i) differences
among the companies’ operating cycles, (ii) different accounting methodologies,
and (iii) the lack of predictability of results for the companies in this
sector.
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a.
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Price to Book Value
multiple. Itaú BBA calculated the exchange ratio based
on the P/BV of the selected comparable companies for Tenda and Gafisa.
Itaú BBA calculated P/BV multiples based on the share price of the
comparable companies on October 27, 2009, and the most recent released
number of shares excluding treasury shares of each comparable company. The
Book Value of the comparable companies was based on the earnings releases
of the respective companies for the second quarter of 2009. This
methodology resulted in an exchange ratio range of 0.186 to 0.301 shares
of Gafisa per share of Tenda.
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b.
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Price to Adjusted Book Value
multiple. Itaú BBA calculated the exchange ratio based
on the P/Adj BV of the selected comparable companies for Tenda and
Gafisa. Itaú BBA calculated P/Adj BV multiples based on the
share price of the comparable companies on October 27, 2009, and the most
recent released number of shares excluding treasury shares of each
comparable company. The Adjusted Book Value of the comparable companies
was based on the earnings releases of the respective companies for the
second quarter of 2009 and calculated according to the formula described
above. This methodology resulted in an exchange ratio range of 0.182 to
0.251 shares of Gafisa per share of
Tenda.
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c.
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P/ NAV
multiple. Itaú BBA calculated the exchange ratio based
on the P/NAV of the selected comparable companies for Tenda and
Gafisa. Itaú BBA calculated P/NAV multiples based on the share
price of the comparable companies on October 27, 2009, and the most recent
released number of shares excluding treasury shares of each comparable
company. The NAV of the comparable companies was based on the earnings
releases of the respective companies for the second quarter of 2009 and
calculated according to the formula described above. This methodology
resulted in an exchange ratio range of 0.173 to 0.205 shares of Gafisa per
share of Tenda.
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As
discussed and agreed with the Special Committee, Itaú BBA did not use the
discounted cash flow, or “DCF”, methodology due to: (1) the real estate sector
does not use DCF as a relevant valuation metric; (2) the difficult
predictability of launches, level and velocity of financing transfers, among
other factors, which significantly impacts a valuation based on DCF and results
in unstable valuations; (3) the scarce equity research coverage for
Tenda.
Selected
Methodologies
Based on
certain of the methodologies described above and discussed and agreed with the
Special Committee, Itaú BBA determined an indicative exchange ratio, or the
“Indicative Exchange Ratio”. The Indicative Exchange Ratio was determined based
on the assumptions and criteria described below, which were discussed and agreed
to between Itaú BBA and the Special Committee. If any of the
information or forecasts, or assumptions underlying such information or
forecasts, relied upon by Itaú BBA proves to be incorrect, incomplete or
inaccurate, the conclusions of the valuation report may be changed in a material
manner. Itaú BBA does not take any responsibility in relation to the
Indicative Exchange Ratio to the Independent Committee and/or any third
party.
Given the
importance of each of the various methodologies and their wide use and
acceptance, as well as the value of their individual characteristics, Itaú BBA
believes that the simple average of the minimum and maximum values of each of
the exchange ratio ranges resulting from the individual methodologies is an
appropriate methodology to determine the Indicative Exchange Ratio.
(1) Market
Price Metrics
Current
and historical prices tend to best reflect the currently available information
and expectations. Since the simple and weighted average ranges are the same,
Itaú BBA used the simple average in order not to double this metric’s
weight.
In
addition, the target price was selected by Itaú BBA since it is an independent
metric, known in the market, and one that captures the expectation of share
appreciation as a proxy for “fair value”.
(2) Balance
Sheet Metrics
The Book
Value was considered as it reflects the current accounting position of both
Tenda and Gafisa and is a commonly used metric and is used by Brazilian
corporate law. The Adjusted Book Value was not considered due to differences in
the operating cycles of Tenda and Gafisa.
Itaú BBA
also did not consider the NAV, despite its being a relatively common metric,
since it fails to capture the growth potential as well as the differences in the
operating cycles of Tenda and Gafisa.
(3) Trading
Multiples
For the
same reasons explained above, Itaú BBA did not consider the P/NAV.
In spite
of being used with some frequency in the market, Itaú BBA believes that the
P/Book Value fails to capture the growth potential of Tenda and
Gafisa. Itaú BBA also believes that the upper limit of this range,
calculated based on Rossi’s multiple, is an outlier and that the wide range
would distort the analysis.
After
incorporating the backlog into the calculation, so as to include the growth
outlook and minimize distortions, Itaú BBA selected the P/Adjusted Book Value, a
widely used metric.
As a
result of the above and based on the assumptions and criteria described in more
detail in the valuation report, Itaú BBA determined for the exclusive benefit of
the Special Committee that the Indicative Exchange Ratio was 0.200 to 0.220
shares of Gafisa per share of Tenda.
Financial
Analyses of Estáter
Gafisa
retained Estáter as its financial advisor to perform certain financial analyses
in connection with the Restructuring. On October 20, 2009, Estáter
presented its financial analyses to Gafisa for its exclusive use in analyzing,
evaluating and negotiating the terms of the Restructuring and for no other
purpose.
Estáter’s
financial analyses do not constitute a fairness opinion or any indication of
fairness from Estáter in relation to the Restructuring. Estáter’s financial
analyses were not intended to be and do not constitute a recommendation to any
of Gafisa, Tenda or their respective board of directors and shareholders or the
Special Committee as to any matters relating to the Restructuring. The following
summary of Estáter’s financial analyses is qualified in its entirety by
reference to, and should be reviewed together with, the full text of the
financial analyses. You are urged to read the Estáter financial
analyses and consider them carefully. The Estáter financial analyses
are not an expert opinion and should not be the basis of any decision in
connection with the Restructuring.
The full
text of Estáter’s presentation of financial analyses, which set forth the
assumptions made, general procedures followed, matters considered and
limitations on the review undertaken, has been filed as an exhibit to the
registration statement of which this prospectus/information statement is a part.
You can obtain a copy of the presentation of financial analyses as described
below in “Part Seven: Additional Information for Shareholders—Where You Can Find
More Information.” Gafisa urges you to read the Estáter financial analyses
carefully and in its entirety.
Estáter’s
presentation of financial analyses was made to Gafisa for the use and benefit of
Gafisa. Estáter was not asked to, and did not, deliver or express, and its
financial analyses should not be considered or construed as, an
opinion,
view or recommendation with respect to the Restructuring, its term and
conditions or the Exchange Ratio, including its fairness (financial or
otherwise), nor with respect to the fairness (financial or otherwise) of the
amount or nature or any other aspect of any compensation payable to or to be
received by any officers, directors, or employees of any of Gafisa or Tenda, or
any class of such persons, or with respect to any other transaction or
matter. Estáter did not, and its financial analyses did not, address
the merits of the underlying decision of Gafisa’s board of directors to
recommend the Exchange Ratio for the Restructuring or of the underlying decision
of Gafisa to engage in the Restructuring, and did not constitute, nor was it
intended to be construed as, a recommendation to any shareholder as to how the
shareholder should vote with respect to the Restructuring or any matters related
thereto. Any decisions that were taken or may be taken by each of
Gafisa, Tenda and their respective shareholders or the Special Committee, in
connection with the Restructuring, are their sole and exclusive
responsibilities.
In
preparing the financial analyses contained in its presentation,
Estáter:
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a.
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held
meetings with certain senior officers, representatives and advisors of
Gafisa concerning the business, operations and prospects of Gafisa and
Tenda;
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b.
|
examined
certain publicly available business and financial information relating to
each of Gafisa and Tenda and certain of their subsidiaries as well as
certain financial forecasts from research institutions of certain
subsidiaries and investments and other information and data relating to
each of Gafisa and Tenda, their subsidiaries and investments, which were
provided by Gafisa to Estáter;
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c.
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examined
the audited consolidated financial statements of Gafisa and Tenda for the
fiscal years ended December 31, 2007 and December 31, 2008;
and
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d.
|
considered
such other financial studies and analyses as Estáter deemed appropriate,
including financial, economic and market
criteria.
|
In
preparing its financial analyses, Estáter assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to it,
discussed with or reviewed by or for it, or publicly available. Estáter did not
assume any responsibility for independently verifying this information and did
not undertake an independent evaluation or appraisal of any of the assets or
liabilities (whether contingent or not) of Gafisa or Tenda and was not furnished
with any such evaluation or appraisal, nor did Estáter evaluate the solvency or
fair value of Gafisa or Tenda under any laws related to bankruptcy, insolvency
or similar matters. In addition, Estáter did not assume any
obligation to conduct any physical inspection of the properties or facilities of
Gafisa or Tenda. With respect to the financial forecast information
from independent third parties, including research reports, Estáter assumed that
the information had been reasonably prepared and reflected the best currently
available estimates and judgments as to the expected future financial
performance of Gafisa, Tenda and comparable companies in the real estate
sector. Estáter expressed no view as to such forecasts or the
assumptions on which they were based. Estáter has not provided any
legal, tax or accounting advice to either of Gafisa or Tenda in connection with
the Restructuring.
Estáter’s
financial analyses were necessarily based upon the market, economic and other
conditions as they existed and could be evaluated on, and on the information
made available to Estáter, as of the date of its presentation of financial
analyses. Due to the limitations described above, Estáter has not and
will not provide, either expressly or implicitly, any representation or warranty
in relation to any information or forecasts used to prepare its financial
analyses. If any of such information or forecasts, or assumptions underlying
such information or forecasts, is not fulfilled or if the information or
forecasts prove to be incorrect, incomplete or inaccurate, the conclusions of
the financial analyses may be changed in a material manner. Estáter
has no obligation to update or otherwise revise its financial
analyses.
The
preparation of financial analyses is a complex process that involves an array of
approaches to evaluate the most appropriate and relevant financial analysis
methods as well as the application of such methods. Neither the reference to a
specific analysis nor its order of appearance in the summary below is meant to
indicate that the analysis
was given more weight than any other analysis. The following summary
is not a complete description of all of the analyses performed and factors
considered by Estáter, but rather is a summary of the material financial
analyses
performed and factors considered by Estáter. Selecting portions of
the analyses or of the summary below, without considering the analyses as a
whole, could create an incomplete view of the processes underlying Estáter’s
analyses. With respect to the comparable company analysis summarized
below, such analysis reflects selected companies, and not necessarily all
companies, that may be considered relevant in evaluating the
Restructuring. In addition, no company used as a comparison is either
identical or directly comparable to either of Gafisa or Tenda. These
analyses involve complex considerations and judgments concerning financial and
operating characteristics and other factors that could affect the public trading
or acquisition values of the companies concerned.
The
Estáter financial analyses provide an estimate, in Estáter’s sole discretion, of
the value obtained from applying certain valuation methodologies typically used
in financial evaluations of companies, and do not evaluate any other aspect or
implication of the Restructuring or any contract, agreement or understanding
entered into in relation to the Restructuring. Estáter did not, and
its financial analyses do not, express any opinion or view as to the value of
Gafisa shares that will be issued in connection with the Restructuring or the
prices at which shares of either of Gafisa or Tenda actually will or could be
privately sold or publicly traded in the securities markets at any time
following the announcement or consummation of the Restructuring. In
addition, the Estáter financial analyses are not and may not be interpreted by
any person obtaining access to the financial analyses to constitute a
fairness opinion or any indication of fairness from Estáter in relation to the
Restructuring. Furthermore, the Estáter financial analyses do not deal with the
strategic and commercial merits of the Restructuring, nor do they deal with any
possible strategic and commercial decision of either Gafisa or Tenda to carry
out the Restructuring. The results presented in the Estáter financial analyses
refer to the Restructuring only and cannot be applied to any other present or
future decision or operation related to Gafisa or Tenda, the economic group to
which they belong or the markets in which they operate. The Estáter financial
analyses do not constitute a judgment, opinion or recommendation to the
management of either of Gafisa or Tenda or to any third party, including the
Special Committee and the shareholders of Gafisa or Tenda, in relation to the
Restructuring, as they are not intended to serve as a basis for any investment
or any other decision.
Estáter’s
financial analyses do not include operating, tax or other benefits or losses of
any type whatsoever, including any possible premium, nor do they include any
synergies, incremental value and/or costs, if any, as of the closing of the
Restructuring, if closed, or of any other transaction. Estáter’s financial
analyses are not and should not be considered as a recommendation in relation to
how the Gafisa’s board of directors, the Special Committee and the shareholders
of each of Gafisa and Tenda should vote in connection with the
Restructuring. Estáter has not been requested to take part and will
not take part in the negotiation or structuring of the Restructuring, since its
work was limited to providing assistance to Gafisa in the analyses and
negotiation of the Exchange Ratio with the Special Committee and Tenda in
connection with the Restructuring.
Gafisa
has agreed to reimburse Estáter for certain expenses. Estáter does
not take responsibility and shall not be held liable for any direct or indirect
damage and/or loss or loss of profit that may arise from its financial
analyses.
In the
normal course of its business, Estáter has provided general financial and
consulting services to Gafisa from time to time in the past, for which Estáter
was compensated, and may, in the future, provide such services to Gafisa and to
its respective affiliates, for which Estáter expects to be
compensated.
The
financial calculations contained in Estáter’s financial analyses may not always
result in an accurate sum due to rounding.
The
following discussion is a summary of the financial analyses furnished by Estáter
to Gafisa, but it does not purport to be a complete description of the financial
analyses performed by Estáter or its presentation to Gafisa’s board of
directors. Considering the data below without considering the full narrative
description of the financial analyses, including the methodologies and
assumptions underlying the analyses, could create a misleading or incomplete
view of Estáter’s financial analyses. The following quantitative information, to
the extent it is based on market data, is, except as otherwise indicated, based
on market data as it existed at or prior to October 27, 2009, and is not
necessarily indicative of current or future market conditions.
Presentation
of Financial Analyses
Estáter
prepared financial analyses to estimate the economic value ranges of Gafisa and
Tenda based on the methodologies that Estáter believes are the most frequently
used for economic-financial valuations in the real estate sector. The main
methodologies analyzed in the Estáter financial analyses were:
Market
Price Metrics
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a.
|
Weighted average – market
price. Estáter analyzed the share prices of each
of Gafisa and Tenda for the 30, 60, 90 and 120-day periods prior to the
release of the Gafisa’s Material Fact related to the Restructuring dated
as of October 21, 2009, and calculated the exchange ratio based on the
volume-weighted average price per share of Gafisa and Tenda for these
periods. This methodology resulted in an exchange ratio range of 0.188 to
0.194 shares of Gafisa per share of Tenda. Estáter also
analyzed the average of the daily exchange ratio for shares of Gafisa and
Tenda for the 90-day period prior to the release of the Material Fact
related to the Restructuring dated as of October 21, 2009, which resulted
in an exchange ratio of 0.189 shares of Gafisa per share of
Tenda.
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b.
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Market
Multiples. Estáter analyzed principal market multiples,
including Average Enterprise Value/Net Revenues, Average Enterprise
Value/EBITDA, Average P/E, and Price to Book Value, for a selected sample
of comparable companies. Estáter considered Cyrela Brazil Realty S.A.
Empreendimentos e Participações, or “Cyrela”, and Rossi Residencial
S.A., or “Rossi”, as Gafisa’s comparable companies due to their
diversified portfolio and their relevant size and liquidity. Estáter
considered MRV Engenharia e Participações S.A., or “MRV”, as Tenda’s
comparable company due to its focus on low-income housing and their
relevant size and liquidity. These calculations resulted in an
exchange ratio range based on 2009 multiples of 0.110 to 0.221 shares of
Gafisa per share of Tenda and based on 2010 multiples of 0.110 to 0.221
shares of Gafisa per Tenda.
|
|
|
c.
|
Target
price. Estáter calculated the exchange ratio based on
the target prices of equity research analysts. Estáter analyzed equity
research reports released within the period between August and October of
2009. Estáter calculated the exchange ratio based on the lower and higher
target prices for Gafisa and Tenda in such period. The calculation
resulted in an exchange ratio range of 0.191 to 0.214 shares of Gafisa per
share of Tenda. The lower target prices were based on the reports of
Goldman Sachs, in the case of Gafisa, and JP Morgan, in the case of
Tenda. The higher target prices were based on the reports of JP
Morgan and Santander, in the case of Gafisa, and Fator, in the case of
Tenda.
|
Trading
Multiples
Estáter
also analyzed principal trading multiples, including Price to Book Value, or
“P/BV”, and Price to Adjusted Book Value (“P/Adj BV”), for a selected sample of
comparable companies. Estáter again considered Cyrela and Rossi as Gafisa’s
comparable companies, and considered MRV and PDG Realty S.A. Empreendimentos e
Participações, or
PDG, as
Tenda’s comparable company.
|
|
a.
|
Price to Book Value
multiple. Estáter calculated the exchange ratio based on
the P/BV of Gafisa and Tenda. The Book Value of Gafisa and Tenda was based
on the earnings releases of the respective companies for the second
quarter of 2009. This methodology resulted in an exchange ratio of 0.209
shares of Gafisa per share of
Tenda.
|
|
|
b.
|
Price to Adjusted Book Value
multiple. Estáter calculated the exchange ratio based on
the P/Adj BV of the selected comparable companies for Gafisa and Tenda.
Estáter calculated P/Adj BV multiples based on the share price of the
comparable companies on October 27, 2009, and the most recent released
number of shares excluding treasury shares of each comparable company.
This methodology resulted in an exchange ratio range of 0.182 to 0.251
shares of Gafisa per share of
Tenda.
|
Estáter
did not use the discounted cash flow (“DCF”) methodology due to: (1)
the real estate sector does not use DCF as a relevant valuation metric; (2) the
difficult predictability of launches, level and velocity of financing transfers,
among other factors, which significantly impacts a valuation based on DCF and
results in unstable valuations; and (3) the scarce equity research coverage for
Tenda.
Selected
Methodologies
Based on
certain of the methodologies described above, Estáter determined an indicative
exchange ratio (the “Indicative Exchange Ratio”). The Indicative Exchange Ratio
was determined based on the assumptions and criteria described below, which were
discussed with Gafisa. If any of the information or forecasts, or
assumptions underlying such information or forecasts, relied upon by Estáter
prove to be incorrect, incomplete or inaccurate, the conclusions of the
financial analyses may be changed in a material manner. Estáter does not take
any responsibility in relation to the Indicative Exchange Ratio to Gafisa and/or
any third party.
Estáter’s
initial conclusion resulted in an exchange ratio of 0.189 shares of Gafisa per
share of Tenda, in accordance with the 17-page report filed as part of Exhibit
99.3 of the registration statement, of which this prospectus/information
statement is a part. In reaching this initial conclusion, Estáter
chose not to rely on any income statement-related metrics due to the (1) wide
discrepancy in valuations, (2) different accounting methodologies, and (3) the
lack of predictability of results for the companies in this
sector. After discussing the methodologies to be used in determining
the Indicative Exchange Ratio in conjunction with the Special Committee, Estáter
elected to retain the following methodologies to render its final conclusion:
(1) market price analyses for the 30, 60, 90 and 120-day periods prior to the
release of the Material Fact related to the Restructuring dated as of October
21, 2009; (2) the target prices of equity research analysts; (3) P/BV; and (4)
P/Adj BV. Estáter believes that the average of the lower and higher values of
each of these exchange ratio ranges is an appropriate methodology to determine
the Indicative Exchange Ratio.
As a
result of the above and based on the assumptions and criteria described in more
detail in the presentation of financial analyses, Estáter determined that the
Indicative Exchange Ratio was 0.192 to 0.217 shares of Gafisa per share of
Tenda, with the middle of the Indicative Range Ratio at 0.205 shares of Gafisa
per share of Tenda.
Valuation
Report of Rothschild
The board
of directors of Gafisa retained Rothschild as its financial advisor to perform
valuation analyses in connection with the Restructuring. Rothschild rendered a
valuation report for the exclusive use of the Board of Directors of Gafisa (the
“Rothschild Valuation”).
Rothschild’s
valuation report is not, and should not be interpreted by any person obtaining
access to the valuation report to constitute a fairness opinion or any
indication of fairness by Rothschild in relation to the Restructuring.
Rothschild provided its valuation report for the information and assistance of
the Boards of Directors of Gafisa in connection with its consideration of the
merger of shares. Rothschild’s valuation report was not intended to be and does
not constitute a recommendation to any of Gafisa, Tenda or their respective
shareholders, nor does it constitute a recommendation to any shareholder as to
any matters relating to the merger of shares.
The full text of Rothschild’s valuation report, which sets forth the
assumptions made, general procedures followed, matters considered and
limitations on the review undertaken, is filed as an exhibit of the registration statement of which
this preliminary
prospectus/information
statement is a part. You can obtain a copy of the valuation report as described
below in “Part Seven: Additional Information for
Shareholders—Where You Can Find More Information”. You are urged
to read
the Rothschild valuation report carefully and in its entirety.
In order to prepare the valuation, as
instructed by Gafisa, Rothschild based its analysis exclusively in information
publicly available as of October 21, 2009. Therefore, Rothschild, among other
things, (1) reviewed certain financial and commercial information publicly
available regarding the Restructuring; (2) reviewed certain audited financial
statements, publicly available, of Gafisa, Tenda and other comparable companies
in the real estate sector operating in Brazil (“Sector Companies”); (3) analyzed the share price of
Gafisa and Tenda in the market and (4) analyzed comparable valuation metrics of
Gafisa, Tenda and the Sector Companies.
For purposes of preparing the Rothschild
Valuation, Rothschild did not undertake to perform an independent verification
of any financial, legal, commercial or other information used, reviewed or
considered by Rothschild for this work, and assumed and trusted, with
Gafisa’s consent and without any independent
investigations, the accuracy,
content, truthfulness, consistency,
completeness, sufficiency and integrality of the financial, accounting, legal
and tax information publicly available
analyzed by Rothschild. In this sense, Rothschild based its valuation on such
information, considering such information exact and complete in all its material
aspects. Rothschild has also assumed that, according to Gafisa’s statement, no relevant changes have
occurred since the base date of the Rothschild Valuation in connection with the
assets, financial condition, result of the Restructurings, business or
perspectives of Gafisa and Tenda and in this extent no material adverse effects
have occurred with respect to Gafisa’s or Tenda’s business, financial and assets.
Rothschild did not and will not assume herein any responsibility for the
independent verification of said information or for conducting an independent
verification or appraisal of any of the assets or liabilities (contingent or
otherwise) of Gafisa and Tenda. As a result, Rothschild does not assume any
responsibility related to the accuracy, truthfulness, integrality, consistency
and sufficiency of the information which Rothschild based the Rothschild
Valuation upon. Moreover, Rothschild has not undertaken to conduct, and did not
in fact conducted, any physical inspection of the properties, assets or premises
of Gafisa and Tenda.
The Rothschild Valuation is based on
market, economic, monetary and other effective conditions existing as of the
date of release of the Material Fact concerning the Restructuring and on other
publicly available information up to date, so that it is valid exclusively on
the date it was issued, since future events and other developments may affect
it. Therefore, although facts and events following the date of Material Fact may
affect the Rothschild Valuation, Rothschild does not undertake to update, review
or revoke it in view of any later developments or for any other reason. Neither
Rothschild, nor any of its affiliates and representatives, undertake any
responsibility or liability regarding these analysis. In addition, the results
specified in the Rothschild Valuation do not represent any opinion with respect
to the value in which Gafisa and Tenda should trade.
With respect to the preparation of the
Rothschild Valuation, Gafisa and its Board of Directors have not authorized
Rothschild to solicit, nor has Rothschild solicited, any indication of interest
from third parties to acquire, in whole or in part, the shares of any of Gafisa
and Tenda. Accordingly, the results contained in the Rothschild Valuation do not
necessarily correspond to, and should not be construed as representative of, the
prices at which Gafisa and Tenda could be sold to a third party on the date
hereof or in the future.
The preparation process of a financial
analysis is a complex process involving several definitions of the most
appropriate and relevant methods for its performance and the application of such
methods to particular circumstances, and therefore, a financial analysis, should
not be the subject matter of a partial analysis. Accordingly, Rothschild did not
attribute any subjective value to any particular factor considered by it. To
arrive at the conclusions presented in the Rothschild Valuation, Rothschild
followed a qualitative line of reasoning for the analysis and factors taken into
consideration. Rothschild’s conclusion was based on the results of
the complete analysis performed and evaluated as a whole, and this conclusion
was not based solely on or related to any specific factors or methods involved
in its analysis. Rothschild feels that its analysis should be considered in its
entirety and therefore if parts of this analysis and specific factors are
selected without considering the full context of the analysis and its
conclusions, this can result in an incomplete understanding of the processes
used to reach said conclusions. The results presented herein refer solely to the
Restructuring and do not extend to any other present or future matters or
Restructurings regarding Gafisa and Tenda, the economic group to which they
belong to or the sector in which they operate.
Rothschild and its affiliates are
constantly involved in rendering of financial analysis with respect to companies
and their securities in connection with mergers and acquisitions, negotiated
subscriptions, public biddings, secondary distributions of bonds, whether or not
listed on stock exchanges, placement of private bonds and other Restructurings,
as well as with other Restructurings involving estate and corporate matters.
Rothschild has been engaged by Gafisa and will receive a fee upon delivery of
the Rothschild Valuation regardless of the successful conclusion or not of the
Restructuring. In addition, Gafisa has undertaken to reimburse for
Rothschild’s out-of-pocket expenses as well as to
indemnify Rothschild due to certain obligations which may arise in connection
with its engagement. Moreover, Rothschild has not been requested and has not
rendered any advice regarding the structure, the price negotiations nor any
other aspects of the Restructuring, neither has Rothschild rendered other
services apart from the delivery of this Rothschild
Valuation.
Rothschild confirms that it has no
interest, whether direct or indirect, in Gafisa and Tenda or in the
Restructuring, and to the best of its knowledge there are no other relevant
circumstances that can typify a conflict of
interest regarding
Rothschild’s involvement in the Restructuring. No
further direction, limitation or difficulty was imposed on Rothschild by the controlling
shareholders of Gafisa or their officers, nor were any other acts performed by
them, which could in any way have affected the access, use or knowledge on
Rothschild’s part of any information, assets,
documents or work methodologies that are relevant for the quality of the
conclusions Rothschild has expressed in the Rothschild
Valuation.
You will also note that Rothschild is
not an accounting firm and did not render accounting or auditing services in
connection with this Restructuring, though Rothschild has used in its
methodology some accounting analysis and principles. In arriving at the
Rothschild Valuation, Rothschild did not take into account nor did evaluate (1)
the tax effects arising from the Restructuring; (2) the impact of any
commissions or expenses which may result from closing of the Restructuring; (3)
the impact of potential synergies resulting from the Restructuring; (4) the
impact of eventual contingencies or losses of any kind of Gafisa or Tenda, which
were not publicly available by the date of the Material Fact; and (5) the terms
of the merger of shares of Tenda. Furthermore, the financial calculations
contained in the Rothschild Valuation may not always result in a precise sum due
to rounding.
Rothschild did not analyze the
Restructuring from a legal or any other standpoint and, therefore, Rothschild is
not responsible (either by force of an agreement, civil liability provisions or
otherwise) for such analysis.
The Rothschild Valuation is for the exclusive use of the board of
directors of Gafisa in
considering the Restructuring, as detailed above, and shall not be used for any
other purposes, including but not limited to capital formation, nor shall it
grant any rights or remedies to the Boards of Directors of Gafisa and Tenda or
to any other shareholder, securities holder or creditor of Gafisa and Tenda. The
Rothschild Valuation is not nor shall it be used as a recommendation to, as an
opinion for, or as an advice to the shareholders of Gafisa or Tenda in relation
to the Restructuring. All shareholders shall conduct their own analysis of the
Restructuring, and such analysis shall be based on their own financial, tax and
legal advisors.
The Rothschild Valuation is exclusively
addressed to Gafisa and does not evaluate the underlying business decision by
Gafisa to engage in the Restructuring and does not constitute a recommendation
to any of Gafisa and/or the holders of the respective Gafisa shares (including,
but not limited to, as to how any such holder shall exercise its rights to vote
or any other rights with respect thereto). Rothschild reserves the right to
refuse any solicitation for presenting the Rothschild Valuation to third persons
other than Gafisa’s officers and members of Board of
Directors.
The following discussion is a summary of
the material financial analysis furnished by Rothschild to the Board of
Directors of Gafisa, but it does not purport to be a complete description of the
analysis performed by Rothschild or its presentation to the Board of Directors
of Gafisa. The summary includes information presented in tabular format. In
order to fully understand the financial analysis used by Rothschild, the table
must be read together with the text of the summary. The table alone does not
constitute a complete description of the financial analysis. Considering the
data below without considering the full narrative description of the financial
analysis, including the methodologies and assumptions underlying the analysis,
could create a misleading or incomplete view of Rothschild’s financial analysis. The following
quantitative information based on market data, is, except as otherwise
indicated, based on market data as it existed at or prior to October 21, 2009
and is not necessarily indicative of current or future market
conditions.
Summary
methodology
Since the analysis was based on publicly
available information, Rothschild based the Rothschild Valuation in two sets of
methodologies:
Share price
performance. Rothschild
analyzed the share price of Gafisa and Tenda over the last 120 trading days up
to October 21, 2009, calculating the market value of Gafisa and Tenda (on a
fully diluted basis) based on the observed average stock prices in different
periods within the last 120 trading days until the date of the Material Fact.
Rothschild then calculated the exchange ratio between Gafisa and
Tenda’s shares.
Real Estate sector
multiples analysis.
Rothschild performed an analysis of the value of Gafisa and Tenda based on
multiples derived from the analysis of Sector Companies. This analysis involved
the following steps: (1)
identify listed companies in Gafisa and
Tenda’s market segment with relevant size and
liquidity; (2) calculate the trading multiples of such Sector
Companies based on publicly available information; (3) evaluate the consistent
multiples for Gafisa and Tenda’s market value calculations; and (4)
calculate the exchange ratio between Gafisa and Tenda’s stock through these
multiples.
The selection of Sector Companies was
based on relevant size and liquidity. Rothschild based its analysis of
comparable companies in the ones which presented a market value above R$1.0
billion as of October 21, 2009. The Sector Companies were then separated in two
market segments: (1) mid/high income and (2) low income.
The Sector Companies selected for the
analysis of the mid/high income segment were: Cyrela, Rossi,
Brookfield
Incorpora S.A., or “Brookfield”, Tecnisa S.A., or “Tecnisa”, Even Consultora e Incorporadora S.A., or
“Even”, and EZ
Tec Empreendimentos e
Participa S.A., or “EZTec”. The companies selected for the
analysis of the low income segment were: MRV, PDG Realty S.A., or “PDG” and Tenda. Gafisa was not classified in
neither group as after the
merger of Tenda and FIT,
Gafisa started to have relevant exposure to both segments.
Rothschild did not include multiples
based on income statement figures (e.g.: revenues, EBITDA, net income) since
Tenda went through a restructuring during the last twelve months that does not
allow for a comparison of the figures with other Sector
Companies.
The multiples calculated in the analysis
were: (1) Price to book value; (2) price to adjusted book value; and (3) price
to Net Asset Value (“NAV”). The analysis of selected trading
multiples of comparable companies in the sector was executed in different time
periods within the last 120 trading days before the date of the material
fact.
Exchange
ratios analysis
The results of Rothschild’s analysis are set forth in the
following table:
|
Exchange
ratio (Gafisa shares per one Tenda share)
|
||||||||
|
Methodology
|
Minimum
|
Maximum
|
||||||
|
Share
price (based on average daily trading price)
|
0.188 | 0.202 | ||||||
|
Share
price (based on weighted average trading price)
|
0.189 | 0.210 | ||||||
|
Price
to NAV multiple
|
0.198 | 0.212 | ||||||
|
Price
to adjusted book value multiple
|
0.212 | 0.226 | ||||||
|
Price
to book value multiple
|
0.242 | 0.259 | ||||||
Valuation
Reports of APSIS
APSIS
Consultoria Empresarial Ltda. has been engaged by Tenda to prepare
the:
|
|
1.
|
Net
equity report of Gafisa and Tenda for purposes of Article 264 of Brazilian
Law No. 6,404/76, which is the Brazilian law that requires an appraisal of
the net worth of the Companies at market prices as of a reference date and
disclosure to shareholders of the outcome of that appraisal so that
shareholders have an independent parameter against which to judge the
Exchange Ratio and so that, for purposes of determining the value of a
shareholder’s withdrawal rights, this exchange ratio can be compared to
the Exchange Ratio proposed in the Restructuring. According to
the net worth appraisal of APSIS, the exchange ratio of Tenda shares for
Gafisa shares, determined on this basis would be 0.186199 shares of Gafisa
for each share of Tenda.
|
APSIS
Consultoria Empresarial Ltda. has also been engaged by Gafisa to determine
the:
|
|
2.
|
Book
value report of Tenda for purposes of Article 8 of Brazilian Law No.
6,404/76, which is the Brazilian law that requires an appraisal of the
book value of the shares of Tenda used to determine the capital increase
of the Gafisa. APSIS concluded that the indicative value, for
this purposes, of one Tenda share is R$2.80 See “Part Five—The
Restructuring—Withdrawal Rights.”
|
The
valuation reports are subject to the considerations and limitations set forth in
the reports. The full valuation reports for each Company are filed as exhibits
to the registration statement on Form F-4 of which this preliminary
prospectus/information statement is a part. Copies of these exhibits may be
obtained as described in “Part
Seven: Additional Information for Shareholders—Where You Can Find More
Information.” The description of the APSIS valuation reports set forth
below is qualified in its entirety by reference to the full text of the reports.
You are urged to read the APSIS
valuation report and consider it carefully.
Valuation
report regarding the market value of the net equity of the
Companies
In preparing its valuation reports,
APSIS:
read the
balance sheets as of September 30, 2009 furnished by the Companies;
|
|
·
|
interviewed
management of the Companies and reviewed documentation furnished by those
companies with respect to the aging of accounts receivable and accounts
payable, credit controls, derivatives with respect to indebtedness and
other matters;
|
|
|
·
|
analyzed
each asset and liability account on the balance sheets of the Companies
and, based on that analysis, adjusted each account to market
value;
|
|
|
·
|
calculated
the tax effects of those adjustments that represented a capital gain or
loss that would be deductible for tax purposes;
and
|
|
|
·
|
based
on those adjustments and calculations, calculated the market value of the
net equity of the Companies.
|
In adjusting the asset and liability
accounts of each company to market value, APSIS used the following
methodology:
|
|
·
|
for
fixed assets, APSIS generally obtained records from each company regarding
its fixed assets, calculated the estimated replacement value of the
assets, estimated the useful lives of the assets and used these estimates
to calculate the market value of the assets, except for certain assets of
low economic value, which were valued based on their book
values;
|
|
|
·
|
for
most other tangible assets and liabilities (pursuant to Brazilian law,
tangibles assets and liabilities considered to be immaterial are not
required to be valued), APSIS
either:
|
|
|
·
|
determined
the aging of the account from information provided by the applicable
company and calculated the present value of the account using a discount
rate equivalent to the cost of capital of each of the companies, adjusted
for the relative inflation rates in Brazil;
or
|
|
|
·
|
where
applicable, determined that the book value approximated the market value;
and
|
|
|
·
|
for
the intangible assets (in this case, exclusively Gafisa and Tenda
trademarks), APSIS estimated a hypothetical expense the Companies would
have to pay in royalties for the utilization of third-parties’ trademarks,
calculated the present value, using a discount rate equivalent to the cost
of capital of each of the Companies, of the incremental cash flow after
taxes the Companies would save from not paying such royalties and used
these estimated to calculate the market value of the assets;
and
|
|
|
·
|
for
the investments of Gafisa and Tenda in their operating subsidiaries, APSIS
calculated the net equity of those subsidiaries based on balance sheets
for those subsidiaries as of September 30, 2009 and adjusted accordingly
the amounts recorded as equity investments in those subsidiaries by Gafisa
and Tenda.
|
In
rendering its reports, APSIS relied exclusively on the market value of (i)
tangible assets, (ii) tangible liabilities and (iii) trademarks and did not
assess the market value of intangible assets (excluding trademarks). In
addition,
APSIS did not assess the validity of any liens or encumbrances on the companies’
assets or take any such liens and encumbrances into consideration in rendering
its reports.
Based on these assumptions and
qualifications, APSIS concluded that the market value of the net equity per
share of each of the companies as of September 30, 2009 was as
follows:
|
Company
|
Market
Value of Net Equity Per Shares as of September 30,
2009
|
|
|
(in
reais)
|
||
|
Gafisa
|
16.315994
|
|
|
Tenda
|
3.038015
|
If the
exchange ratio used to determine the shares to be received by shareholders
of Tenda in the proposed transaction had been calculated solely based
upon the market value of the net equity of the companies and their respective
number of outstanding shares, as calculated by APSIS, the exchange ratio would
have been as follows:
|
Company
|
Hypothetical
Exchange Ratio If Such Ratio Had Been Calculated
Using
the
Market Value of Net Equity of Companies as of
September
30, 2009
|
|
|
(in
reais)
|
||
|
Tenda
per Gafisa’s shares
|
0.186199
|
Valuation
report regarding the book value of the shares of Tenda used to determine the
capital increase of the merged companies
APSIS’
valuation reports were prepared for the exclusive use of the Board of Directors
of Gafisa in connection with its analysis of the proposed
Restructuring, as described further below, and should not be used for any other
purposes, including, without limitation, to the formation of capital of Gafisa
under the terms of Brazilian law, including, but not limited to, Article 8 of
Brazilian Law No. 6,404/76.
The
valuation reports were exclusively addressed to the Board of Directors of Gafisa
and do not address the underlying business decision by the Companies to engage
in the Restructuring and do not constitute a recommendation to any of the Companies and/or their
respective shareholders (including, but not limited to, as to whether any
shareholder should vote in favor of the Restructuring or exercise any withdrawal
rights or other rights with respect to the Restructuring).
In rendering its valuation reports
regarding book value, APSIS:
|
|
·
|
reviewed
certain financial analyses and forecasts for Tenda prepared and approved
by the senior management Tenda;
|
|
|
·
|
reviewed
financial statements of Tenda for the period ended September 30, 2009;
and
|
|
|
·
|
reviewed
certain other financial information with respect to each of the Companies,
including, but not limited to, the cash and bank balances, loans and other
debt obligations and hedging and contingencies provisions of each as of
September 30, 2009.
|
APSIS
also held discussions with members of the senior management of Tenda with
respect to their assessment of the past and current business operations,
financial condition and prospects of Tenda. The valuation analyses also take
into consideration the distribution of interest on net equity, as well as the
payment of dividends as anticipated by the Board of Directors of
Tenda.
In
preparing its valuation analyses, APSIS assumed and relied, with the express
consent of the Companies and without independent verification, on the
accuracy, content, truthfulness, consistency, completeness, sufficiency and
integrity of the financial, accounting, legal, tax and other information
reviewed by or discussed with it, and APSIS
did not
assume any responsibility to independently verify any of the information or to
make an independent verification or appraisal of any of the assets or
liabilities (contingent or otherwise) of the Companies, nor did APSIS examine
the solvency or fair value of the Companies under any laws concerning
bankruptcy, insolvency or similar matters. To this effect, APSIS assumed no
responsibility or liability with respect to the accuracy, truthfulness,
integrity, consistency or sufficiency of such information, for which the
respective Companies are solely and exclusively responsible. In addition, APSIS
did not assume any obligation to conduct, and did not conduct, any physical
inspection of the properties or facilities of the Companies. With the consent of
the Companies, APSIS assumed that the financial analyses and forecasts prepared
by the senior management of each of the Companies, as approved by the management
of each, were reasonably prepared on a basis reflecting the best currently
available estimates and judgments of each of the Companies.
APSIS’
valuation analyses were prepared based on the above mentioned methodologies. The
valuation analyses and their results do not purport to reflect the prices at
which any of the Companies or its respective securities could be sold, nor do
they take into account any element of value that may arise from the
accomplishment or expectation of Restructuring. APSIS is not an accounting firm
and did not provide accounting or audit services in connection with the
valuation reports. Valuation analyses are based upon (1) the book value of
Companies’ assets and liabilities and (2) the estimated market value of
Companies’ assets and liabilities, considering, but not limited to, replacement
costs, current realization value, assets’ useful lives and accounts’
aging.
APSIS’
valuation analyses are necessarily based on book and estimated market value as
in effect on, and the information made available to APSIS as of November 5,
2009, the date of the valuation reports, reflecting Companies’ financial
statements as of September 30, 2009. As a result, the valuation analyses are
valid exclusively as of that date, as subsequent events and developments may
affect the conclusions reached in the reports. APSIS did not assume any
obligation to update, review, revise or revoke the valuation analyses as a
result of any subsequent event or development. With respect to the
valuation analyses, the Companies and their boards of directors did not
authorize APSIS to solicit, nor did APSIS solicited, any indication of interest
from third parties to acquire, in whole or in part, any of the Companies’
shares. As a result, the results determined in the valuation analyses do not
necessarily correspond to, and should not be construed as representative of, the
prices at which any of the Companies could be sold in a third-party acquisition
transaction, at which their respective shares or, where applicable, ADSs traded
on the date of the valuation reports or trade at any subsequent time, or at
which the shares or ADSs of the Companies will trade after the
Restructuring.
In
addition, the valuation analyses (1) treat the Companies as stand-alone
operations, and the analyses and results of the valuation analyses therefore do
not include any operational, tax or other benefits or losses, or synergies,
incremental value and/or costs for the Companies, if any, which may arise from
the consummation of the proposed mergers; and (2) do not address the treatment
of the different classes of shares of the Companies, and any adjustments
intended to offset, or that may reflect, any specific rights associated with any
specific class of shares of the Companies.
APSIS did
not take into account (1) the tax consequences of the Restructuring for the
holders of the Companies’ shares or ADSs, as the case may be; and (2) the impact
of any fees and expenses that may result from the consummation of the
Restructuring, including, but not limited to, those related to any financial,
accounting or legal services that may be charged to the holders of shares of the
Companies. In addition, pursuant to applicable laws and regulations, APSIS
excluded the tax-related effects associated with the future use by the Companies
of the non-amortized goodwill arising from the purchase of shares of Gafisa and
Tenda. The financial calculations contained in the valuation analyses may not
always result in a precise sum due to rounding.
In
preparing its reports, APSIS relied upon the truthfulness, completeness and
accuracy of the information obtained from the Companies without independent
verification.
APSIS did
not conduct any general legal, accounting or other due diligence investigation
in connection with the preparation of the reports. APSIS did evaluate the future
profitability of the Companies, but did not independently verify any of the factors used in
calculating the cost of capital of each of the Companies in order to calculate
the
present
value of certain assets and liabilities. In addition, the valuation reports
delivered by APSIS do not constitute an audit report on the financial statements
used in preparing those reports.
Neither
the independent public accountants of the Companies, nor any other independent
accountants, have compiled, examined or performed any procedures with respect to
the prospective financial information used to prepare the valuation reports, nor
have they expressed any opinion or any other form of assurance on such
information or its achievability, and assume no responsibility for, and
disclaim any association with, this prospective financial
information.
The APSIS
valuation reports do not address the underlying business decision by the
Companies to engage in the proposed Restructuring and do not
constitute a recommendation to the Companies, or their respective shareholders
with respect to the transaction.
APSIS
provides valuation services to several large real estate companies and has over
28 years of experience in assisting major companies in Brazil in several
industries. APSIS was selected to prepare the valuation reports
based on its experience in preparing such reports and other factors. APSIS will
be paid a fee by the Companies, which have agreed to reimburse APSIS’
expenses.
Tenda will mail this prospectus
information statement to record holders of common shares of Tenda who are
residents of the United
States and whose names
appear on Tenda’s shareholder lists. Gafisa
will mail or otherwise distribute this prospectus/information statement to
record holders of Gafisa shares who are residents of the United States and Gafisa will arrange for the
distribution of this prospectus to Gafisa ADS holders. If you hold common shares
of Tenda, you are receiving this prospectus/information statement because Gafisa
may be deemed to be offering you securities for purposes of the U.S. Securities
Act of 1933, as amended.
You do not have to pay any brokerage
commissions in connection with the exchange of your Tenda shares for Gafisa
shares pursuant to the Restructuring if your shares of Tenda are registered in
your name. If your securities are held through a bank or broker or a custodian
linked to a stock exchange, you should consult with them as to whether or not
they charge any transaction fee or service charges in connection with the
Restructuring. In addition, if you are not a resident of Brazil, you may be required to pay certain
fees and expenses in order to comply with the applicable foreign investment
regime in Brazil as described above under “Part Two – Summary –Terms of the
Restructuring.”
Holders
of common shares of Tenda who receive common shares of Gafisa in connection with
the Restructuring may subsequently choose to hold Gafisa ADSs instead of Gafisa
shares. If a holder of Gafisa shares (or such person’s broker) deposits Gafisa
shares with the custodian appointed under the deposit agreement, the depositary
bank may create ADSs on such holder’s behalf. The depositary bank
will deliver these ADSs to the person indicated by the holder of Gafisa shares
only after such holder pays any applicable issuance fees and any charges and
taxes payable for the transfer of the Gafisa shares to the
custodian. A holder’s ability to deposit Gafisa shares and receive
ADSs may be limited by U.S. and Brazilian legal considerations applicable at the
time of deposit.
The
issuance of ADSs may be delayed until the depositary bank or the custodian
receives confirmation that all required approvals have been given and that the
Gafisa shares have been duly transferred to the custodian. The
depositary bank will only issue ADSs in whole numbers.
When the
holder of Gafisa shares makes a deposit of shares, such holder will be
responsible for transferring good and valid title to the depositary
bank. As such, the holder will be deemed to represent and warrant
that:
|
|
·
|
the
Gafisa shares are duly authorized, validly issued, fully paid,
non-assessable and legally
obtained;
|
|
·
|
all
preemptive (and similar rights, if any, with respect to such Gafisa shares
have been validly waived or
exercised;
|
|
·
|
the
holder of Gafisa shares is duly authorized to deposit the
shares;
|
|
·
|
the
Gafisa shares presented for deposit are free and clear of any lien,
encumbrance, security interest, charge, mortgage or adverse claim, and are
not, and the ADSs issuable upon such deposit will not be, “restricted
securities” (as defined in the deposit agreement);
and
|
|
·
|
the
Gafisa shares presented for deposit have not been stripped of any rights
or entitlements.
|
If any of
the representations or warranties are incorrect in any way, Gafisa and the
depositary bank may, at such holder’s cost and expense, take any and all actions
necessary to correct the consequences of the misrepresentations. If a
holder of Gafisa shares converts the shares into ADSs, such person will become a
party to the deposit agreement and therefore will be bound to its terms and to
the terms of any ADR that represents such person’s ADSs. For a
detailed description of Gafisa ADSs and the respective rights of Gafisa ADS
holders, please refer to Gafisa’s depositary agreement which is incorporated by
reference herein.
Under
Brazilian GAAP, the accounting principles used to prepare Gafisa’s consolidated
financial statements, the Restructuring is expected to be accounted for by the
book value of the shares exchanged.
Under
U.S. GAAP, the merger of shares will be accounted for as equity transactions in
accordance with Statement of Financial Accounting Standards (SFAS) No. 160,
“Noncontrolling Interests in Consolidated Financial Statements, an Amendment of
ARB No. 51.” This standard requires that the carrying amount of
noncontrolling interests (formerly referred to as
“minority interests”) be adjusted to reflect the change in our
ownership interest in the subsidiary. Any difference between book value of the
consideration received or paid and the amount by which the
noncontrolling interests is adjusted shall be recognized in equity
attributable to the parent.
The
following chart shows the simplified corporate structure of Gafisa and Tenda as
of September 30, 2009:
A
description of Gafisa’s management is set forth below.
Board
of directors
Our
company is managed by a board of directors and a board of executive officers.
Our shareholders elect the members of the board of directors. The board of
directors must have between five and seven members, each serving
a
two-year term. The board currently consists of six members. The terms of the
current members of the board of directors will expire in the annual general
shareholders’ meeting to take place in 2010. Our board of directors meets at
least once every quarter and at any other times when a meeting is called by its
chairman or by at least two other members. The decisions of our board of
directors are taken by the majority vote of its members.
The
following are the current members of our board of directors and their respective
positions.
|
Name
|
Position
|
Date
Elected
|
|||
|
Gary
R. Garrabrant
|
Chairman
|
April
4, 2008
|
|||
|
Caio
Racy Mattar
|
Director
|
April
4, 2008
|
|||
|
Richard
L. Huber
|
Director
|
April
4, 2008
|
|||
|
Thomas
J. McDonald
|
Director
|
April
4, 2008
|
|||
|
Gerald
Dinu Reiss
|
Director
|
April
14, 2008
|
|||
|
Jose
Ecio Pereira da Costa Junior
|
Director
|
April
30, 2008
|
|||
None of
our directors is entitled to any severance compensation in the event of
dismissal from office, except for unpaid compensation related to prior
years. Our directors are not subject to mandatory retirement due to
age.
The
following is a summary of the business experience and principal outside business
interests of the current members of our board of directors.
Gary
R. Garrabrant. Mr. Garrabrant is the chief executive officer and
co-founder of Equity International and executive vice president of Equity Group
Investments, LLC (EGI), the privately held investment company founded and led by
Sam Zell. Mr. Garrabrant joined EGI in 1996 and founded Equity International
with Mr. Zell in 1999. Mr. Garrabrant is a director of Equity International, and
is the former vice chairman and director of Homex and a former director of NH
Hoteles (MSE:NHH). Previously, Mr. Garrabrant was involved in the creation of
Capital Trust (NYSE:CT) where he served as vice chairman and director, and in
the formation of Equity Office Properties Trust. Prior to joining EGI, he
co-founded Genesis Realty Capital Management and was a managing director in the
real estate investment banking division of Chemical Bank and in a similar role
with The Bankers Trust Company. Mr. Garrabrant is a member of the University of
Notre Dame’s Mendoza College of Business Advisory Council and the Real Estate
Advisory Board at Cambridge University. Mr. Garrabrant holds a bachelor’s degree
in finance from the University of Notre Dame and completed the Dartmouth
Institute at Dartmouth College. He is currently the chairman of our board of
directors, and his current term commenced on April 4, 2008. He is also a member
of the Investment Committee and Compensation Committee. His business address is
Two North Riverside Plaza, Suite 1500, Chicago, Illinois, 60606, United
States. Mr.
Garrabant owns, directly or indirectly, common shares of both Gafisa and Tenda
and has an interest as a shareholder of both Companies. Mr. Garrabant’s ownership
interest in the two Companies currently is not equal and his respective
ownership interests in each of the Companies may change prior to completion of
the Restructuring.
Caio Racy Mattar. Mr. Mattar
is currently the investment and construction officer of Companhia Brasileira de
Distribuição (CBD− Pão de Açúcar Group). He is also a member of the board of
directors of Sendas Distribuidora S.A. and Paramount Têxteis Indústrias e
Comércio S.A. Mr. Mattar holds a bachelor’s degree in civil engineering and a
master’s degree in business administration from the London Business School. He
is currently a member of our board of directors, and his current term commenced
on April 4, 2008. He is also a member of the Compensation Committee and
Nomination and Corporate Governance Committee. His business address is Av.
Nações Unidas No. 8,501, 19th floor 05425−070 − São Paulo, SP −
Brazil.
Richard L. Huber. Mr. Huber
is an investor in different companies from various segments, especially in South
America. He is currently the chairman of Antarctic Shipping, a Chilean company
that operates maritime cruises in the Antarctic, and a director of, and an
investor in, Viña San Rafael in Chile, Covanta Energy Corporation, American
Commercial Barge Line, and other companies in the United States. Mr. Huber holds
a bachelor’s degree in chemistry from Harvard University. He started his career
as a trainee at First National Bank in 1959. He has worked for more than 40
years at Aetna Inc. in its financial area and as its chief executive officer and
chairman, and left
Aetna Inc. in 2000. He was also a member of the board of directors of many
United States and Latin American companies. He is currently a member of our
board of directors, and his current term commenced on April 4, 2008.
He is
also member of the Audit Committee and the Nomination and Corporate Governance
Committee. His business address is 139 W. 78th Street, 10024, New York, New
York, United States.
Thomas J. McDonald. Mr.
McDonald is chief strategic officer of Equity International. Mr. McDonald has
been associated with the Company since its inception in 1999. He is a director
of several of Equity International’s portfolio companies, including Gafisa
(NYSE:GFA, BZ:GFSA3), Tenda (BZ:TEND3), BR Malls (BZ:BRML3), and AGV Logística.
Prior to Equity International, Mr. McDonald was with Anixter International, a
global provider of network infrastructure solutions and services. Prior to
joining Anixter in 1992, Mr. McDonald was based in Mexico City with Quadrum S.A.
de C.V., a Latin American finance company. Mr. McDonald holds a bachelor’s
degree in international relations and Spanish from the University of Notre Dame
and a master’s degree in business administration from the University of
Chicago’s Graduate School of Business. He is currently a member of our board of
directors, and his current term commenced on April 4, 2008. He is also member of
the Investment Committee, the Compensation Committee and the Nomination and
Corporate Governance Committee. His business address is Two North Riverside
Plaza, Suite 1500, Chicago, Illinois, 60606, United States. Mr. McDonald is also
a member of Tenda’s board of directors as described below. Mr.
McDonald owns, directly or indirectly, common shares of both Gafisa and Tenda
and has an interest as a shareholder of both Companies. Mr. McDonald's
ownership interest in the two Companies currently is not equal and his
respective ownership interests in each of the Companies may change prior to
completion of the Restructuring.
Gerald Dinu Reiss. Mr. Reiss
is the founder and the officer of the business consulting firm Reiss &
Castanheira Consultoria e Empreendimentos Ltda. since 1987. He was the Planning
and Controlling Officer of Grupo Ultra from 1980 to 1986 and member of its
Executive Committee as of 1984. Professor of Business Planning of Escola de
Administração de Empresas de São Paulo at Fundação Getulio Vargas from 1974 to
1986. Mr. Reiss was also a member of the board of directors of various Brazilian
companies, as CAEMI, Petrobrás S.A., Petrobrás Distribuidora S.A, COMERC and
Grupo Pão de Açúcar. Mr. Reiss holds a bachelor’s degree in electric engineering
from Escola Politécnica da Universidade de São Paulo and a Ph.D in Business
Administration from California University, Berkeley, USA. He is currently a
member of our board of directors, and his current term commenced on April 14,
2008. He is also member of the Audit Committee. His business address is Rua
Cordeiro Galvão, 301, 05450−020 – São Paulo, SP – Brazil.
José Ecio Pereira da Costa Junior.
Mr. Pereira is currently head of the Administrative Council of IBEF – PR
Instituto Brasileiro dos Executivos de Finanças do Paraná. He started his
auditing career in 1974 and became in 1986 partner of Arthur Andersen & Co.
In June 2002 he was admitted as an audit partner at Deloitte Touche Tohmatsu in
Brazil. Mr. Pereira is also the founder of the business consulting firm
JEPereira Consultoria em Gestão de Negócios. Mr. Pereira holds a bachelor’s
degree in business administration from Fundação Getulio Vargas and a bachelor’s
degree in accounting from Faculdade São Judas Tadeu. He is currently a member of
our board of directors and the chairman of our Audit Committee, and his current
term commenced on April 30, 2009. His business address is Av. República
Argentina, 665, No. 906/907, 80240−210 – Curitiba, PR – Brazil.
Board
of Executive Officers
The
members of our board of officers are our legal representatives and are primarily
responsible for managing our day-to-day operations and implementing the general
policies and guidelines set forth in our shareholders’ general meetings and by
our board of directors. Our bylaws require that our board of officers be
composed of at least two members and a maximum of eight members. The members of
our board of officers are appointed by our board of directors for three-year
terms, and may be reelected or removed by our board of directors at any time.
Our bylaws and our board of directors determine the role of our executive
officers.
The
following are the current executive officers and their respective
positions.
|
Name
|
Position
|
Date
Elected
|
||
|
Wilson
Amaral de Oliveira
|
Chief
Executive Officer
|
December
22, 2006
|
||
|
Alceu
Duilio Calciolari
|
Chief
Financial Officer and Investor Relations Officer
|
December
22, 2006
|
||
|
Antonio
Carlos Ferreira Rosa
|
Officer
|
December
22, 2006
|
||
|
Mario
Rocha Nesto
|
Officer
|
December
22, 2006
|
||
|
Odair
Garcia Senra
|
Officer
|
December
22, 2006
|
None of
our executive officers is entitled to any severance compensation in the event of
dismissal from office, except the unpaid portions related to prior
years. The business address of each of our executive officers is Av.
Nações Unidas No. 8,501, 19th floor , 05425-070 - São Paulo, SP –
Brazil.
The
following is a summary of the business experience and principal outside business
interests of the current members of our board of executive
officers.
Wilson Amaral de Oliveira.
Mr. Amaral is currently our chief executive officer, and his current term
commenced in December 2006, and he is the president of the board of directors of
Construtora Tenda S.A. He holds a bachelor’s degree in business administration
from Fundação Getulio Vargas and a marketing certificate from ESPM. Previously,
he was a member of the board of directors and officer of Playcenter S.A., a
member of the board of officers of Hopi Hari S.A. and of the fiscal council of
Lojas Americanas S.A., an officer of Artex Ltda., as well as sales and marketing
officer of Fundição Tupy S.A., Tupy Tubos e Conexões Ltda. and CLC Alimentos
Ltda. He was also a member of the executive board of directors of Americanas.com
S.A., Kuala Ltda. (successor of Artex Ltda.), Toalia S.A. and ABC Supermercados
S.A. Mr. Amaral was also the managing partner of Finexia, country manager of DHL
Worldwide Express do Brasil Ltda. and managing director of Tupi Perfis
S.A.
Alceu Duilio Calciolari. Mr.
Calciolari is currently our chief financial officer and investor relations
officer, and his current term commenced in December 2006 and he is the vice
president of the board of directors of Construtora Tenda S.A. He holds a
bachelor’s degree in business administration from Faculdades Metropolitanas
Unidas and a master’s degree in controllership from Pontifícia Universidade de
São Paulo. Mr. Calciolari started his career as a trainee at ABN AMRO Real S.A.
in 1978 and worked as an auditor, from 1983 to 1996, at Arthur Andersen LLP. He
was also chief finance officer at Tupy S.A., from 1996 to 1998, and ALL—America
Latina Logística S.A., from 1998 to 2000. Mr. Calciolari has been our chief
financial officer since 2000.
Antônio Carlos Ferreira Rosa.
Mr. Rosa is currently our executive officer responsible for real estate
developments, and his current term commenced in December 2006. He holds a
bachelor’s degree in civil engineering from Universidade de São Paulo. He joined
Gafisa in 1995 as an intern, holding several positions, including construction
manager and development manager.
Mário Rocha Neto. Mr. Rocha
Neto is currently our operations executive officer, and his current term
commenced in December 2006. He holds a bachelor’s degree in civil engineering
from the Polytechnical School of the Universidade de São Paulo. Mr. Rocha Neto
joined the former Gomes de Almeida in 1978 as an intern. He was also a member of
the management of Y. Takaoka Empreendimentos S.A. and, from 2003 to 2004, a
member of the São Paulo Construction Union.
Odair Garcia Senra. Mr.
Garcia Senra is currently our executive officer responsible for institutional
relations, and his current term commenced in December 2006. He holds a
bachelor’s degree in civil engineering from the civil engineering school of
Mauá. Mr. Garcia Senra joined the former Gomes de Almeida in 1970 as an intern,
and he has worked as a construction engineer, a construction manager and a
construction officer. He was also a professor at the Civil Engineering School of
Mauá in 1972, and officer of Secovi—Sindicato de Compra e Venda de Imóveis in
São Paulo.
Compensation
Under
Brazilian corporate law, the company’s shareholders are responsible for
establishing the aggregate or individual amount paid to members of the board of
directors, the board of officers and the members of the fiscal council,
when installed. Once the shareholders establish an aggregate amount
of compensation, the members of the board of directors are then responsible for
setting individual compensation levels.
As of
December 31, 2008, the aggregate compensation, including cash and
benefits-in-kind paid to: (1) the members of our board of directors and
consulting committees totaled R$916 thousand; and (2) our executives
officers
totaled R$4.1 million. For 2009, our shareholders have established R$7.8 million
as the aggregate compensation to be paid to members of our board of directors,
board of officers and committees.
Certain
Transactions
As of
December 31, 2008, there were no contracts of any type or any other material
agreements entered into by us with the members of our board of directors and our
board of officers. As of December 31, 2008, our board of officers in the
aggregate held 1.08% of our share capital and our board of directors in the
aggregate held approximately 0.01% direct or indirect interest in our share
capital. Also, as of December 31, 2008, some of our executive officers held
interests in our subsidiaries as partners,
noncontrolling shareholders, and/or directors and executive
officers. In none of these cases, as of the referenced date, were the
interests held material. In addition, there is no family relationship
among our executive officers, directors or controlling shareholders, if
any.
A
description of Tenda’s management is set forth below.
Board
of Directors
Tenda is
managed by a board of directors comprised of a minimum of five and a maximum of
seven members, and by a board of executive officers comprised of five members.
Tenda’s shareholders elect the members of its board of directors. Tenda’s board
of directors consists of seven members, each serving a two-year term. The terms
of the current members of Tenda’s board of directors will expire in 2011.
Tenda’s board of directors holds regular quarterly meetings, and the chairman or
two board members may call special meetings whenever necessary.
The
following are the current members of Tenda’s board of directors and their
respective positions.
|
Name
|
Position
|
Date
Elected
|
||
|
Wilson
Amaral de Oliveira
|
Chairman
|
April
24, 2009
|
||
|
Alceu
Duilio Caliolari
|
Vice-Chairman
|
April
24, 2009
|
||
|
Fernando
Cesar Calamita
|
Director
|
April
24, 2009
|
||
|
Rodrigo
Osmo
|
Director
|
April
24, 2009
|
||
|
Henrique
de Freitas Alves Pinto
|
Director
|
April
24, 2009
|
||
|
Thomas
Joseph McDonald
|
Director
|
April
24, 2009
|
||
|
Mauricio
Luis Luchetti
|
Director
|
April
24, 2009
|
Set forth
below are brief biographical descriptions of Tenda’s directors:
For
biographical information regarding: Wilson Amaral de Oliveira, Alceu Duilio
Caliolari and Thomas J. McDonald, see “—Management of Gafisa.”
Fernando Cesar
Calamita. Mr. Calamita serves as the Planning, Control and
Management Officer of Gafisa. He worked in auditing and consulting at
PricewaterhouseCoopers from 1986 to 1991 and at Arthur Andersen LLP from 1991 to
1995. He served as Controller at Case New Holland from 1995 to 1997, as CFO of
ALL – América Latina Logística Argentina from 1999 to 2002, as Vice CFO and
Management Officer at Kidde South America (a United Technologies Corp. company)
from 2003 to 2007. Mr. Calamita holds a bachelor’s degree in business
administration from Pontifícia Universidade de São Paulo (PUC-SP) and a master’s
degree in business administration in finance from the University of São Paulo
(USP). His business address is Av. Nações Unidas No. 8,501, 19th
floor, São Paulo, Brazil.
Rodrigo Osmo. Mr. Osmo serves
as the Business Development Officer of Gafisa. He has worked as an
associate at GP Investments, as a consultant at Bain & Company and as
assistant professor at the Finance Department at Harvard Business School and was
the founding partner of Ysoquim Representações Internacionais. Mr. Osmo holds a
bachelor’s degree in chemical engineering from Polytechnic School at the
University of São Paulo (USP) and a master’s degree in business administration
from Harvard Business School. His business address is Av. Nações Unidas No.
8,501, 19th floor, São Paulo, Brazil.
Henrique de Freitas Alves
Pinto. Mr. Henrique de Freitas Alves Pinto founded Construtora Tenda in
the State of Minas Gerais when he was 20 years old and expanded its activities
to the real estate markets of São Paulo and Rio de Janeiro. His business address
is Av. Brigadeiro Faria Lima, No. 2413, 9th floor, São Paulo,
Brazil.
Mauricio Luis Luchetti. From
1985 to 2003 Mr. Luchetti served as the regional industrial and commercial
operations officer and as the human resources officer for Brahma/AmBev. From
2003 to 2006, he served as the organizational development officer for Votorantim
Participações and as COO for Votorantim Cimentos Brasil, both companies from
Grupo Votorantim. Mr. Luchetti holds a bachelor’s degree in business
administration from Pontifícia Universidade Católica do Rio de Janeiro—PUC/RJ,
and a post-graduate degree in finance and human resources from
IAG-PUC/RJ. Mr. Luchetti is currently an independent member of
Tenda’s board of directors and also the coordinator of its human resources
committee. His business address is Rua Joaquim Candido de A. Marques,
750, Loja 1, São Paulo, Brazil.
Board
of Executive Officers
The
by-laws of Tenda provide for a board of executive officers with five positions,
each elected by Tenda’s board of directors for a term of two years, reelection
being permitted. One officer may be elected for more than one position on
Tenda’s board of executive officers. The members of Tenda’s board of executive
officers are subject to removal at any time by Tenda’s
shareholders. In the case of a vacancy in any position on Tenda’s
board of executive officers, the respective replacement shall be appointed by
Tenda’s board of directors. The members of Tenda’s board of directors
shall appoint one member of Tenda’s board of executive officers to serve as its
Investor Relations Officer.
The board
of executive officers of Tenda currently consists of the following
officers:
|
Name
|
Position
|
Date
Appointed
|
||
|
Carlos
Eduardo Dan Alves Trostli
|
Chief
Executive Officer
|
April
28, 2009
|
||
|
Paulo
Roberto Cassoli Mazzali
|
Chief
Financial Officer, Chief Investor Relations Officer and Chief
Administrative Officer
|
April
28, 2009
|
||
|
Marcelo
Silva de Souza
|
Chief
Operations Officer
|
April
28, 2009
|
||
|
Daniela
Ferrari Toscano de Britto
|
Chief
Sales Officer and Chief Development Officer
|
April
28, 2009
|
None of
our executive officers is entitled to any severance compensation in the event of
dismissal from office, except the unpaid portions related to prior
years. The business address of each of our executive officers is Av.
Engenheiro Luiz Carlos Berini, No. 1,376, 9th floor, 04571-000 - São Paulo, SP –
Brazil.
Set forth
below are brief biographical descriptions of the executive officers of
Tenda:
Carlos Trostli. Mr. Trostli
is currently Tenda’s chief executive officer and his current term commenced in
April 2009. Mr. Trostli has 24 years of professional experience with
an emphasis on the marketing and sale of consumer goods, having been CEO of the
Brazilian subsidiaries of Quaker Oats, America Online and Reckitt Benckiser, for
Latin America’s South Cone region, in addition to serving at Bestfoods Brasil
and Procter & Gamble. He also worked in the American and German markets,
playing successive key roles in leading and integrating large teams. Carlos
holds a bachelor’s degree in Business Administration from PUC – SP and a
master’s degree in business administration from The Wharton School of Business
at the University of Pennsylvania.
Paulo Roberto Cassoli
Mazzali. Mr. Mazzali is currently Tenda’s chief financial officer,
investor relations officer and chief administrative officer and his current term
commenced in April 2009. Mr. Mazzali brings valuable experience
in the financial and capital markets arenas to Tenda having spent five years
with the Camargo Corrêa Group, one of the largest private business conglomerates
in Brazil with interests in multiple sectors. He worked in the financial and
strategic planning areas of the Group’s holding company until September 2006,
when he became CFO and investor relation’s officer of Camargo Corrêa
Desenvolvimento Imobiliário, a residential and commercial real estate developer,
where he led the public offering of that company. Between 1992 and 2000, Mr.
Mazzali worked for General Motors do Brasil’s Allison Transmission Division,
before moving to Grupo Framatome in 2001. He holds a degree in
Mechanical Engineering from the Polytechnic School of the University of São
Paulo, with a
specialization
in marketing from the Superior School of Advertising and Marketing, as well as a
master’s degree in business administration with honors from The Wharton School
of Busines at the University of Pennsylvania.
Marcelo Silva de Souza. Mr.
Souza is Tenda’s chief operations officer and his current term commenced in
April 2009. Mr. Souza has 16 years of professional experience, with an emphasis
on the construction and management of residential and commercial real estate and
hotels. Before joining Tenda, he was Construction Officer at FIT and also worked
some time at Gafisa. With a nationwide scope, he played a leading role in the
startup of the engineering area in new markets, as well as implementing
management and quality programs. Mr. Souza holds a degree in Civil
Engineering from the University of Santa Úrsula, in the state of Rio de Janeiro,
and a master’s degree in business administration in management from the
University of São Paulo and in Real Estate Planning and Management from
FAAP.
Daniela Ferrari Toscano de Britto.
Ms. Toscano de Britto is Tenda’s chief sales officer and chief
development officer and his current term commenced in April 2009. Mr. Britto is
married and holds a degree in Civil Engineering from Mackenzie University and a
master’s degree in business administration in finance from Ibmec. She has worked
for Grupo Gafisa for 17 years, having joined the company as a works intern in
1992. In 2007, she took over as FIT’s Business Officer.
Fiscal
Council
Under
Brazilian corporate law, the fiscal council is a corporate body independent from
the management of the company and its external auditors. The fiscal council may
act either as a permanent or nonpermanent body and whenever installed, must
consist of no less than three and no more than five members. The primary
responsibility of the fiscal council is to review management’s activities and
the company’s financial statements and to report its findings to the
shareholders of the company. The fiscal council is not equivalent to an audit
committee as contemplated by the Securities Exchange Act, as amended. According
to CVM Resolution No. 324/00 and taking into consideration our corporate
capital, our fiscal council, a nonpermanent body, must be established at a
shareholders’ general meeting upon the request of shareholders representing at
least 2% of the shares with voting rights, and its members shall remain in
office until the annual general shareholders’ meeting of the year following
their election. Each member of the fiscal council is entitled to receive
compensation in an amount equal to at least 10% of the average amount paid to
each executive officer (excluding benefits and profit sharing).
Listed
below are the current members of Tenda’s fiscal council and their respective
positions:
|
Name
|
Position
|
Date
Elected
|
||
|
Vitor
Hugo dos Santos Pinto
|
Member
|
April
28, 2009
|
||
|
Laércio
Lampiasi
|
Member
|
April
28, 2009
|
||
|
Luiz
Fernando Moreira Cruz
|
Member
|
April
28, 2009
|
||
|
Aline
de Oliveira Lima
|
Deputy
Member
|
April
28, 2009
|
||
|
Fabio
Antônio Pereira
|
Deputy
Member
|
April
28, 2009
|
||
|
Rodrigo
Luis Rey
|
Deputy
Member
|
April
28, 2009
|
Set forth
below are brief biographical descriptions of the members of Tenda’s fiscal
council:
Vitor Hugo dos Santos Pinto.
Mr. Pinto has a bachelor’s degree in business administration, and postgraduate
qualifications in investment funds from the Pontifical Catholic University of
São Paulo. Since August 2003, he has been the Vice President of Asset Management
at CAIXA. Between 2003 and 2004, he was an analyst as well as manager
of assets and fixed income and equity products. In 2005, he started working in
the structuring and management of structured funds, with Private Equity Funds,
Credit Rights Investment Funds and Real Estate Investment Funds. His business
address is Av. Paulista, No. 2300, 11th floor,
São Paulo, SP – Brazil.
Laércio Lampiasi. Mr.
Lampiasi has a bachelor’s degree in accounting from São Paulo City University
(UNICID), with postgraduate studies in Controllership from Mackenzie University
and business management from the São Paulo University’s Institute of
Administration Foundation (FIA). He began his career as an intern at
PRODAM,
the data processing company of the Municipality of São Paulo, in its Finance
Department on June 19, 1979. He worked as an accountant at the Brazilian Savings
Fund Association from July 1, 1982 to October 11, 1986 and at Arcesp Previdência
Privada, from October 13, 1986 to June 19, 1987, both publicly-held private
pension funds. From March 1, 1988 to January 31, 2001, he worked as Control
Manager at Reichhold S/A, a multinational in the chemicals and industrial resins
segment. He joined Gafisa S/A in February 1, 2001, where he is currently Tax
Planning Manager. His business address is Av. Nações Unidas No. 8,501, 19th
floor, São Paulo, SP – Brazil.
Luiz Fernando Moreira Cruz.
Mr. Cruz has a bachelor’s degree in business administration, an MBA from Dom
Cabral in Minas Gerais, and postgraduate studies in accounting and financial
administration from FAAP. He worked in the International Treasury of Lloyds Bank
from 1998 to 2003 and as treasurer of AREVA T&D from 2004 to 2005. He has
been the finance manager at Gafisa since 2005. His business address is Av.
Nações Unidas No. 8,501, 19th floor, São Paulo, SP – Brazil.
Aline de Oliveira Lima. Ms
Lima has a bachelor’s degree in business administration from Paulista
University, a master’s degree in business administration in corporate management
from the Superior School of Advertising and Marketing (ESPM), and postgraduate
qualifications in Financial Markets from the Mackenzie Presbyterian Institute.
Since 2009, she has been a technical consultant to the Vice-President of Asset
Management at CAIXA, where she has been working since 1998. From February 2006
to January 2009, she served as Institutional Relationship Manager, being
responsible for the relationship with Private and Public Complementary Pension
Funds, Insurance Companies, Savings Companies, Private Social Security Regimes
(RPPS) and large high net worth individuals and corporate investors with regard
to investments and financial solutions through structured investment funds. His
business address is Av. Paulista, No. 2300, 11th floor;
São Paulo, SP – Brazil.
Fábio Antônio Pereira. Mr.
Pereira has a bachelor’s degree in accounting from Paulista University (UNIP)
and in business administration from Faculdades Metropolitanas Unidas (FMU) and a
master’s degree in business administration from Fundação Getulio Vargas
(FGV-RJ). He worked at Arthur Andersen and at Deloitte Touche Tohmatsu from
November 1989 to September 2004 in the audit and capital markets areas. From
September 2004 to October 2006, he worked as planning and control superintendent
for Companhia Energética do Rio Grande do Norte (COSERN), a company of group
Neoenergia. He also worked at Gol Transportes Aéreos S.A. as an Officer of Tax
and Accounting areas from November 2006 to September 2008. Currently, he works
as Controller in Gafisa. His business address is Av. Nações Unidas No. 8,501,
19th floor, São Paulo, SP – Brazil.
Rodrigo Luis Rey. Mr. Rey has
a bachelor’s degree in economics from the Armando Alvarez Penteado Foundation
(FAAP) and a master’s degree in business administration in corporate finance
from the Brazilian Institute of Capital Markets (Ibmec). Mr. Rey began his
career at the operations desk of BNP – LAIBG. He later worked for Deutsche Bank
in the area of Derivatives and Structured Operations for five consecutive years.
Mr. Rey also worked for three years in the planning and control area at CSN,
where he was responsible for the management of the company’s cash in excess of
R$ 1.5 billion, structuring the company’s hedge and funding operations. He later
worked for Even Construtora, where he was responsible for the company’s
financial department. In 2008, Mr. Rey joined Gafisa as its financial manager.
His business address is Av. Nações Unidas No. 8,501, 19th floor, São Paulo, SP –
Brazil.
Compensation
Under
Brazilian corporate law, the company’s shareholders are responsible for
establishing the aggregate or individual amount paid to members of the board of
directors, the board of officers and the members of the fiscal council, when
installed. Once the shareholders establish an aggregate amount of
compensation, the members of the board of directors are then responsible for
setting individual compensation levels.
As of
December 31, 2008, the aggregate compensation, including cash and
benefits-in-kind paid to: (1) the members of our board of directors totaled
R$600 thousand; and (2) our executives officers totaled R$3.5 million. For 2009,
our shareholders have established R$6.0 million as the aggregate compensation to
be paid to members of our board of directors, board of officers and
committees.
Certain
Transactions
As of
December 31, 2008, there were no contracts of any type or any other material
agreements entered into by Tenda with the members of Tenda’s board of directors
and board of executive officers. As of December 31, 2008, Tenda’s
board of executive officers did not hold any of Tenda’s share capital and its
board of directors in the aggregate held approximately 12.0% direct or indirect
interest in Tenda’s share capital.
Further,
as of December 31, 2008, the members of the board of directors and of the boards
of executive officers of Tenda did not have any transaction or loan with Gafisa
or Tenda.
Brazilian
Tax Considerations
The
following discussion summarizes the principal Brazilian tax consequences (a) of
the exchange of Tenda common shares for Gafisa common shares as a result of the
Restructuring , with respect to holders of Tenda common shares that are not
resident or domiciled in Brazil for purposes of Brazilian taxation
(“Non-Brazilian Holders”), and (b) of the acquisition, ownership and disposition
of Gafisa common shares or ADSs by a Non-Brazilian Holder of these common shares
or ADSs. It is based on the tax laws of Brazil and regulations thereunder in
effect on the date hereof, which are subject to change (possibly with
retroactive effect). This discussion does not specifically address all of the
Brazilian tax considerations that may be applicable to any particular
Non-Brazilian Holder. Therefore, each Non-Brazilian Holder should consult its
own tax advisor about the Brazilian tax consequences of the exchange of Tenda
common shares for Gafisa common shares in each particular situation, and of an
investment in Gafisa common shares or ADSs.
Exchange
of Tenda Common Shares for Gafisa Common Shares
As a
result of the Restructuring , Non-Brazilian Holders of Tenda shares will receive
Gafisa common shares. The Brazilian tax implications of this exchange of shares
are not expressly provided for under Brazilian tax law. We understand that there
are arguments to sustain that no taxation is due upon the exchange of Tenda
common shares for Gafisa common shares.
With
respect to income tax, this conclusion is based on our view that the exchange of
shares does not represent a disposition of shares which gives rise to a taxable
capital gain in Brazil, and does not give rise to any income which is legally or
economically available to the Non-Brazilian Holder.
There is
a risk that Brazilian tax authorities will adopt a different position, and
consider the exchange of Tenda common shares for Gafisa common shares as an
event giving rise to a taxable gain in Brazil. In this case, the withholding
income tax would be imposed on the gain, according to the rules described under
“—Taxation on Acquisition, Ownership and Disposition of Gafisa Common Shares and
ADSs —Taxation of Gains.” Interest and penalties could also be
imposed.
With
respect to the Tax on Foreign Exchange Transactions (“IOF/Exchange Tax”), the
conclusion mentioned above, that no taxation is due upon the exchange of Tenda
common shares for Gafisa common shares, is based on the position that this
exchange of shares does not require the record of any foreign exchange agreement
before the Brazilian Central Bank.
Taxation
on Acquisition, Ownership and Disposition of Gafisa Common Shares and
ADSs
Dividends
Dividends
paid by a Brazilian corporation, such as our company, including stock dividends
and other dividends paid to a Non-Brazilian Holder of Gafisa common shares or
ADSs, are currently not subject to withholding income tax in Brazil to the
extent that such amounts are related to profits generated after January 1, 1996.
Dividends paid from profits generated before January 1, 1996 may be subject to
Brazilian withholding income tax at varying rates, according to the tax
legislation applicable to each corresponding year.
Interest
on Shareholders’ Equity
Law No.
9,249, dated December 26, 1995, as amended, allows a Brazilian corporation, such
as Gafisa, to make distributions to shareholders of interest on shareholders’
equity, and treat those payments as a deductible expense for purposes of
calculating Brazilian corporate income tax, and, since 1998, social contribution
on net profits as well, as long as the limits described below are observed.
These distributions may be paid in cash. For tax purposes, the deductible amount
of this interest is limited to the daily pro rata variation of the TJLP, as
determined by the Brazilian Central Bank from time to time, and the amount of
the deduction may not exceed the greater of:
|
·
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50%
of net income (after the deduction of social contribution on net profits
but before taking into account the provision for corporate income tax and
the amounts attributable to shareholders as interest on shareholders’
equity) for the period in respect of which the payment is made;
and
|
|
·
|
50%
of the sum of retained profits and profit reserves as of the date of the
beginning of the period in respect of which the payment is
made.
|
Payment
of interest on shareholders’ equity to a Non-Brazilian Holder is subject to
withholding income tax at the rate of 15%, or 25% if the Non-Brazilian Holder is
domiciled in a country or location that is considered to be a “tax haven
jurisdiction” for this purpose. For this purpose, the definition of “tax haven”
encompasses countries and locations (a) that do not impose income tax, (b) that
impose income tax at a rate of 20% or less, or (c) that impose restrictions on
the disclosure of shareholding composition, of the ownership of investments, or
of the identity of the ultimate beneficiary of earnings that are attributed to
non-residents.
These
payments of interest on shareholders’ equity may be included, at their net
value, as part of any mandatory dividend. To the extent payment of interest on
net equity is so included, we are required to distribute to shareholders an
additional amount to ensure that the net amount received by them, after payment
of the applicable withholding income tax, is at least equal to the mandatory
dividend.
Payments
of interest on shareholders’ equity are decided by our shareholders, at our
annual shareholders meeting, on the basis of recommendations of our board of
directors. No assurance can be given that our board of directors will not
recommend that future distributions of profits should be made by means of
interest on shareholders’ equity instead of by means of dividends.
Taxation
of Gains
Under Law
No. 10,833, enacted on December 29, 2003, the gain on the disposition or sale of
assets located in Brazil by a Non-Brazilian Holder, whether to another
non-Brazilian resident or to a Brazilian resident, may be subject to the
withholding of income tax in Brazil.
With
respect to the disposition of Gafisa shares, as they are assets located in
Brazil, the Non-Brazilian Holder should be subject to income tax on the gains
assessed, following the rules described below, regardless of whether the
transactions are conducted in Brazil or with a Brazilian resident.
As
regards the ADSs, although the matter is not entirely clear, arguably the gains
realized by a Non-Brazilian Holder upon the disposition of ADSs to another
non-Brazilian resident are not taxed in Brazil, on the basis that ADSs are not
“assets located in Brazil” for the purposes of Law No. 10,833. We cannot assure
you, however, that the
Brazilian tax authorities or the Brazilian courts will agree with this
interpretation. As a result, gains on a disposition of ADSs by a Non-Brazilian
Holder to a Brazilian resident, or even to a non-Brazilian resident, in the
event that courts determine that ADSs would constitute assets located in Brazil,
may be subject to income tax in Brazil according to the rules applicable to
Gafisa shares, described above.
As a
general rule, gains realized as a result of a disposition of Gafisa shares or
ADSs are the positive difference between the amount realized on the transaction
and its acquisition cost.
Under
Brazilian law, however, income tax rules on such gains can vary depending on the
domicile of the Non-Brazilian Holder, the type of registration of the investment
by the non-Brazilian holder with the Central Bank and how the disposition is
carried out, as described below.
Gains
assessed on a disposition of shares carried out on the Brazilian stock exchange
(which includes the organized over-the-counter market) are:
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·
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exempt
from income tax when realized by a Non-Brazilian Holder that (1) has
registered its investment in Brazil with the Central Bank under the rules
of Resolution No. 2,689 (a “2,689 Holder”), and (2) is not a resident in a
country or location which is defined as a “tax haven jurisdiction” for
this purpose (as described below);
or
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·
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subject
to income tax at a rate of up to 25% in any other case, including a case
of gains assessed by a Non-Brazilian Holder that is not a 2,689 Holder,
and is a resident of a country or location defined as “tax haven
jurisdiction” for this purpose (as described below). In these cases, a
withholding income tax of 0.005% of the sale value will be applicable and
can be later offset with the eventual income tax due on the capital gain.
This 0.005% withholding income tax is not levied in day trade
transactions.
|
Any gains
assessed on a disposition of Gafisa shares that is not carried out on a
Brazilian stock exchange are subject to income tax at the rate of 15%, or up to
25% in the case of a Non-Brazilian Holder that resides in a “tax haven
jurisdiction” according to the definition applicable to this situation. In the
case that these gains are related to transactions conducted on the Brazilian
non-organized over-the-counter market with intermediation, the withholding
income tax of 0.005% shall also be applicable and can be offset against the
eventual income tax due on the capital gain. This 0.005% withholding income tax
is not levied in day trade transactions.
In the
case of 2,689 Holders, a country or location should only be defined as a “haven
jurisdiction” when it (a) does not tax income, or (b) taxes income at a rate of
20% or less. In the case of gains realized by Non-Brazilian Holders other than
2,689 Holders, a country or location should be defined as a “haven jurisdiction”
when it (a) does not tax income, (b) taxes income at a rate of 20% or less, or
(c) imposes restrictions on the disclosure of shareholding composition, of the
ownership of investments, or of the identity of the ultimate beneficiary of
earnings that are attributed to non-residents.
In the
case of redemption of securities or capital reduction by a Brazilian
corporation, such as Gafisa, the positive difference between the amount
effectively received by the Non-Brazilian Holder and the corresponding
acquisition cost is treated, for tax purposes, as capital gain derived from sale
or exchange of shares not carried out on a Brazilian stock exchange market, and
is therefore subject to income tax at the rate of 15% or 25%, as the case may
be.
The
deposit of Gafisa common or preferred shares in exchange for ADSs may be subject
to Brazilian income tax if the acquisition cost of the shares is lower than (a)
the average price per share on a Brazilian stock exchange on which the greatest
number of such shares were sold on the day of deposit; or (b) if no shares were
sold on that day, the average price on the Brazilian stock exchange on which the
greatest number of shares were sold in the 15 trading sessions immediately
preceding such deposit. In such case, the difference between the acquisition
cost and the average price of the shares calculated as above will be considered
to be a capital gain subject to withholding income tax at the rate of 15% or
25%, as the case may be. In some circumstances, there may be arguments to claim
that this taxation is not applicable in the case of a Non-Brazilian Holder that
is a 2,689 Holder and is not a resident in a “tax haven jurisdiction” for this
purpose.
Discussion
on the Definition of “Tax Haven Jurisdictions”
On June
24, 2008, Law No. 11,727 broadened the definition of “tax haven jurisdictions”
for specific purposes, with effect as from January 1, 2009. However, Brazilian
tax authorities regularly issue a list of jurisdictions that are considered “tax
haven jurisdictions,” and such list has not been updated after the modifications
introduced by Law No. 11,727. There is no assurance that, when and if Brazilian
tax authorities issue a new list, those authorities will
not
regard as “tax haven jurisdictions” countries or locations which do not meet the
criteria provided for under applicable law, in each particular
situation.
Tax
on Foreign Exchange Transactions
Brazilian
law imposes the IOF/Exchange Tax on the liquidation of foreign exchange
agreements related to the conversion of reais into foreign currency and to the
conversion of foreign currency into reais. Foreign exchange agreements entered
into as from October 20, 2009 in connection with inflows of funds related to
investments carried out by non-Brazilian holders in the Brazilian financial and
capital markets are subject to the IOF/Exchange Tax at a rate of 2%. In turn,
foreign exchange transactions related to outflows of funds in connection with
investments made in the Brazilian financial and capital markets are subject to
the IOF/Exchange Tax at a zero percent rate. This zero percent rate applies to
payments of dividends and interest on shareholders’ equity to non-Brazilian
holders with respect to investments in the Brazilian financial and capital
markets. Aside from these transactions, the rate applicable to most foreign
exchange transactions is 0.38%. Other rates may apply to particular operations
and the Brazilian government may increase the rate at any time up to 25.0% on
the foreign exchange transaction amount. However, any increase in rates is only
authorized to apply to future transactions.
Tax
on Transactions Involving Bonds and Securities
Brazilian
law also imposes a Tax on Transactions Involving Bonds and Securities
(“IOF/Bonds Tax”) due on transactions involving bonds and securities, including
those carried out on a Brazilian stock exchange. The rate of IOF/Bonds Tax
applicable to transactions involving our shares and ADSs is currently zero,
although the Brazilian government may increase such rate at any time up to 1.5%
of the transaction amount per day, but only in respect of future
transactions.
Other
Brazilian Taxes
There are
no Brazilian inheritance, gift or succession taxes applicable to the ownership,
transfer or disposition of our shares or ADSs by a non-Brazilian holder except
for gift and inheritance taxes levied by some states in Brazil. There are no
Brazilian stamp, issue, registration, or similar taxes or duties payable by
non-Brazilian holders of our shares or ADSs.
United
States Federal Income Tax Considerations
The
following are the material U.S. federal income tax consequences of the
Restructuring and the ownership of Gafisa common shares or ADSs. This discussion
applies only to “U.S. Holders” (as defined below) and addresses only common
shares held as capital assets. This discussion does not describe all of the tax
consequences that may be relevant in light of a U.S. Holder’s particular
circumstances, including alternative minimum tax consequences and tax
consequences applicable to U.S. Holders subject to special rules, such
as:
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certain
financial institutions;
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insurance
companies;
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·
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dealers
or traders in securities who use a mark-to-market method of tax
accounting;
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persons
holding shares as part of a hedge, straddle, integrated transaction, or
similar transaction;
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persons
whose functional currency for U.S. federal income tax purposes is not the
U.S. dollar;
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·
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entities
classified as partnerships for U.S. federal income tax
purposes;
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·
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tax-exempt
entities, including “individual retirement accounts” or “Roth
IRAs”;
|
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·
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persons
who will own 5% or more of the total voting power or the total value of
Gafisa stock after the
Restructuring;
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·
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persons
who acquired the Tenda shares pursuant to the exercise of any employee
stock option or otherwise as compensation;
or
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·
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nonresident
alien individuals who have lost their U.S. citizenship or who have ceased
to be taxed as U.S. resident
aliens.
|
If an
entity that is classified as a partnership for U.S. federal income tax purposes
holds shares, the U.S. federal income tax treatment of a partner will generally
depend on the status of the partner and the activities of the partnership.
Partnerships holding shares and partners in such partnerships should consult
their tax advisers.
This
discussion is based on the U.S. Internal Revenue Code of 1986, as amended (the
“Code”), administrative pronouncements, judicial decisions and final, temporary
and proposed Treasury regulations, all as of the date hereof. These laws are
subject to change, possibly on a retroactive basis. Holders should consult their
tax advisers to determine the particular tax consequences to them of the
Restructuring, including the applicability and effect of U.S. state, local and
non-U.S. tax laws.
As used
herein, the term “U.S. Holder” means, for U.S. federal income tax purposes, a
beneficial owner of Tenda shares and is:
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·
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a
citizen or individual resident of the United
States;
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·
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a
corporation, or other entity taxable as a corporation, created or
organized in or under the laws of the United States or any political
subdivision thereof; or
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·
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an
estate or trust the income of which is subject to U.S. federal income
taxation regardless of its source.
|
None of
the parties have requested a ruling from the Internal Revenue Service (the
“IRS”) with respect to any of the U.S. federal income tax consequences of the
Restructuring and the following discussion is not binding on the IRS or any
court. As a result, there can be no assurance that the IRS will not disagree
with or challenge any of the conclusions described below.
Consequences
of the Restructuring
In the
opinion of Davis Polk & Wardwell LLP, the Restructuring should qualify as a
tax-free “reorganization” for U.S. federal income tax purposes. In
order for the Restructuring to qualify as a reorganization for such purposes,
among other things, Tenda shareholders must receive, from Gafisa, solely Gafisa
voting stock in exchange for their Tenda shares. Because there is no authority
under the U.S. tax laws expressly addressing whether the payment of cash to
Tenda shareholders who exercise withdrawal rights pursuant to Brazilian law will
prevent the Restructuring from satisfying this “solely for voting stock”
requirement, U.S. tax counsel is unable to express an unqualified opinion as to
the tax consequences of the Restructuring. However, based on the
advice of Gafisa’s Brazilian counsel to the effect that solely Tenda, and not
Gafisa, will be liable to make any cash payment to any Tenda shareholders who
exercise withdrawal rights, and assuming that any such payments are not funded
indirectly by Gafisa, in the opinion of Davis Polk & Wardwell LLP, the
payment of such cash to Tenda shareholders who exercise withdrawal rights should
not prevent the Restructuring from qualifying as a reorganization for U.S.
federal income tax purposes. No ruling has been sought or will be
obtained from the U.S. Internal Revenue Service on the U.S. federal income tax
consequences of the transaction.
Consequences
If the Restructuring Qualifies as a Tax-Free Reorganization
If the
Restructuring is treated as a tax-free reorganization for U.S. federal income
tax purposes, the receipt of Gafisa shares in exchange for Tenda shares will
have the following consequences:
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Subject
to the discussion below under “—Passive Foreign Investment Company Rules,”
U.S. Holders will not recognize gain or loss when they exchange their
Tenda shares for Gafisa shares, except to the extent of any gain
attributable to cash received in lieu of a fractional Gafisa share as
discussed below;
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the
aggregate tax basis in the Gafisa shares U.S. Holders receive in the
Restructuring (including any fractional shares U.S. Holders are deemed to
receive and exchange for cash) will equal the aggregate tax basis in the
Tenda shares surrendered; and
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the
holding period for the Gafisa shares that a U.S. Holder receives in the
Restructuring will include the U.S. Holder’s holding period for the Tenda
shares surrendered in the exchange.
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If a U.S.
Holder acquired blocks of Tenda shares at different times and at different
prices, the tax basis and holding period in Gafisa shares will be determined
with reference to each block of Tenda shares.
A U.S.
Holder will recognize gain or loss on any cash received in lieu of a fractional
Gafisa share equal to the difference between the amount of cash received in lieu
of the fractional share and the portion of the holder’s adjusted tax basis of
the Tenda shares surrendered that is allocable to the fractional share. Subject
to the discussion under “—Passive Foreign Investment Company Rules,” such gain
or loss generally will be long-term capital gain or loss if the holding period
in Tenda shares is more than one year as of the closing date of the
Restructuring.
Consequences
If the Restructuring Fails to Qualify as a Tax Free Reorganization
If the
Restructuring fails to qualify as a tax free reorganization for U.S. federal
income tax purposes, a U.S. Holder will recognize gain or loss equal to the
difference between the fair market value of Gafisa common shares received (plus
any cash received in lieu of a fractional Gafisa share) and the U.S. Holder’s
tax basis in the shares exchanged. The fair market value of Gafisa common shares
received is determined as of the date of the closing of the Restructuring. Gain
or loss must be calculated separately for each block of Tenda shares exchanged
by the U.S. Holder. Subject to the discussion below under “—Passive
Foreign Investment Company Rules,” such gain or loss generally will be treated
as capital gain or loss. If a U.S. Holder has held the Tenda shares for more
than one year, the gain will be treated as long term capital gain. In the case
of certain U.S. Holders, including individuals, long term capital gain is
subject to reduced rates of taxation. A U.S. Holder’s ability to deduct capital
losses may be limited. A U.S. Holder that receives Brazilian reais with respect to a
fractional Gafisa share pursuant to the Restructuring, or paid for Tenda shares
in Brazilian reais,
should read the discussion below under “Foreign Currency Gain or
Loss”.
A U.S.
Holder’s adjusted basis in Gafisa shares received pursuant to the Restructuring
will be equal to the fair market value of such shares (determined as described
above), and the U.S. Holder will have a holding period beginning on the day
after the closing of the Restructuring.
Consequences
to U.S. Holders who Receive Cash Pursuant to the Exercise of Withdrawal
Rights
U.S.
Holders of Tenda shares who exercise withdrawal rights, as discussed in “Part
Five: The Restructuring—Withdrawal Rights,” with respect to their Tenda shares
will recognize gain or loss equal to the difference between the amount of cash
received and their aggregate tax basis in their shares, unless the receipt of
such cash is treated as a distribution of property under Sections 302 and 301 of
the Code. Subject to the discussion below under “—Passive Foreign Investment
Company Rules,” such gain or loss generally will be long-term capital gain or
loss if the holding period in Tenda shares is more than one year. The receipt of
cash pursuant to the exercise of withdrawal rights will not be treated as a
distribution of property under Sections 302 and 301 of the Code unless such cash
is paid by Tenda out of its own resources, a U.S. Holder who receives such cash
also continues to own indirectly, through the ownership of Gafisa shares, shares
of Tenda, and certain other conditions are met. U.S. Holders who own Gafisa
shares and who receive cash in respect of the Tenda shares pursuant to the
exercise of withdrawal rights should consult their own tax advisors concerning
the proper U.S. federal income tax treatment of the receipt of such
cash.
Passive
Foreign Investment Company Rules
A U.S.
Holder may have different consequences if Tenda is or was a passive foreign
investment company (“PFIC”) for U.S. federal income tax purposes for any taxable
year during which the U.S. Holder held the Tenda shares. In general, a non-U.S.
corporation is considered a PFIC for any taxable year in which (i) 75 percent or
more of its gross income consists of passive income (such as dividends,
interest, rents and royalties) or (ii) 50 percent or more of the average value
of its assets consists of assets that produce, or are held for the production
of, passive
income.
For these purposes, a non-U.S. corporation that directly or indirectly owns at
least 25 percent by value of the stock of another corporation is treated as if
it held its proportionate share of the assets of such other corporation and
received directly its proportionate share of the income of such other
corporation. If a non-U.S. corporation is a PFIC for any year during which a
U.S. Holder holds its shares, it will generally continue to be treated as a PFIC
with respect to such holder for all succeeding years during which the U.S.
Holder holds its shares even if the non-U.S. corporation’s assets and income
cease to meet the threshold requirements for PFIC status.
Because
PFIC status depends on the composition of a company’s assets and income from
time to time and because the relevant taxable period for conducting this
analysis may be different for each holder, Gafisa is not in a position to
determine whether Tenda is or was a PFIC for any year in which a U.S. Holder
held Tenda shares. U.S. Holders should consult their tax advisers regarding
Tenda’s PFIC status for the periods during which they have held Tenda shares and
as to the U.S. federal income tax consequences to them of the Restructuring if
Tenda is or was a PFIC.
If Tenda
were characterized as a PFIC for any taxable year during which a U.S. Holder
held Tenda shares, then under certain proposed regulations, the U.S. Holder
generally would be subject to special U.S. federal income tax rules. In general,
(i) a U.S. Holder would be required to recognize gain as a result of the
Restructuring as if it were a taxable transaction, regardless of whether the
Restructuring qualified as a tax-free reorganization, and (ii) gain recognized
by a U.S. Holder that exchanges its shares pursuant to the Restructuring would
be allocated ratably over the holder’s holding period for the shares. The
amounts allocated to the current taxable year and to any year before Tenda
became a PFIC would be taxed as ordinary income. The amount allocated to each
other taxable year would be subject to tax at the highest rate in effect for
that taxable year for individuals or corporations, as appropriate, and an
interest charge would be imposed on the tax attributable to such allocated
amounts.
Foreign
Currency Gain or Loss
For
purposes of calculating gain or loss pursuant to the Restructuring, a cash basis
taxpayer that paid Brazilian reais for a Tenda share will
generally determine its tax basis in the share by translating the Brazilian
reais it paid into U.S.
dollars using the exchange rate in effect on the settlement date of the
taxpayer’s purchase. A cash basis taxpayer that receives Brazilian reais with respect to a
fractional Gafisa share or pursuant to the exercise of its withdrawal rights
will, for U.S. federal income tax purposes, determine the taxpayer’s amount of
cash received using the U.S. dollar value of the Brazilian reais received. This U.S.
dollar value is computed by reference to the exchange rate in effect on the date
the Brazilian reais are
received by the taxpayer, regardless of whether the Brazilian reais are converted into U.S.
dollars. If the Brazilian reais received pursuant to
the Restructuring are not converted into U.S. dollars on the date of receipt, a
cash basis taxpayer will have a basis in the Brazilian reais equal to their U.S.
dollar value computed as described above, and any gain or loss realized on a
subsequent conversion or other disposition of the Brazilian reais will generally be
treated as ordinary income or loss. An accrual basis taxpayer may elect to apply
the above rules that are applicable to a cash basis taxpayer.
Foreign
Tax Credits
Any gain
or loss recognized by a U.S. Holder pursuant to the Restructuring will generally
be qualified as U.S.-source gain or loss for U.S. foreign tax credit purposes.
If a Brazilian income tax is imposed pursuant to the Restructuring and the U.S.
Holder does not receive significant foreign source income from other sources,
the U.S. Holder may not be able to credit the Brazilian tax against its U.S. tax
liability. However, the Brazilian income tax imposed may be eligible as a
deduction in computing the U.S. Holder’s taxable income. U.S. Holders should
consult their tax advisers regarding the availability of foreign tax credits in
light of their particular circumstances.
Information
Reporting and Backup Withholding
In
general, cash payments made to a U.S. Holder within the United States or through
certain U.S.-related financial intermediaries pursuant to the Restructuring
generally are subject to information reporting and may be subject to backup
withholding unless: (i) the U.S. Holder is a corporation or other exempt
recipient; or (ii) in the case of backup withholding, the U.S. Holder provides a
correct taxpayer identification number and certifies that no loss of exemption
from backup withholding has occurred. The amount of any backup withholding from
a payment to
a U.S.
Holder will be allowed as a credit against the U.S. Holder’s U.S. federal income
tax liability and may entitle the U.S. Holder to a refund, provided that the
required information is timely furnished to the IRS.
Ownership
of Gafisa Shares or ADSs
The
following are the material U.S. federal income tax consequences to U.S. Holders
of owning and disposing of Gafisa shares or ADSs. This discussion is based in
part on representations by the depositary and assumes that each obligation under
the deposit agreement and any related agreement will be performed in accordance
with its terms. U.S. Holders should consult their tax advisers with respect to
the particular tax consequences to them of owning or disposing of Gafisa shares
or ADSs, including the applicability and effect of state, local, non-U.S. and
other tax laws and possible changes in tax laws.
In
general, a U.S. Holder who owns Gafisa ADSs will be treated as the owner of the
underlying shares represented by those ADSs for U.S. federal income tax
purposes. Accordingly, no gain or loss will be recognized if a U.S. Holder
exchanges Gafisa ADSs for the underlying shares represented by those
ADSs.
The U.S.
Treasury has expressed concerns that parties to whom American depositary shares
are released before shares are delivered to the depositary or intermediaries in
the chain of ownership between U.S. Holders and the issuer of the security
underlying the American depositary shares may be taking actions that are
inconsistent with the claiming of foreign tax credits by U.S. Holders of
American depositary shares. These actions would also be inconsistent with the
claiming of the reduced rate of tax, described below, applicable to dividends
received by certain non-corporate holders. Accordingly, the analysis of the
creditability of Brazilian taxes, and the availability of the reduced tax rate
for dividends received by certain non-corporate holders, each described below,
could be affected by actions taken by such parties or
intermediaries.
This
discussion assumes that Gafisa is not, and will not become, a PFIC, as described
below.
Distributions
Distributions
paid on Gafisa shares or ADSs, other than certain pro rata distributions of
common shares, will generally be treated as dividends to the extent paid out of
Gafisa’s current or accumulated earnings and profits (as determined under U.S.
federal income tax principles). Because Gafisa does not maintain calculations of
its earnings and profits under U.S. federal income tax principles, it is
expected that distributions will be reported to U.S. Holders as dividends.
Subject to applicable limitations and the discussion above regarding concerns
expressed by the U.S. Treasury, dividends paid by qualified foreign corporations
to certain non-corporate U.S. Holders in taxable years beginning before January
1, 2011 are taxable at a maximum rate of 15%. A foreign corporation is treated
as a qualified foreign corporation with respect to dividends paid on stock that
is readily tradable on an established securities market in the United States,
such as the New York Stock Exchange where Gafisa ADSs are traded. Gafisa common
shares are not readily tradable on an established securities market in the
United States and therefore dividends paid on such Gafisa common shares are not
likely to meet the conditions required for the reduced tax rate. U.S. Holders
should consult their tax advisers to determine whether the favorable rate will
apply to dividends they receive and whether they are subject to any special
rules that limit their ability to be taxed at this favorable rate.
The
amount of a dividend will include any amounts withheld in respect of Brazilian
taxes on the distribution. The amount of the dividend will be treated as
foreign-source dividend income to U.S. Holders and will not be eligible for the
dividends-received deduction generally allowed to U.S. corporations under the
Code. Dividends will be included in a U.S. Holder’s income on the date of the
holder’s, or in the case of ADSs, the depositary’s, receipt of the dividend. The
amount of any dividend income paid in reais will be a U.S. dollar
amount calculated by reference to the
exchange rate in effect on the date of such receipt regardless of whether the
payment is in fact converted into U.S. dollars. If the dividend is converted
into U.S. dollars on the date of receipt, a U.S. Holder generally should not be
required to recognize foreign currency gain or loss in respect of the dividend
income. A U.S. Holder may have foreign currency gain or loss if the amount of
such dividend is converted into U.S. dollars after the date of such
receipt.
Subject
to applicable limitations that may vary depending upon a U.S. Holder’s
circumstances and subject to the discussion above regarding concerns expressed
by the U.S. Treasury, Brazilian income taxes withheld from dividends on Gafisa
shares or ADSs will be creditable against the U.S. Holder’s U.S. federal income
tax liability. The rules governing foreign tax credits are complex and,
therefore, U.S. Holders should consult their tax advisers regarding the
availability of foreign tax credits in their particular circumstances. Instead
of claiming a credit, a U.S. Holder may, at its election, deduct such Brazilian
taxes in computing its taxable income, subject to generally applicable
limitations under U.S. law. An election to deduct foreign taxes instead of
claiming foreign tax credits must apply to all taxes paid or accrued in the
taxable year to foreign countries and possessions of the United
States.
Sale
and Other Disposition of Gafisa Shares or ADSs
For U.S.
federal income tax purposes, gain or loss realized on the sale or other
disposition of Gafisa shares or ADSs will be capital gain or loss, and will be
long-term capital gain or loss if the U.S. Holder held the Gafisa shares or ADSs
for more than one year. The amount of the gain or loss will equal the difference
between the U.S. Holder’s tax basis in the Gafisa shares or ADSs disposed of and
the amount realized on the disposition, in each case as determined in U.S.
dollars. Such gain or loss will generally be U.S.-source gain or loss for
foreign tax credit purposes. Consequently, if a Brazilian withholding tax is
imposed on the sale or disposition of Gafisa shares or ADSs, and a U.S. Holder
does not receive significant foreign source income from other sources, the
holder may not be able to derive effective U.S. foreign tax credit benefits in
respect of such Brazilian withholding tax. If a Brazilian tax is withheld on the
sale or disposition of Gafisa shares or ADSs, a U.S. Holder’s amount realized
will include the gross amount of the proceeds of such sale or disposition before
deduction of the Brazilian tax. See “Brazilian Tax Considerations — Taxation on
Acquisition, Ownership and Disposition of Gafisa Common Shares and ADSs
— Taxation of Gains” for a description of when a disposition may be
subject to taxation in Brazil.
Passive
Foreign Investment Company Rules
Gafisa
believes that it was not a PFIC for U.S. federal income tax purposes for its
2008 taxable year and it does not expect to become one in the foreseeable
future. If Gafisa were a PFIC for any taxable year during which a U.S. Holder
held Gafisa shares or ADSs, gain recognized by the U.S. Holder on a sale or
other disposition (including certain pledges) of Gafisa shares or ADSs would be
allocated ratably over the U.S. Holder’s holding period for the Gafisa shares or
ADSs. The amounts allocated to the taxable year of the sale or other disposition
and to any year before Gafisa became a PFIC would be taxed as ordinary income.
The amount allocated to each other taxable year would be subject to tax at the
highest rate in effect for individuals or corporations, as appropriate, for such
taxable year, and an interest charge would be imposed on the amount allocated to
such taxable year. Similar rules would apply to any distribution in respect of
Gafisa shares or ADSs in excess of 125% of the average of the annual
distributions on Gafisa shares or ADSs received during the preceding three years
or the U.S. Holder’s holding period, whichever is shorter. Certain elections may
be available that would result in alternative treatments (such as a
mark-to-market treatment) of Gafisa shares or ADSs. U.S. Holders should consult
their tax advisers to determine whether any such elections are available and, if
so, what the consequences of the alternative treatments would be in their
particular circumstances.
Information
Reporting and Backup Withholding
Payments
of dividends and sales proceeds that are made within the United States or
through certain U.S.-related financial intermediaries generally are subject to
information reporting and may be subject to backup withholding unless (i) the
U.S. Holder is a corporation or other exempt recipient or (ii) in the case of
backup withholding, the U.S. Holder provides a correct taxpayer identification
number and certifies that it is not subject to backup withholding. The amount of
any backup withholding from a payment to a U.S. Holder will be allowed as a
credit against
the holder’s U.S. federal income tax liability and may entitle it to a refund,
provided that the required information is timely furnished to the
IRS.
Historical
Share Information
Gafisa’s
common shares are currently listed on the BM&FBOVESPA under the ticker
symbol “GFSA3”, and ADSs representing common shares of Gafisa are listed on the
NYSE under the ticker symbol “GFA.” Each Gafisa ADS represents two common shares
of Gafisa. Citibank N.A. is Gafisa’s depositary and issues the ADRs evidencing
our ADSs. Gafisa’s ADSs commenced trading on the NYSE on March 16,
2007.
Tenda’s
common shares are currently listed on the BM&FBOVESPA under the ticker
symbol “TEND3.” Tenda does not have an ADR program in place.
The
following tables set forth the high and low of the last reported closing prices
per Gafisa common share and per Gafisa ADS, as compared to the reported closing
price per Tenda common shares for the periods indicated. Common share prices are
as reported on the BM&FBOVESPA, ADS prices are as reported on the
NYSE.
The table
below sets forth, for the indicated periods, the high and low closing prices of
Gafisa ADSs on the NYSE, in U.S. dollars, and Gafisa common shares on the
BM&FBOVESPA, in reais:
|
Gafisa
|
||||||||||||||||||||||||
|
New
York Stock Exchange
US$
per ADS
|
BM&FBOVESPA
R$
per common share
|
|||||||||||||||||||||||
|
High
|
Low
|
Volume
|
High
|
Low
|
Volume
|
|||||||||||||||||||
|
Year
Ended
|
||||||||||||||||||||||||
|
December
31, 2006 (1)
|
— | — | — | 35.20 | 17.70 | 430,555 | ||||||||||||||||||
|
December
31, 2007
|
40.50 | 23.10 | 418,005 | 35.61 | 22.50 | 897,085 | ||||||||||||||||||
|
December
31, 2008
|
46.50 | 5.41 | 930,018 | 38.26 | 6.86 | 1,238,592 | ||||||||||||||||||
|
Quarter
|
||||||||||||||||||||||||
|
First
quarter 2007
|
27.77 | 24.89 | 1,164,963 | 35.30 | 25.70 | 466,779 | ||||||||||||||||||
|
Second
quarter 2007
|
35.32 | 24.65 | 310,953 | 34.02 | 25.25 | 889,111 | ||||||||||||||||||
|
Third
quarter 2007
|
35.09 | 23.10 | 405,016 | 33.41 | 22.50 | 1,141,404 | ||||||||||||||||||
|
Fourth
quarter 2007
|
40.50 | 30.00 | 407,786 | 35.61 | 27.01 | 1,089,472 | ||||||||||||||||||
|
First
quarter 2008
|
41.50 | 29.96 | 771,929 | 34.60 | 25.50 | 1,128,515 | ||||||||||||||||||
|
Second
quarter 2008
|
46.50 | 33.36 | 969,276 | 38.26 | 27.50 | 995,435 | ||||||||||||||||||
|
Third
quarter 2008
|
35.59 | 20.97 | 890,823 | 28.20 | 19.90 | 1,206,926 | ||||||||||||||||||
|
Fourth
quarter 2008
|
24.60 | 5.41 | 1,080,111 | 23.79 | 6.86 | 1,621,471 | ||||||||||||||||||
|
First
quarter 2009
|
12.11 | 7.33 | 674,687 | 13.23 | 8.69 | 1,885,703 | ||||||||||||||||||
|
Second
quarter 2009
|
19.73 | 10.91 | 721,893 | 20.90 | 12.41 | 2,481,110 | ||||||||||||||||||
|
Third
quarter 2009
|
32.91 | 16.49 | 744,936 | 29.68 | 16.30 | 1,966,653 | ||||||||||||||||||
|
Month
|
||||||||||||||||||||||||
|
June
2009
|
18.72 | 15.03 | 622,545 | 18.19 | 14.97 | 2,436,248 | ||||||||||||||||||
|
July
2009
|
26.00 | 16.49 | 677,130 | 24.50 | 16.30 | 2,646,341 | ||||||||||||||||||
|
August
2009
|
31.73 | 24.59 | 822,751 | 29.68 | 22.75 | 1,699,690 | ||||||||||||||||||
|
September
2009
|
32.91 | 26.40 | 738,155 | 29.53 | 24.95 | 1,521,562 | ||||||||||||||||||
|
October
2009
|
36.60 | 28.49 | 1,350,094 | 31.27 | 25.50 | 2,125,000 | ||||||||||||||||||
|
November
2009
|
35.03 | 29.83 | 1,128,917 | 29.55 | 25.88 | 2,233,000 | ||||||||||||||||||
|
December
2009 (through December 22, 2009)
|
35.21 | 30.48 | 1,231,122 | 29.59 | 26.55 | 1,592,413 | ||||||||||||||||||
(1)
Shares started trading on February 17, 2006.
The table
below sets forth, for the indicated periods, the high and low closing prices of
Tenda common shares on the BM&FBOVESPA in reais:
|
Tenda
|
||||||||||||
|
BM&FBOVESPA
R$
per common share
|
||||||||||||
|
High
|
Low
|
Volume
|
||||||||||
|
Year
Ended
|
||||||||||||
|
December
31, 2007 (1)
|
10.80 | 6.9 | 1,264,338 | |||||||||
|
December
31, 2008
|
12.8 | 0.76 | 1,233,719 | |||||||||
|
Quarter
|
||||||||||||
|
First
quarter 2007
|
N/A | N/A |
NA
|
|||||||||
|
Second
quarter 2007
|
N/A | N/A |
NA
|
|||||||||
|
Third
quarter 2007
|
N/A | N/A |
NA
|
|||||||||
|
Fourth
quarter 2007
|
10.80 | 6.9 | 1,264,338 | |||||||||
|
First
quarter 2008
|
11.80 | 7.9 | 629,950 | |||||||||
|
Second
quarter 2008
|
12.80 | 7.9 | 698,837 | |||||||||
|
Third
quarter 2008
|
11.40 | 1.30 | 2,053,018 | |||||||||
|
Fourth
quarter 2008
|
1.51 | 0.76 | 1,493,952 | |||||||||
|
First
quarter 2009
|
1.90 | 1.26 | 1,275,793 | |||||||||
|
Second
quarter 2009
|
3.93 | 1.93 | 1,627,195 | |||||||||
|
Third
quarter 2009
|
5.50 | 3.46 | 2,414,784 | |||||||||
|
Month
|
||||||||||||
|
June
2009
|
3.80 | 3.30 | 908,686 | |||||||||
|
July
2009
|
4.68 | 3.46 | 2,038,159 | |||||||||
|
August
2009
|
5.50 | 4.29 | 2,537,343 | |||||||||
|
September
2009
|
5.35 | 4.70 | 2,686,786 | |||||||||
|
October
2009
|
6.07 | 4.79 | 2,624,210 | |||||||||
|
November
2009
|
5.85 | 5.10 | 1,478,400 | |||||||||
|
December
2009 (through December 22, 2009)
|
5.87 | 5.34 | 2,011,006 | |||||||||
(1)
Shares started trading on October 15, 2007.
We
urge you to obtain current market quotations for each of Gafisa and Tenda
securities.
Dividend
Information
The
following tables show the amount of dividends and interest on shareholders’
equity declared by each of Gafisa and Tenda on common shares for the years 2005
to 2008. The dividend amounts set forth below for each year were paid in the
immediately following year. The tables set forth amounts in reais per common
shares.
Gafisa
|
Year
|
Common
Shares
|
|
|
(per
share/in R$)
|
||
|
2008
|
0.20
|
|
|
2007
|
0.21
|
|
|
2006
|
0.10
|
|
|
2005
|
—
|
Tenda
|
Year
|
Common
Shares
|
|
|
(per
share/in R$)*
|
||
|
2008
|
—
|
|
|
2007
|
—
|
|
|
2006
|
0.39
|
|
|
2005
|
—
|
On
October 21, 2008, Gafisa and Tenda concluded a business combination in which
Gafisa’s wholly-owned subsidiary FIT was merged into Tenda. The purpose of the
merger was to consolidate the activities of FIT and Tenda in the low income
sector in Brazil and to develop real estate units with an average value of less
than R$200,000. As a result of the business combination, Gafisa ended up owning
60.0% of the total and voting capital stock of Tenda and FIT was merged into
Tenda.
On
February 27, 2009, Gafisa and Odebrecht Empreendimentos Imobiliários S.A., or
Odebrecht, entered into an agreement to terminate the partnership created in
February 2007 for the development, construction and management of large scale,
low income residential projects with more than 1,000 units each. Gafisa withdrew
from Bairro Novo Empreendimentos Imobiliários S.A., terminating the
Shareholders’ Agreement then effective between Gafisa and Odebrecht. Therefore
Gafisa is no longer a partner in Bairro Novo Empreendimentos Imobiliários S.A.
The ongoing real estate ventures that were being jointly developed by the
parties were separated as follows: Gafisa continued developing the Bairro Novo
Cotia real estate venture and Odebrecht Empreendimentos Imobiliários S.A.
continued developing the other real estate ventures of the dissolved
partnership, in addition to the operations of Bairro Novo Empreendimentos
Imobiliários S.A.
On June
29, 2009, Gafisa sold its equity participation in the company developing the
Bairro Novo Cotia real estate venture to Tenda.
Ownership
of Securities
As of
September 30, 2009, each of the members of Gafisa board of directors and board
of executive officers owned, directly or indirectly, less than 0.05% of Tenda
shares. The table below illustrates the aggregate number and percentage of
common shares of Tenda that are beneficially owned by Gafisa, its subsidiaries
and their directors and executive officers.
|
Name
of Owner
|
Common
Shares
|
%
Common Shares
|
Total
Shares
|
%
Total Capital
|
||||||||||||
|
Gafisa
S.A.
|
240,391,470
|
60
|
240,391,470
|
60
|
||||||||||||
|
Directors
and Officers
|
85,496
|
—
|
85,496
|
—
|
||||||||||||
The
following table sets forth Gafisa’s principal holders of common shares and their
respective share ownership as of December 15, 2009:
|
Name
|
Number
of common shares owned
|
Percentage
of outstanding common shares
|
|||||||
|
EIP
Brazil Holdings, LLC (1)(2)
|
18,329,604 | 13.7 | |||||||
|
Marsico
Capital Management (3)
|
17,017,626 | 13.4 | |||||||
|
Morgan
Stanley (4)
|
10,174,334 | 7.6 | |||||||
|
Itaú
Unibanco S.A.
|
7,265,028 | 5.4 | |||||||
|
Directors
and Officers
|
1,232,472 | 0.9 | |||||||
|
(1)
|
Affiliate
of Equity International and Gary
Garrabrant.
|
|
(2)
|
Based on information
filed jointly by EIP Brazil Holdings, LLC (“EIP Brazil”), EI Fund II, LP
(“EI Fund II”), EI Fund II GP, LLC (“EI Fund II GP”), EI Fund IV Pronto,
LLC (“EI Pronto”), EI Fund IV, LP (“EI Fund IV”), EI Fund IV GP, LLC (“EI
Fund IV GP”) and Equity International, LLC (“EI”) with the SEC
on December 3, 2009, 11,729,604 common shares are owned directly
by EIP Brazil. EIP Brazil is wholly owned by EGB Holdings, LLC, which is
owned 99.9% by EI Fund II. EI Fund II GP is the general partner of EI Fund
II. EI Fund II and EI Fund II GP may be deemed to have beneficial
ownership of the shares owned directly by EIP Brazil. 3,300,000 ADSs
representing 6,600,000 common shares are owned directly by EI Pronto. EI
Pronto is wholly owned by EI Fund IV and EI Fund IV GP is the general
partner of EI Fund IV. EI Fund IV and EI Fund IV GP may be deemed to have
beneficial ownership of the shares owned directly by EI Pronto. Each of EI
Fund II GP and EI Fund IV GP is indirectly wholly owned by EI and EI may
be deemed to have beneficial ownership of the shares owned directly by EIP
Brazil and EI Pronto.
|
|
(3)
|
Based
on information filed by Marsico Capital Management, LLC with the SEC on
December 10, 2009.
|
|
(4)
|
Based
on information filed jointly by Morgan Stanley and Morgan Stanley
Investment Management Inc. with the SEC on February 17, 2009. The
securities being reported on by Morgan Stanley as a parent holding company
are owned, or may be deemed to be beneficially owned, by Morgan Stanley
Investment Management Inc., an investment adviser in accordance with Rule
13d−1(b)(1)(ii)(E) of the Securities Exchange Act, as amended. Morgan
Stanley Investment Management Inc. is a wholly-owned subsidiary of Morgan
Stanley.
|
To
Gafisa’s knowledge, each one of the persons indicated in the tables above
intends to vote its voting shares in favor of the Restructuring.
Transactions
and Arrangements
None of
Gafisa nor any of its subsidiaries has effected any transaction in the common
shares of Gafisa, Tenda or in the ADSs of Gafisa in the past 60
days.
Gafisa
and its subsidiaries (including Tenda) are not, and to Gafisa’s knowledge, none
of the directors or executive officers of Gafisa, Gafisa’s subsidiaries
(including Tenda), a party to any agreement, arrangement, understanding or
relationship with any other person relating, directly or indirectly, to any of
Gafisa’s or Tenda’s securities (including any agreement, arrangement,
understanding or relationship concerning the transfer or the voting of any such
securities, joint ventures, loan or option arrangements, puts or calls,
guarantees of loans, guarantees against loss or the giving or withholding of
proxies, consents or authorizations).
In
connection with the Restructuring, Tenda will become a wholly owned subsidiary
of Gafisa. As a result, the common shares of Tenda will be delisted from the
BM&FBOVESPA. After the consummation of the Restructuring and the completion
of the delisting and deregistration of the Tenda shares, Gafisa may cause the
by-laws of Tenda (which will then be wholly owned subsidiaries) to be amended to
simplify their corporate structure and may change the composition of the Tenda
boards, including, without limitation, by seeking the resignation of the
independent directors, whose participation on the Tenda boards will no longer be
required because Tenda will be a wholly owned subsidiary. None of Gafisa or
Tenda is undertaking or engaged in any negotiations in response to the
Restructuring that relate to a tender offer or other acquisition of Tenda’s
securities by Gafisa or Tenda, any of their subsidiaries or any other person or
any of the matters listed above.
The
following is an itemized statement of the expenses incurred or estimated to be
incurred by Gafisa in connection with the Restructuring:
|
Type
of Fee
|
Amount
|
|||
|
Filing
fees
|
$ | 14,759 | ||
|
Legal
fees
|
1,200,000 | |||
|
Accounting
fees and fees for valuation reports
|
5,700,000 | |||
|
Printing
costs
|
7,700 | |||
Gafisa
and Tenda are incorporated in the Federative Republic of Brazil.
If you
hold common shares of Gafisa or Tenda, your rights as a holder of securities of
those companies are governed by Brazilian law and the by-laws (estatutos sociais) of the
applicable company. If you hold common shares of Tenda, your rights as a holder
of Gafisa securities after the Restructuring will be governed by Brazilian law
and the by-laws of Gafisa. You should read the by-laws of Gafisa and Tenda,
copies of which are filed as exhibits to the registration statement of which
this preliminary prospectus/information statement is a part.
There are
no material differences between the rights of common shareholders of Gafisa and
those of common shareholders of Tenda, except as provided below. The following
table lists the rights of common shares of Tenda and Gafisa.
The main
rights attributed to holding the common shares of Gafisa and Tenda
are:
|
·
|
each
common share is entitled to one vote in the resolutions in the General
Shareholders’ Meeting;
|
|
·
|
mandatory
minimum dividend of 25% of the adjusted net
profit;
|
|
·
|
dissenting
shareholders who exercise their right to withdraw, pursuant to the terms
of the Brazilian Law No. 6,406/76, are entitled to refund of their
respective shares. In the case of Tenda’s shareholders, the
refund will based on the net worth value of the shares based on the last
balance sheet approved at a general meeting. In the case of
Gafisa’s shareholders, the refund will be based on the economic value of
Gafisa;
|
|
·
|
the
right to inspect and monitor the company’s management, in accordance with
the Brazilian corporate law;
|
|
·
|
preemptive
rights in the subscription of shares, convertible debentures and warrants,
except in certain circumstances under the Brazilian corporate law
described in “—Preemptive Rights”;
|
|
·
|
the
right to participate in the company’s remaining assets in proportion to
its equity interest in the company’s share capital in the event of
company’s liquidation;
|
|
·
|
in
the event of a transfer of control, the right to sell their shares under a
public offer to be conducted by the purchaser at the same price and
conditions applicable to shares comprising the controlling block, with due
observation to the provisions in the by-laws, the Brazilian corporate law
and the rules and regulations of the Novo Mercado;
and
|
|
·
|
if
the company is delisted from the Novo Mercado or in the event of the
cancellation of its registration as a publicly-held company: right to sell
its shares under a public offer to be conducted by the company or by the
controlling shareholder (as the case may be, pursuant to the terms of the
company’s bylaws) at a price at least equal to economic value of the
shares to be determined by appraisal, with due observation to the other
provisions of the company’s by-laws, the Brazilian corporate law and the
rules and regulations of the CVM.
|
As of
September 30, 2009, Gafisa’s capital stock was R$1,233,896,693.50, divided in
133,633,318 common shares, no par value, including 3,124,972 shares held in
treasury.
For a
summary of Gafisa’s and Tenda’s payments of dividends and interest on
shareholders’ equity for the years 2006, 2007 and 2008, see “Part Five: The
Restructuring—Comparative Share and Dividend Information—Dividend
Information.”
Gafisa
For 2003,
2004 and 2005, Gafisa did not distribute dividends. In 2007, Gafisa
distributed dividends in the total amount of R$11.0 million, or R$0.10 per
share, for the fiscal year 2006. In April 2008, Gafisa’s shareholders
approved the distribution of dividends for the fiscal year 2007 in the amount of
R$27.0 million, or R$0.21 per share, which were fully paid to our shareholders
on April 29, 2008. On April 30, 2009, Gafisa’s shareholders approved
the distribution of dividends for the fiscal year 2008 in the amount of R$26.1
million, or R$0.20 per share, which will be fully paid to our shareholders
during the fiscal year 2009 upon board approval.
Tenda
Tenda
only distributed dividends in 2005 and 2007. In 2005, Tenda
distributed dividends in the total amount of R$264 thousand, or R$0.11 per
share, for the fiscal year 2004. In June 2007, Tenda’s shareholders
approved the distribution of the dividends for the fiscal year 2006 in the total
amount of R$899 thousand, or R$0.39 per share. For the fiscal year 2008, Tenda
will not distribute dividends, as approved by at the annual general shareholders
of Tenda held on April 27, 2009.
As of the
date hereof, the subscribed and fully paid-up capital stock of Gafisa was
R$1,233,896,692.50, represented by 133,633,318 book-entry common shares, all of
them registered and with no par value, including 3,124,972 shares held in
treasury. All Gafisa shares shall be held in a depositary account with a
financial institution on behalf of their respective holders, with no issuance of
certificates, and the institution may charge shareholders transfer costs with
respect to the shares they own. Each common share of Gafisa entitles the holder
thereof to one vote in Gafisa shareholders’ meetings. Further information on
Gafisa’s capital stock can be found in Gafisa’s Annual Report on Form 20-F for
the fiscal year ended December 31, 2008, filed with the SEC on June 5, 2009,
which is incorporated by reference herein.
Recent
History of Gafisa Capital Stock
For a
brief history of Gafisa’s capital stock since 2006, see “Part Five: The
Restructuring—Past Contacts, Transactions, Negotiations and
Agreement—Significant Corporate Events.”
The
following is a summary of certain significant provisions of Tenda’s bylaws, the
Brazilian corporate law and the rules and regulations of the CVM and the Novo
Mercado listing segment of the BM&FBOVESPA. This description does not
purport to be complete in relation to any subject mentioned herein, and it shall
not be deemed a legal opinion in relation to the issues discussed herein.
Further, this description is qualified by reference to Tenda’s bylaws, the
Brazilian corporate law and the rules and regulations of the CVM and of the Novo
Mercado. You should read Tenda’s bylaws, which are filed as exhibits to the
registration statement of which this preliminary prospectus/information
statement is a part.
As of
September 30, 2009, Tenda’s capital stock, fully subscribed and paid in, was
approximately R$755,235,879.36, divided into 400,652,450 common
shares, without par value. As of the date of this offering memorandum Tenda did
not have any treasury stock.
Recent
History of Tenda Capital Stock
On June
27, 2007, Tenda’s 540,000 outstanding preferred shares were converted into
common shares on a one-to-one basis.
On June
28, 2007, Tenda increased its capital stock from R$2,280,000.00 to
R$16,636,159.20, when Tenda capitalized R$14,356,159.20 of its legal reserve
account and portions of its accumulated profits and profit reserves accounts, as
reflected in Tenda’s financial statements as of December 31, 2006. As a result
of this capital increase, Tenda issued 1,780,020 additional common shares,
without par value, to current shareholders in proportion to their equity
interest in Tenda’s share capital at the time. On the same date, Tenda redeemed
(and subsequently cancelled) 84,771 of Tenda’s common shares, without reducing
Tenda’s capital stock, using the remaining balance of Tenda’s profit reserves
accounts in the total amount of R$383,937.74. This share redemption did not
alter Tenda’s shareholders’ equity interest in Tenda’s share capital at the
time.
On June
30, 2007, EDSP92 subscribed 687,800 common shares that Tenda issued at a price
per share of R$106.2286, in an aggregate amount of R$73.1 million. These shares
were partially paid-in as follows:
|
·
|
R$39.0
million via the capitalization of all of the credits held by EDSP92
against Tenda; and
|
|
·
|
R$7
million in cash.
|
As a
result, on June 30, 2007, Tenda’s total capital increased from R$16.6 million to
R$89.7 million, made up of 4,663,049 common shares, which were partially
paid-in, with a balance remaining to be paid of R$34.1 million to be paid in by
December 31, 2007. The balance of R$34.1 million was fully paid-in (in cash) in
three separate payments in July 2007.
On July
31, 2007, EDSP92 Participações S.A. merged into us and as a result its
shareholders became Tenda’s direct shareholders, holding in the aggregate
687,000 of Tenda’s common shares, representing 14.75% of Tenda’s share
capital.
On
September 17, 2007, Tenda’s shareholders approved a share split of all Tenda’s
common shares at a ratio of one common share to 20 common shares. As a result,
Tenda’s capital stock became divided into 93,260,980 common shares.
On April
25, 2008, Tenda’s shareholders ratified the capital increase approved by the
Board of Directors on October 15, 2007, pursuant to which Tenda’s capital added
up to R$692,700,159.20, fully paid in, divided into 160,260,980 common shares,
registered and without par value.
On
October 21, 2008, Tenda’s shareholders approved the merger of FIT into the
company. As a result of this merger, Tenda’s capital stock was increased to
R$755,235,879.35, represented by 400,652,450 common shares, without par
value.
On
November 6, 2009, the board of directors of Tenda approved an increase of
Tenda’s capital stock pursuant to which Tenda’s capital added up to
R$755.634.763,57, fully paid in, divided into 400.804.117 common shares,
registered and without par value.
Registration
of Tenda’s Common Shares
Tenda’s
common shares are held in book-entry form with the Banco Itaú S.A. Transfers of
Tenda’s common shares are carried out through book entry by debiting the share
account of the seller and crediting the share account of the buyer upon a
written order of the transferor or a judicial authorization or order to effect
such transfer.
Rights
of Tenda’s Common Shares
Each of
Tenda’s common shares entitles its holder to one vote at any shareholders’
meeting. In addition, each common share is indivisible, entitling its owner to
one vote on matters presented at shareholder’s meetings. In
accordance
with Tenda’s bylaws, the Brazilian corporate law and the rules and regulations
of the Novo Mercado,
shareholders have the right to receive dividends or other distributions in
proportion to their equity interest in Tenda’s share capital. For additional
information regarding the payment of dividends and other distributions relating
to Tenda’s common shares, see “Part Five: – The Restructuring – Comparative
Share and Dividend Information.” In addition, shareholders of Tenda may freely
transfer their shares and are entitled to certain tag-along rights upon a
transfer of Tenda’s control.
Also,
upon Tenda’s liquidation, and after the discharge of all liabilities, Tenda’s
common shares entitle its holders to a participation in Tenda’s remaining assets
as capital reimbursement in proportion to their equity interest in Tenda’s share
capital. Holders of Tenda common shares have the right, but not the obligation,
to subscribe for Tenda’s future capital increases.
Moreover,
pursuant to the Brazilian corporate law, neither Tenda’s bylaws, nor actions
taken at a shareholders’ meeting may deprive a shareholder of the following
rights:
|
·
|
right
to participate in Tenda’s profit
distributions;
|
|
·
|
right
to participate in Tenda’s remaining assets in proportion to its equity
interest in Tenda’s share capital in the event of Tenda’s
liquidation;
|
|
·
|
preemptive
right to subscribe for Tenda’s common shares, convertible debentures and
warrants, except in certain circumstances under the Brazilian corporate
law described in “—Preemptive
Rights”;
|
|
·
|
right
to inspect and monitor Tenda’s management, in accordance with the
Brazilian corporate law;
|
|
·
|
right
to vote at shareholders’ meetings;
and
|
right to
withdraw from us in the cases provided in the Brazilian corporate law, as
described in “—Withdrawal
Rights” and “—Redemption.”
Tenda’s
Shareholders’ Meetings
Pursuant
to the Brazilian corporate law, shareholders, during shareholders’ meetings
regularly called and convened, are generally empowered to pass resolutions
relating to Tenda’s corporate purpose as they may deem necessary. Shareholders’
meetings may be general or special. Shareholders at the annual shareholders’
meeting, which is required to be held within four months of the end
of Tenda’s fiscal year, have the exclusive power to approve Tenda’s financial
statements and to determine the allocation of Tenda’s net profits and the
distribution of dividends with respect to the fiscal year ended immediately
prior to the shareholders’ meeting. Likewise, special shareholders’ meetings are
convened to approve the remaining matters within their competency as provided by
law and/or Tenda’s bylaws. A special shareholders’ meeting may be held
concurrently with a general meeting.
The
following actions, among others, may be taken only at a general shareholders’
meeting:
|
·
|
amendment
of Tenda’s bylaws;
|
|
·
|
election
or dismissal of Tenda’s board of directors or fiscal council, once
constituted;
|
|
·
|
approval
of management accounts and Tenda’s financial
statements;
|
|
·
|
issuance,
redemption or repurchase of Tenda’s securities (including derivatives
linked to Tenda’s securities);
|
|
·
|
authorization
of the issuance of convertible or secured debentures (except as set forth
in Article 59, Paragraph 1 of the Brazilian corporate
law);
|
|
·
|
approval
of the allocation of Tenda’s net income and the corresponding profits
distribution and payment of
dividends;
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|
·
|
approval
of share splits;
|
|
·
|
approval
of a stock option plan or the subscription of shares by Tenda’s management
and employees;
|
|
·
|
suspension
of shareholders’ rights in the event of noncompliance with the Brazilian
corporate law or Tenda’s bylaws;
|
|
·
|
approval
of the appraisal of assets contributed by a shareholder in the
subscription of Tenda’s shares;
|
|
·
|
approval
of Tenda’s transformation into a limited liability company (sociedade limitada) or
into any other corporate form;
|
|
·
|
approval
of Tenda’s merger with another company (incorporação or fusão) or a spin-off
(cisão) of a
portion of Tenda’s assets or
liabilities;
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|
·
|
approval
of Tenda’s dissolution or liquidation, and the appointment and dismissal
of the respective liquidator and approval of the reports prepared by such
liquidator;
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|
·
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approval
of a reduction in Tenda’s mandatory
dividend;
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|
·
|
approval
of Tenda’s participation in a group of companies (as defined in the
Brazilian corporate law);
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|
·
|
approval
to delist from the Novo
Mercado segment of the BM&FBOVESPA;
and
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|
·
|
approval
of a specialist firm (among those identified by Tenda’s board of
directors) to prepare an appraisal report with respect to the value of
Tenda’s common shares in public offerings, as provided in Tenda’s bylaws
appointment.
|
Quorum
for Tenda’s Shareholders’ Meetings
As a
general rule, the Brazilian corporate law provides that a quorum for purposes of
a shareholders’ meeting consists of shareholders representing no less than 25%
of Tenda’s voting capital stock, and on second call, consisting of any number of
voting shareholders. When the purpose of a shareholders’ meeting is to amend the
bylaws, a quorum consists of shareholders representing at least two-thirds of
the issued and outstanding capital on the first call and any percentage on the
second call.
Generally,
the affirmative vote of shareholders representing at least a majority of Tenda’s
issued and outstanding common shares present at a shareholders’ meeting in
person, or represented by a proxy, is required to approve any proposed action,
with abstentions not taken into account. The affirmative vote of shareholders
representing at least 50% of Tenda’s voting capital is required, among other
things, to:
|
·
|
reduce
the mandatory dividend;
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|
·
|
change
Tenda’s corporate purpose;
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·
|
spin-off;
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·
|
merge
with another company;
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·
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approve
Tenda’s participation in a group of companies (as defined in the Brazilian
corporate law);
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|
·
|
apply
for cancellation of any voluntary liquidation;
and
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|
·
|
approve
Tenda’s dissolution.
|
Notice
of Tenda’s Shareholders’ Meetings
In
accordance with the Brazilian corporate law, the notice of Tenda’s shareholders’
meetings must be published at least three times in the Diário Oficial, and in one
other widely circulated newspaper, which is in Tenda’s case, Valor Econômico. The first
notice must be published no later than 15 days prior to the date of the meeting
on the first call, and no later than eight days prior to the date of the meeting
on the second call. In certain circumstances, however, the CVM may require that
the first notice be published no later than 30 days prior to the
meeting.
Location
of Tenda’s Shareholders’ Meeting
Tenda’s
shareholders’ meetings are held at Tenda’s headquarters in the city of São
Paulo, State of São Paulo at Av. Engenheiro Luiz Carlos Berrini No. 1,376, 9th
floor, 04571−000. The Brazilian corporate law allows Tenda’s shareholders to
hold meetings outside Tenda’s headquarters in the event of force majeure, provided the
meetings are held in the city of São Paulo and the relevant notice indicates
expressly and clearly the location of the meeting.
Who
May Call Tenda’s Shareholders’ Meeting
In
addition to being called by Tenda’s board of directors, shareholders’ meetings
may also be called by:
|
·
|
any
shareholder, if Tenda’s board of directors fails to call a shareholders’
meeting within 60 days after the date they were required to do so under
applicable laws and Tenda’s bylaws;
|
|
·
|
shareholders
holding at least five percent of Tenda’s capital stock if Tenda’s board of
directors fails to call a meeting within eight days after receipt of a
justified request to call a meeting by those shareholders indicating the
proposed agenda;
|
|
·
|
shareholders
holding at least five percent of Tenda’s shares if Tenda’s board of
directors fails to call a meeting within eight days after receipt of a
request to call the meeting for the creation of the fiscal council;
and
|
|
·
|
Tenda’s
fiscal council, when constituted, if the board of directors fails to call
an annual shareholders’ meeting within 30 days after the mandatory date it
should have been called. The fiscal council may also call a special
shareholders’ meeting if it believes that there are important or urgent
matters to be addressed.
|
Conditions
of Admission to Tenda’s Shareholders’ Meeting
In order
to attend a shareholders’ meeting, a shareholder must produce, in advance of the
meeting, proof of ownership of the shares it intends to vote, including
identification and/or pertinent document that evidence its legal representation
of another shareholder.
A
shareholder may be represented at a shareholders’ meeting by a proxy appointed
less than a year before the meeting. The proxy must be a shareholder, a
corporate officer, a lawyer or a financial institution. An investment fund must
be represented by its investment fund officer.
Composition
of Tenda’s Board of Directors as Novo Mercado Regulations
Pursuant
to regulations of the Novo
Mercado, at least 20% of the members of Tenda’s board of directors must
be independent. An independent board member pursuant to such regulations: (1)
does not have any ties to Tenda, except through ownership of stock; (2) is not a
controlling shareholder, or a spouse or relative to the second degree of any
such controlling shareholder, or does not have, would not have had within the
last three years, ties to any corporation or entity related to such controlling
shareholder; (3) has not been, within the last three years, an employee or
director of Tenda, its controlling shareholder or entity controlled by Tenda;
(4) does not supply to, or purchase from, us any products or services, to such
an extent as would cause such shareholder to cease to be independent; (5) is not
an employee or administrator of any corporation or entity that offers to, or
receives from, products or services of us; (6) is not a spouse or relative to
the second degree of any of Tenda’s managers; (7) does
not
receive any other compensation from us aside from compensation for duties as a
board member (gains arising from ownership in Tenda’s stock are excluded from
this restriction). Currently, three of Tenda’s directors are independent
pursuant to the regulations of the Novo Mercado.
The
Brazilian corporate law permits the adoption of cumulative voting upon a request
by shareholders representing at least 10% of Tenda’s voting capital, according
to which each share receives a number of votes corresponding to the number of
members of the board of directors and allowing shareholders the right to
cumulate their votes for one candidate or distribute them among various
candidates. As prescribed by CVM Instruction 282 dated June 26, 1998, the
threshold to trigger cumulative voting rights may vary from 5% to 10% of the
total voting capital stock. Taking into consideration Tenda’s current capital,
shareholders representing 5% of Tenda’s voting capital stock may request the
adoption of cumulative voting to elect the members of Tenda’s board of
directors. If cumulative voting is not requested, Tenda’s directors shall be
elected by majority vote of the holders of Tenda’s common shares, in person or
represented by proxy. Shareholders who own, individually or with other
shareholders, 15% of Tenda’s common stock are assured the right to elect, by
separate vote, one board member. Tenda’s directors are elected by Tenda’s
shareholders at an annual shareholders’ meeting for a two-year
term.
According
to the Brazilian corporate law, each director must hold at least one of Tenda’s
shares.
Transactions
of Interest to Tenda’s Directors
According
to the Brazilian corporate law, Tenda’s directors and executive officers may
not:
|
·
|
perform
any charitable act at Tenda’s expense, except for such reasonable
charitable acts for the benefit of Tenda’s employees or of the community
in which Tenda participate and is not detrimental to us, upon approval by
the board of directors;
|
|
·
|
receive,
by virtue of his or her position, any direct or indirect personal benefit
from third parties without authorization in Tenda’s bylaws or in a
shareholders’ meeting;
|
|
·
|
borrow
money or property from us or use Tenda’s property, services or credit for
his or her own benefit or for the benefit of a company or third party in
which he or she has an interest, without the prior approval at a
shareholders’ meeting or of Tenda’s board of
directors;
|
|
·
|
take
advantage of any commercial opportunity for his or her own benefit or for
the benefit of a third party at Tenda’s expense when he or she learned of
such opportunity through his or her position as a
director;
|
|
·
|
neglect
the protection of Tenda’s rights by failing to disclose a business
opportunity in Tenda’s interests with a view to exploiting the opportunity
for personal gain, or for the benefit of a third
party;
|
|
·
|
acquire,
in order to resell for profit, a good or right that is essential to
Tenda’s business operations, or that Tenda intend to acquire for
ourselves; and
|
|
·
|
take
part in a corporate transaction in which he or she has an interest that
conflicts with Tenda’s interests or in the deliberations undertaken by
Tenda’s directors on the matter.
|
The
compensation of Tenda’s directors is determined by Tenda’s shareholders at the
annual shareholders’ meeting that approves the previous fiscal year’s financial
statements.
Tenda’s
Fiscal Council
As with
the board of directors, the members of the fiscal council, when constituted,
through execution of a consent agreement (termo de anuência) of the
members of the fiscal council as provided for by the regulations of the Novo Mercado, are personally
responsible to act in conformity with the Novo Mercado Participation
Agreement, with regulations of the Market Arbitration Chamber of the
BM&FBOVESPA and with the regulations of the Novo Mercado. The swearing in
of the members of the fiscal council is contingent upon their execution of the
consent agreement.
Tenda’s
Withdrawal Rights
Shareholders
who do not vote in favor of certain actions taken by Tenda’s shareholders in a
shareholders’ meeting have withdrawal rights based, in general, on the book
value of their shares.
According
to the Brazilian corporate law, a shareholder’s withdrawal rights may be
exercised in the following circumstances, among others:
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a
spin-off (as described below);
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a
reduction in the percentage of mandatory
dividends;
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a
change in Tenda’s corporate
purpose;
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a
change in Tenda’s corporate form;
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a
merger of all of Tenda’s shares into another Brazilian corporation that
transforms us into a wholly owned subsidiary of such
corporation;
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a
merger (fusão or
incorporação)
with another company (as described below);
and
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Tenda’s
participation in a group of companies (as defined in the Brazilian
corporate law).
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The
Brazilian corporate law further provides that any resolution regarding a
spin-off will also entitle shareholders to withdraw from us if the
spin-off:
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causes
a change in Tenda’s corporate purpose, except if the equity is spun off to
a company whose primary activities are consistent with Tenda’s corporate
purpose;
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reduces
Tenda’s mandatory dividends; or
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causes
us to join a group of companies (as defined in the Brazilian corporate
law).
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In cases
where Tenda merges with another company or participates in a group of companies
(as defined in the Brazilian corporate law), Tenda’s shareholders will not be
entitled to withdraw if their respective shares (1) are liquid, defined as being
part of the BM&FBOVESPA Index or another traded stock exchange index (as
defined by the CVM), and (2) are widely held such that the controlling
shareholder or companies that it controls hold less than 50% of Tenda’s
shares.
The right
to withdraw expires 30 days after publication of the minutes of the relevant
shareholders’ meeting. Tenda are entitled to reconsider any action giving rise
to withdrawal rights for ten days after the expiration of those rights if the
redemption of shares of dissenting shareholders would jeopardize Tenda’s
financial stability.
Any
shareholder that exercises its withdrawal rights is entitled to receive from
Tenda book value for its shares based on the last balance sheet approved by
Tenda’s shareholders. If the resolution giving rise to the withdrawal rights is
made more than 60 days after the date of the last approved balance sheet, the
shareholder may demand that its shares be valued according to a new balance
sheet dated no less than 60 days before the resolution date. In this case, Tenda
must (1) immediately pay 80% of the book value of the shares according to the
most recent balance sheet approved by Tenda’s shareholders, and (2) pay the
remaining balance within 120 days after the date of the resolution of the
shareholders’ meeting.
Tenda’s
Redemption Rights
Pursuant
to the Brazilian corporate law, Tenda is permitted to redeem its shares if such
redemption is approved by Tenda’s shareholders at a special shareholders’
meeting.
Tenda’s
Preemptive Rights
Tenda’s
shareholders have preemptive rights to subscribe for shares in any capital
increase according to the proportion of their shareholdings, in any convertible
debentures and in any offering of Tenda’s shares or subscription warrants that
Tenda may issue, except in the event of a grant or exercise of an option to
acquire Tenda’s shares or the conversion of debentures into Tenda’s shares and
except where such right is limited by the Brazilian corporate law. A period of
at least 30 days following the publication of notice of the capital increase is
allowed for the exercise of the preemptive right, and the right may be
transferred or disposed of for value.
Restrictions
on Certain Transactions by Controlling Shareholders, Directors and Officers of
Tenda
In
addition, Tenda is subject to the rules set forth in CVM Instruction No. 358,
dated January 3, 2002, with respect to the trading of Tenda’s common shares. As
a result, Tenda, Tenda’s controlling shareholder (Gafisa), directors, executive
officers and members of Tenda’s fiscal council, members of Tenda’s committees
(if constituted) and any technical or advisory groups who are considered
insiders under the Brazilian securities regulation, as well as any other
insiders who know that certain information has not been made publicly available
to the market, are prohibited from trading in Tenda’s common shares, including
derivatives linked to Tenda’s common shares, before the public disclosure of any
such material act or fact with respect to Tenda’s business.
This
restriction applies in the following instances:
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persons
that are no longer members of Tenda’s management team are prohibited from
trading in Tenda’s securities before the disclosure of material
information relating to us that happened during their terms of office, and
the prohibition from trading Tenda’s securities is extended for a period
of six months as from the date on which such persons quit their
positions;
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whenever
a procedure is ongoing for purchase or sale of Tenda’s shares by Tenda or
Tenda’s controlled or associated companies, or other companies that share
control with Tenda, or an option or mandate has been granted for the same
purpose, or there is an intention to merge us into another company or to
carry out Tenda’s total or partial spin-off, consolidation, transformation
or corporate reorganization;
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during
the 15-day period before the disclosure of Tenda’s quarterly financial
information, or IFT, and annual financial information and statements, or
IAN, and standardized financial statements, or DFP, respectively, as
required by CVM; and
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with
respect only to Gafisa, directors and officers, in the event of the
acquisition or sale of Tenda’s shares by Tenda or the acquisition or sale
of Tenda’s shares by any of Tenda’s controlled or associated companies or
any other company under Tenda’s common control or an option or mandate has
been granted for the same purpose.
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Moreover,
Tenda may not hold treasury stock representing more than 10% of Tenda’s
outstanding shares, excluding shares held by Gafisa and including shares held by
Tenda’s affiliates and subsidiaries.
Restrictions
on Actions Outside of the Scope of Tenda’s Corporate Purpose
The
Brazilian corporate law contains provisions and sets forth activities that are
expressly prohibited. As such, any acts that Tenda perform that are not related
to Tenda’s corporate purpose or that are against Tenda’s bylaws, including
granting any financing or offering guarantees of any kind to third parties in
connection with any transactions or business outside the scope of Tenda’s
corporate purpose, are deemed null and without effect in relation to
us.
Acquisition
by Tenda of its Own Shares
Tenda’s
bylaws authorize the board of directors to approve Tenda’s purchase of its own
shares, with the purpose of cancellation or holding them in
treasury. Tenda’s purchase of its shares cannot, among other
things:
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result
in a decrease of Tenda’s capital;
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require
the use of funds greater than Tenda’s accumulated profits and available
profit reserves, except for Tenda’s legal reserve, unrealized profit
reserve, contingency reserve and special, as stated in the last balance
sheet (as defined in the applicable
regulations);
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create,
directly or indirectly, any demand, offer, or artificial subscription
price, or engage in any unjust practice relating from any particular act
or omission; or
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be
used for the purchase of shares held by Tenda’s controlling
shareholder.
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Any
purchase Tenda makes of its shares must be made on the stock exchange, unless
such shares can be traded only on the over-the-counter market, and not through
private transactions, except when previously approved by the CVM. Tenda’s
purchase of its shares can also occur when Tenda is no longer a publicly held
company. In addition, Tenda may acquire or issue put or call options related to
Tenda’s shares.
Tenda’s
Reporting Requirements
Once
Tenda became a publicly traded company, Tenda became subject to the reporting
requirements established by the Brazilian corporate law and the regulations of
the CVM. In addition, as a result of Tenda’s listing on the Novo Mercado, Tenda must
comply with the disclosure requirements set forth in Novo Mercado
regulations.
Periodic
Reporting
The
Brazilian corporate law, securities regulations of the CVM and the rules and
regulations for listing on the Novo Mercado require that a
publicly held corporation like us provide certain periodic information to the
CVM and the BM&FBOVESPA, such as quarterly and annual information including
quarterly reports of management and the independent public accountants. These
regulations also require that Tenda file with the CVM shareholder agreements,
notices of shareholder meetings as well as the minutes of such
meetings.
In
addition to the reporting requirements of the Brazilian corporate law and of the
CVM, Tenda must provide the following periodic information:
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Tenda
must disclose its financial statements prepared at the end of each quarter
(except the last quarter) and at the end of each year, including a cash
flow statement, which should indicate, at a minimum, the changes in
Tenda’s cash and cash equivalents, divided into operational, finance and
investment cash flows for the relevant quarter or
year;
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from
the date in which Tenda released its financial statements relating to the
second fiscal year following Tenda’s listing on the Novo Mercado Tenda
must, no later than four months after the end of the fiscal year: (1)
prepare Tenda’s annual financial statements and consolidated financial
statements, if applicable, in accordance with U.S. GAAP or IFRS, in reais or in U.S.
dollars, in the English language, together with (a) management reports,
(b) notes to the financial statements, including information on net income
and shareholders’ equity calculated at the end of such fiscal year in
accordance with Brazilian GAAP, as well as management proposals for
allocation of net profits, and (c) Tenda’s independent public accountants
report; or (2) disclose, in the English language, complete financial
statements, management reports and notes to the financial statements,
prepared in accordance with the Brazilian corporate law, accompanied by
(a) an additional explanatory note regarding the reconciliation of
year-end net income and shareholders’ equity calculated in accordance with
Brazilian GAAP and U.S. GAAP or IFRS, as the case may be, which must
include the main differences between the accounting principles used, and
(b) the independent public accountants’ report;
and
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from
the date on which Tenda released its first financial statements prepared
as provided above, no later than 15 days following the term established by
law for the publication of quarterly financial information, Tenda must
disclose, in its entirety, its quarterly financial information translated
into the English language or disclose its financial statements and
consolidated financial statements in accordance with Brazilian GAAP, U.S.
GAAP or IFRS as provided above, accompanied by the independent public
accountants
report.
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Quarterly
Reporting
In
Tenda’s quarterly reports, in addition to the information required by applicable
legislation, Tenda must disclose the following information:
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Tenda’s
consolidated balance sheet, consolidated statement of income and a
discussion and analysis of Tenda’s consolidated performance, if Tenda are
obliged to disclose consolidated financial statements at
year-end;
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any
direct or indirect ownership interest exceeding 5% of Tenda’s capital
stock, considering any ultimate individual beneficial
owner;
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the
number and characteristics, on a consolidated basis, of Tenda’s shares
held by Gafisa, members of Tenda’s board of directors, board of executive
officers and fiscal council;
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changes
in the numbers of Tenda’s shares held by Gafisa, members of Tenda’s board
of directors, board of executive officers and fiscal council in the
immediately preceding 12 months;
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in
an explanatory note, Tenda’s cash flow statements, which should indicate
the cash flows in cash balance and cash equivalent, separated into
operating, finance and investments cash
flows;
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the
number of free-float shares, and their percentage in relation to the total
number of issued shares; and
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notification
that a binding arbitral clause is in
place.
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The
following information must also be included in Tenda’s IAN in the section
“Additional Information Deemed Relevant by Company”:
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information
relating to number and characteristics of Tenda’s shares directly or
indirectly held by Gafisa, members of Tenda’s board of directors, board of
executive officers and fiscal
council;
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changes
in the number of shares held by such persons within the immediately
proceeding 12 months; and
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establishment
of the arbitral clause.
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The
acquisition by Tenda of its own shares must comply with the Reporting Policy,
Use of Information and Trading of Securities approved on June 28, 2007 by
Tenda’s board of directors.
Information
Required by the CVM
The
Brazilian corporate law, securities regulations of the CVM and the rules and
regulations of the Novo
Mercado segment of the BM&FBOVESPA require that a publicly held
corporation like us provide the following periodic information to the CVM and
the BM&FBOVESPA:
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financial
statements prepared in accordance with Brazilian GAAP and related
management and auditors’ reports, within three months from the end of the
fiscal year on the date on which they are published or made available to
shareholders, whichever occurs first, together with the
DFP;
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notices
of Tenda’s annual shareholders’ meeting, on the same date as their
publication;
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summary
of the decisions made at annual shareholders’ meetings, on the day
following their occurrence;
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copy
of the minutes of the annual shareholders’ meetings, within ten days of
their occurrence;
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IAN,
an annual report on standard form containing Tenda’s relevant corporate,
business and selected financial information, within one month from the
date of the annual shareholders’ meeting;
and
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ITR,
a quarterly report on standard form containing Tenda’s relevant quarterly
corporate, business and financial information, together with a special
review report issued by Tenda’s independent public accountants, within 45
days form the end of each quarter (except for the last quarter of each
year) or upon disclosure of such information to shareholders or third
parties, whichever occurs first.
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In
addition to the foregoing, Tenda must also file the following information with
the CVM and the BM&FBOVESPA:
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notice
of Tenda’s special shareholders’ meetings, on the same date as their
publication;
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summary
of the decisions made in special shareholders’ meetings, on the day
following their occurrence;
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minutes
of Tenda’s special shareholders meetings’, within ten days from its
occurrence;
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a
copy of any shareholders’ agreement on the date on which it is filed with
us;
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any
press release giving notice of material facts, on the same date it is
published in the press;
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information
on any filing for corporate reorganization, the reason for such filing,
special financial statements prepared for obtaining a legal benefit, and,
if applicable, any plan for payment of holders of debentures, as well as
copies of any judicial decision granting such request, on the same date it
is filed and on the date Tenda take notice of
it;
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information
on any bankruptcy filing, on the same day Tenda become aware of it, or the
filing of a judicial claim, as applicable;
and
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a
copy of any judicial decision granting a bankruptcy request and
appointment of a bankruptcy trustee, on the date Tenda take notice of
it.
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Disclosure
of Trading by Gafisa, Directors, Officers or Members of the Fiscal
Council
Gafisa,
executive officers, members of Tenda’s board of directors and members of Tenda’s
fiscal council, if active, or of any technical or advisory committee are
required to disclose to us the number, type, and manner of acquisition of
securities issued by us, Tenda’s subsidiaries and Tenda’s controlling companies
that are held by them or by persons closely related to them and any changes in
their respective ownership positions. The information regarding the acquisition
of such securities (such as name of the amount, price and date of purchase) must
be provided to the CVM and BM&FBOVESPA within ten days following the end of
the month in which they were traded.
The
communication shall include, at least, the following information:
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the
name and qualification of the person providing the
information;
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the
issuer, amount, price, type and/or class, in the case of acquired shares,
or characteristics, in the case of securities;
and
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the
form, price and date of the
transactions.
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In
accordance with paragraph 1 of Article 12 of CVM Instruction No. 358, dated
January 3, 2002, if the controlling shareholder, whether direct or indirect, or
shareholders entitled to elect Tenda’s directors and fiscal council members
either individually or in a group of persons or entities sharing similar
interests, should directly or indirectly increase or reduce their interest in
Tenda’s capital stock by more than 5%, such persons or entities must disclose to
us the following information:
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name
and identification of the person acquiring the
shares;
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the
number, kind and class and other characteristics of the shares, warrants,
subscription rights, call options, and convertible debentures, if any
interest is already held by their acquirer or any related
person;
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form
of acquisition (private transaction, trading on the stock exchange,
etc.);
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the
reasons and purpose of the transaction;
and
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information
regarding any agreement regulating the exercise of voting rights or the
purchase and sale of Tenda’s
securities.
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Disclosure
of Material Information
According
to Law No. 6,385, dated December 7, 1976, as amended, and CVM Instruction No.
358, dated January 3, 2002, as amended, Tenda must disclose any material
information related to Tenda’s business to the CVM and the BM&FBOVESPA and
publish a notice of such material information. Material information consists of
any decision by the controlling shareholder, any resolution taken by Tenda’s
board of directors, by the executive officers or by the shareholders in a
shareholders’ meeting, or any other act or fact of political, technical,
managerial, economic or financial nature occurring or related to us that could
materially influence the price of Tenda’s securities, the decision of investors
to buy, sell or hold Tenda’s securities, or the investors’ decision to exercise
any rights deriving from Tenda’s securities.
Under
special circumstances, Tenda may request confidential treatment by the CVM of
certain material developments affecting us.
Trading
of Tenda’s shares in Stock Exchange Markets
Tenda’s
common shares trade on the BM&FBOVESPA and such trading is carried out by
brokerage firms and other authorized institutions. The CVM and the
BM&FBOVESPA have discretionary authority to suspend trading in shares of a
particular issuer in certain circumstances.
Settlement
of transactions on the BM&FBOVESPA occurs three business days after the
trade date. Delivery of and payment for shares is made through the facilities of
an independent clearinghouse. The clearinghouse for trading in the
BM&FBOVESPA is the BM&FBOVESPA itself, since BM&FBOVESPA merged with
the former CBLC. The BM&FBOVESPA is the central counterparty for
transactions effected on the BM&FBOVESPA and carries out multi-party
settlement for financial obligations and securities transfers. Under the
regulations of the BM&FBOVESPA, financial settlement is carried out through
the Reserve Transfer System (Sistema de Transferência de
Reservas) of the Central Bank. The settlement of trades of shares is carried out
in the custodial system of the BM&FBOVESPA. All deliveries against final
payment are irrevocable.
Gafisa
has filed with the SEC a registration statement on Form F-4 to register under
the Securities Act the common shares of Gafisa to be received in the
Restructuring by holders of common shares of Tenda residing in the United
States. This preliminary prospectus/information statement, which is part of the
registration statement, does not contain all of the information set forth in the
registration statement and the exhibits and schedules to the registration
statement. For further information with respect to Gafisa and their common
shares and ADSs, Gafisa refers you to the registration statement and the
exhibits and schedules filed as a part of the registration
statement.
Gafisa
files annual reports on Form 20-F and furnish reports on Form 6-K to the SEC
under the rules and regulations that apply to foreign private issuers. As
foreign private issuers, Gafisa and its respective shareholders are exempt from
some of the reporting requirements of the Exchange Act, including the proxy
solicitation rules, the rules regarding the furnishing of annual reports to
stockholders and Section 16 short-swing profit reporting for its officers,
directors and holders of more than 10% of its shares. You may read and copy any
materials filed with the SEC at its Public Reference Room at 100 F Street, N.E.,
Washington, D.C., 20549. You may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a
website at http://www.sec.gov that contains reports and other information
regarding issuers that file electronically with the SEC. Tenda is not subject to
the reporting requirements of the Exchange Act.
Gafisa
maintains an internet site at www.gafisa.com.br. However, information contained
on that internet site is not incorporated by reference in this preliminary
prospectus/information statement. You may also read reports and other
information about Gafisa at the offices of the NYSE located at 20 Broad Street,
New York, New York 10005. Tenda does not have securities listed on the
NYSE.
Gafisa
provides annual reports in English to Citibank N.A., as depositary under the
deposit agreements relating to its ADR program. Gafisa also furnishes to the
depositary in English all notices of meetings of holders of common shares and
other reports and communications that are made generally available to holders of
common shares. Upon written request of Gafisa the depositary will mail to all
holders of ADSs a notice containing the information (or a summary of the
information) contained in any notice of a shareholders’ meeting received by the
depositary and all other reports and communications received by the depositary.
So long as the applicable ADRs are listed on the NYSE, the depositary will mail
to all registered holders of ADSs at Gafisa’s expense any notices, reports and
other communications that are made generally available to the holders of the
Gafisa’s common shares or, at the company’s request, make these notices, reports
and other communications available to all registered holders of ADSs on a basis
similar to that for holders of common shares or on such other basis as the
company may advise the depositary may be required by any applicable law,
regulation or stock exchange requirement.
The SEC
allows Gafisa to “incorporate by reference” information into this
preliminary prospectus/information statement, which means that Gafisa can
disclose important information to you by referring you to another document that
Gafisa has filed previously with the SEC. The information incorporated by
reference is considered to be part of this preliminary prospectus/information
statement, and certain later information that Gafisa files with the SEC will
automatically update and supersede this information. Gafisa incorporates by
reference the following documents:
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Gafisa’s
Annual Report on Form 20-F for the fiscal year ended December 31, 2008,
filed with the SEC on June 5, 2009, except for the U.S. GAAP information
included in items 3A, 8A and 18, which has been adjusted to reflect the
retrospective adoption of the disclosure required by SFAS No. 160 and is
incorporated by reference from the Form 6-K filed by Gafisa with the SEC
on November 13, 2009, which is incorporated by reference in this
preliminary prospectus/information statement;
and
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any future filings
on Form 20-F by Gafisa made with the SEC under the Exchange Act after the
date of this preliminary prospectus/information statement and prior to the
completion of the Restructuring and
any
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future
filings on Form 6-K by Gafisa during such period that are identified in
such forms as being incorporated by reference into this preliminary
prospectus/information
statement.
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Gafisa
will provide to each person, including any beneficial owner, to whom a
preliminary prospectus/information statement is delivered, upon written or oral
request at no cost, a copy of any and all of the information that has been
incorporated by reference in this preliminary prospectus/information statement
and that has not been delivered with this preliminary prospectus/information
statement by contacting Gafisa at the following street address, telephone number
or e-mail address:
Gafisa
S.A.
Attention:
IR Department
Av.
Nações Unidas No. 8,501, 19th floor
05425−070
− São Paulo, SP − Brazil
Telephone:
+ 55 (11) 3025−9000
e-mail:
ri@gafisa.com.br
You may
also contact Tenda for at the following street address, telephone number or
e-mail address:
Construtora
Tenda S.A.
Attention:
IR Department
Av.
Engenheiro Luiz Carlos Berrini No. 1,376, 9th floor
04571−000
− São Paulo, SP − Brazil
Telephone:
+ 55 (11) 3040−6426
e-mail:
ri@tenda.com
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You may also contact the
information agent for the
Restructuring:
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D.F. King
& Co., Inc.
48 Wall
Street, 22nd floor
New York,
N.Y. 10005 - USA
Toll
Free: (800)207-3158
Collect:
(212)269-5550
e-mail:
proxy@dfking.com
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In
addition, if you are a holder of Gafisa ADSs, you may also
contact:
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Citibank,
N.A.
Attention:
Depositary Receipts Department
388
Greenwich Street
New York,
N.Y. 10013 − USA
Calls
within the United States: (800) 308−7887
Calls
outside the United States: (781) 575−4555
Gafisa is
also subject to the informational requirements of the CVM and the
BM&FBOVESPA and files reports and other information relating to their
business, financial condition and other matters with the CVM and the
BM&FBOVESPA. You may read these reports, statements and other
information at the public reference facilities maintained in Rio de Janeiro or
São Paulo. Some Gafisa filings with the CVM are also available at the
website maintained by the CVM at http://www.cvm.gov.br.
Gafisa
has been advised by its Brazilian counsel, Barbosa, Müssnich & Aragão
Advogados, that a final substantiated (i.e., if the grounds for the judgment are
contained in the decision), certain (i.e., the obligation to be accomplished in
Brazil as ordered by the foreign judgment is clearly defined) and conclusive
judgment of a U.S. court for civil liabilities predicated upon the federal
securities laws of the United States, subject to certain requirements described
below, may be enforced in Brazil. A judgment against Gafisa, Tenda, their
respective
directors
and certain of their respective officers and advisors or any such person would
be enforceable in Brazil without reconsideration of the merits upon confirmation
of that judgment by the Brazilian Superior Court of Justice. That confirmation
generally will occur if the foreign judgment:
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fulfills
all formalities required for its enforceability under the laws of the
country where the foreign judgment is
granted;
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is
issued by a competent court after proper service of process is made or
sufficient evidence of our absence has been given as required under
applicable law;
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has
been made res
judicata (i.e. final and not subject to
appeal);
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is
authenticated by a Brazilian consular office in the country where the
foreign judgment is issued and is accompanied by a sworn translation into
Portuguese;
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is
not contrary to Brazilian national sovereignty or public policy or “good
morals”; and
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is
not equal to a proceeding in Brazil involving the same parties, based on
the same grounds and with the same object, which has already been judged
by a Brazilian court.
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However,
you cannot be certain that this confirmation will be obtained or that it will be
obtained in a timely manner. In addition, you cannot be certain that a Brazilian
court would enforce a monetary judgment for violations of U.S. securities
laws.
Gafisa
has been further advised by Barbosa, Müssnich & Aragão Advogados that
original actions may be brought in Brazilian courts and that Brazilian courts
may enforce civil liabilities in such actions against each of Gafisa, Tenda, its
directors and certain of its officers and advisors.
A
plaintiff, whether Brazilian or non-Brazilian, who resides outside Brazil during
the course of litigation in Brazil must provide a bond to guarantee court costs
and legal fees if the plaintiff owns no real property in Brazil that may ensure
such payment. This bond must have a value sufficient to satisfy the payment of
court fees and defendant’s attorney’s fees, as determined by the Brazilian
judge. This requirement does not apply to the enforcement of foreign judgments
that have been duly confirmed by the Brazilian Superior Court of
Justice.
Gafisa is
not aware of any of the following:
|
·
|
any
governmental license or regulatory permit that appears to be material to
the businesses of Gafisa or Tenda that might be adversely affected by the
Restructuring;
|
|
·
|
except
as described below, any approval or other action by any government or
governmental administrative or regulatory authority or agency, domestic or
foreign, that would be required for the completion of the Restructuring;
or
|
|
·
|
any
consent, waiver or other approval that would be required as a result of or
in connection with the Restructuring, including but not limited to, any
consents or other approvals under any licenses, concessions, permits and
agreements to which any of Gafisa or Tenda is a party that have not been
obtained.
|
The
approval of the Restructuring by the CVM is not a condition to the
Restructuring. Should any such approval or other action be required, Gafisa
currently contemplates that such approval will be sought or such action will be
taken, as the case may be. Gafisa is unable to predict whether it may
be necessary to delay the completion of the Restructuring pending the outcome of
any approval or other action. Gafisa cannot assure you that any approval or
other action, if needed, would be obtained or would be obtained without
substantial conditions. In addition, neither Gafisa nor Tenda can assure you
that if the approvals were not obtained or other actions were not taken, adverse
consequences might not result to the businesses of the operating
companies.
Gafisa
has received an opinion from Barbosa, Müssnich & Aragão Advogados, São
Paulo, Brazil, with respect to the validity of the common shares of Gafisa to be
issued in connection with the Restructuring. Gafisa was advised as to certain
matters of U.S. law by Davis Polk & Wardwell LLP, New York, New
York.
The
consolidated financial statements incorporated in this prospectus by reference
to our report on Form 6-K furnished to the SEC on November 13, 2009, and
management’s assessment of the effectiveness of our internal control over
financial reporting incorporated in this prospectus by reference to our annual
report on Form 20-F for the year ended December 31, 2008, have been so
incorporated in reliance on the report, which contains an explanatory paragraph
on the effectiveness of internal control over financial reporting due to the
exclusion of certain elements of the internal control over financial reporting
of Construtora Tenda S.A., acquired by the registrant as of October 21, 2008, of
PricewaterhouseCoopers Auditores Independentes, an independent registered public
accounting firm, given on the authority of such firm as experts in auditing and
accounting.
The
audited financial statements as of December 31, 2008 and for the period from
October 22, 2008 through December 31, 2008 of Construtora Tenda S.A., not
separately presented in our Annual Report on Form 20-F, have been audited by
Terco Grant Thornton Auditores Independentes, an independent registered public
accounting firm, whose report thereon is incorporated in this prospectus
supplement/information statement by reference to our report on Form 6-K
furnished to the SEC on November 13, 2009. Such financial statements, to the
extent they have been included in the financial statements of Gafisa S.A., have
been so included in reliance on the report of such independent registered public
accounting firm given on the authority of said firm as experts in auditing and
accounting.
The
consolidated financial statements of Tenda as of December 31, 2008 and 2007 and
for the years ended December 31, 2008, 2007, and 2006 included in this
preliminary prospectus/information statement have been audited by Terco Grant
Thornton Auditores Independentes, an independent registered public accounting
firm, as set forth therein and included in this preliminary
prospectus/information statement. Such consolidated financial statements are
included
in this preliminary prospectus/information statement in reliance upon such
reports given on the authority of such firm as experts in accounting and
auditing.
Neither
the independent public accountants of Gafisa or Tenda , nor any other
independent accountants, have compiled, examined or performed any procedures
with respect to the prospective financial information used to prepare the
valuation reports described in “Part Five: The Restructuring” nor have they
expressed any opinion or any other form of assurance on such information or its
achievability, and assume no responsibility for, and disclaim any association
with, this prospective financial information. The reports of independent
registered public accounting firms included or incorporated by reference in this
preliminary prospectus/information statement relate to the historical financial
information of the respective companies, do not extend to the prospective
financial information and should not be read to do so.
Previous
independent registered public accounting firm
On August
18, 2009, Gafisa dismissed PricewaterhouseCoopers Auditores
Independentes as its independent registered public accounting firm.
Gafisa’s board of directors participated in and approved the decision to change
its independent registered public accounting firm.
The
reports of PricewatehouseCoopers Auditores Independentes on the financial
statements for the past two fiscal years contained no adverse opinion or
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principle.
During
the two most recent fiscal years and through August 18, 2009, there have been no
disagreements with PricewatehouseCoopers Auditores Independentes on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements if not resolved to the
satisfaction of PricewatehouseCoopers Auditores Independentes would have
caused them to make reference thereto in their reports on the financial
statements for such years.
During
the two most recent fiscal years and through August 18, 2009, there have been no
reportable events (as defined in Item 304(a)(1)(v)) of Regulation
S-K).
Gafisa
has requested that PricewatehouseCoopers Auditores Independentes furnish it
with a letter addressed to the SEC stating whether or not it agrees with the
above statements. A copy of such letter, dated November 13, 2009, is filed
as Exhibit 16.1 to this prospectus/information statement.
New
independent registered public accounting firm
Gafisa
engaged Terco Grant Thornton Auditores Independentes public accountants as its
new independent registered public accounting firm as of August 18, 2009. During
the two most recent fiscal years and through August 18, 2009, Gafisa has not
consulted with Terco regarding either (i) the application of accounting
principles to a specified transaction, either completed or proposed; or the type
of audit opinion that might be rendered on Gafisa’s financial statements, and
neither a written report was provided to Gafisa or oral advice was provided that
Terco concluded was an important factor considered by Gafisa in reaching a
decision as to the accounting, auditing or financial reporting issue; or (ii)
any matter that was either the subject of a disagreement, as that term is
defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to
Item 304 of Regulation S-K, or a reportable event, as that term is defined in
Item 304(a)(1)(v) of Regulation S-K.
Certain
prior relationships exist between the experts and financial advisors whose
reports have been relied upon in relation to the Restructuring and
Gafisa. Itaú BBA and its affiliates, in the normal course of their
businesses, have engaged in investment banking and other commercial dealing with
both Gafisa and Tenda, for which Itaú BBA and its affiliates were compensated,
and may, in the future, provide such services to Gafisa and to its respective
affiliates, for which Itaú BBA and its affiliates expect to be
compensated.
In
January 2008 Gafisa entered into a joint venture with institutions now
affiliated to Itaú BBA to create UniGafisa Participações e Empreendimentos
Imobiliários SCP, whose corporate purpose is to invest in other real estate
companies. In addition, Itaú Unibanco S.A. and its affiliates hold a 5.4%
ownership interest in Gafisa.
In the normal course of its business,
Estáter has only provided general financial and consulting services to Gafisa in
relation to the present Restructuring, for which Estáter will be compensated and
may, in the future, provide similar services to Gafisa and its affiliates, for
which Estáter expects to be compensated. Rothschild, in the normal course of its
business, has previously provided financial advice to Gafisa in relation to the
merger of FIT and Tenda, for which Rothschild was compensated, and may, in the
future, provide similar services to Gafisa and to its affiliates, for which
Rothschild expects to be compensated. In the normal course of its business,
APSIS has advised Gafisa on a number of previous transactions, including, but
not limited to, the merger of FIT and Tenda and the Alphaville Urbanismo S.A.
transaction, for which APSIS was compensated, and may, in the future, provide
similar services to Gafisa and to its respective affiliates, for which APSIS
expects to be compensated.
You
should rely only on the information incorporated by reference or provided in
this preliminary prospectus/information statement. Gafisa has not authorized any
person to give any information or to make any representations in connection with
the Restructuring other than the information contained or incorporated in this
preliminary prospectus/information statement and, if any person gives other
information or makes a representation in connection with the Restructuring, that
information or representation must not be relied on as having been authorized by
Gafisa.
This
preliminary prospectus/information statement does not constitute an offer to any
person in any jurisdiction in which an offer is unlawful. The offer is not being
made to holders of shares in any jurisdiction in which the making or acceptance
of the offer would not be in compliance with the laws of that jurisdiction.
However, Gafisa may, in its sole discretion, take any action it may deem
necessary to make the offer in any such jurisdiction and extend the offer to
holders of shares in any jurisdiction. In any jurisdiction where the securities,
blue sky or other laws require the offer to be made by a licensed broker or
dealer, the offer will be deemed to be made on Gafisa’s behalf by one or more
registered brokers or dealers licensed under the laws of the relevant
jurisdiction.
The
delivery of this preliminary prospectus/information statement will not, under
any circumstance, create an implication that Gafisa’s affairs have not changed
since the date as of which information is furnished or since the date of this
preliminary prospectus/information statement.
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
|
Page
|
|
|
Index to
Consolidated Unaudited Interim Financial Statements as of September 30,
2009 and for the nine month periods ended September 30, 2009 and 2008 of
Gafisa S.A.
|
F-1
|
|
Index to
Consolidated Unaudited Interim Financial Statements as of September 30,
2009 and for the nine month periods ended September 30, 2009 and 2008 of
Construtora Tenda S.A.
|
F-78
|
|
Index to
Consolidated Financial Statements as of December 31, 2008 and 2007 and for
the years ended December 31, 2008, 2007 and 2006 of Construtora Tenda
S.A.
|
F-119
|
Consolidated
Unaudited Balance Sheets as of September 30, 2009 and
for
the Nine-Month Periods ended September 30, 2009 and 2008 of Gafisa
S.A.
| Page | |
|
F-2
|
|
|
F-4
|
|
|
F-5
|
|
|
F-6
|
|
|
F-7
|
Gafisa
S.A.
at
September 30, 2009 (unaudited) and December 31, 2008
In
thousands of Brazilian reais
|
Assets
|
Note
|
September
30, 2009
|
December
31, 2008
|
|||||||||
| (Unaudited) | ||||||||||||
|
Current
assets
|
||||||||||||
|
Cash, cash equivalents and marketable
securities
|
4 | 948,350 | 528,574 | |||||||||
|
Restricted
cash in guarantee to loans
|
4 | 151,337 | 76,928 | |||||||||
|
Receivables from
clients
|
5 | 1,718,110 | 1,254,594 | |||||||||
|
Properties for sale
|
6 | 1,376,236 | 1,695,130 | |||||||||
|
Other accounts
receivable
|
7 | 93,722 | 182,775 | |||||||||
|
Deferred
taxes
|
15 | 13,099 | - | |||||||||
|
Deferred selling
expenses
|
7,205 | 13,304 | ||||||||||
|
Prepaid expenses
|
13,522 | 25,396 | ||||||||||
| 4,321,581 | 3,776,701 | |||||||||||
|
Non-current
assets
|
||||||||||||
|
Receivables from
clients
|
5 | 1,662,300 | 863,950 | |||||||||
|
Properties for sale
|
6 | 386,196 | 333,846 | |||||||||
|
Deferred taxes
|
15 | 250,846 | 190,252 | |||||||||
|
Escrow
deposits
|
- | 2,489 | 41,807 | |||||||||
|
Other accounts
receivable
|
7 | 49,651 | 68,799 | |||||||||
| 2,351,482 | 1,498,654 | |||||||||||
|
Goodwill,
net
|
8 | 195,088 | 195,088 | |||||||||
|
Property and
equipment, net
|
- | 53,698 | 50,348 | |||||||||
|
Intangible
assets
|
- | 9,690 | 18,067 | |||||||||
| 258,476 | 263,503 | |||||||||||
| 2,609,958 | 1,762,157 | |||||||||||
|
Total
assets
|
6,931,539 | 5,538,858 | ||||||||||
Gafisa
S.A.
Condensed
Consolidated Balance Sheets
at
September 30, 2009 (unaudited) and December 31, 2008
| In thousands of Brazilian reais |
(continued)
|
|
Liabilities
and shareholders' equity
|
Note
|
September
30, 2009
|
December
31, 2008
|
|||||||||
| (Unaudited) | ||||||||||||
|
Current
liabilities
|
||||||||||||
|
Loans and financing, net of
swaps
|
9 | 570,307 | 447,503 | |||||||||
|
Debentures
|
10 | 80,781 | 61,945 | |||||||||
|
Obligations for purchase of land and
advances from clients
|
13 | 488,935 | 421,584 | |||||||||
|
Materials and service
suppliers
|
- | 194,302 | 112,900 | |||||||||
|
Taxes and
contributions
|
- | 132,216 | 113,167 | |||||||||
|
Salaries, payroll charges and profit
sharing
|
- | 61,206 | 29,693 | |||||||||
|
Mandatory dividends
|
14 | (a) | 26,106 | 26,104 | ||||||||
|
Provision for
contingencies
|
12 | 10,512 | 17,567 | |||||||||
|
Deferred
taxes
|
15 | 52,375 | - | |||||||||
|
Other accounts payable
|
11 | 181,312 | 97,933 | |||||||||
| 1,798,052 | 1,328,396 | |||||||||||
|
Non-current
liabilities
|
||||||||||||
|
Loans and financing, net of
swaps
|
9 | 636,639 | 600,673 | |||||||||
|
Debentures
|
10 | 1,244,000 | 442,000 | |||||||||
|
Obligations for purchase of land and
advances from clients
|
13 | 147,168 | 231,199 | |||||||||
|
Deferred taxes
|
15 | 322,870 | 239,131 | |||||||||
|
Provision for
contingencies
|
12 | 59,509 | 35,963 | |||||||||
|
Deferred gain on sale of
investment
|
8 | (b) | 11,594 | 169,394 | ||||||||
|
Negative goodwill on acquisition of
subsidiaries
|
8 | (b) | 12,499 | 18,522 | ||||||||
|
Other accounts payable
|
11 | 362,843 | 389,759 | |||||||||
| 2,797,122 | 2,126,641 | |||||||||||
|
Noncontrolling
interests
|
552,889 | 471,402 | ||||||||||
|
Shareholders’
equity
|
14 | |||||||||||
|
Capital stock
|
1,233,897 | 1,229,517 | ||||||||||
|
Treasury shares
|
(18,050 | ) | (18,050 | ) | ||||||||
|
Capital reserves
|
190,584 | 182,125 | ||||||||||
|
Income reserves
|
218,827 | 218,827 | ||||||||||
|
Retained
earnings
|
158,218 | - | ||||||||||
| 1,783,476 | 1,612,419 | |||||||||||
|
Total
liabilities and shareholders' equity
|
6,931,539 | 5,538,858 | ||||||||||
The accompanying
notes are an integral part of these financial statements.
Gafisa
S.A.
For
the nine-month periods ended September 30, 2009 and 2008
In
thousands of Brazilian reais, except number of
shares and per share information
|
Note
|
2009
|
2008
|
||||||||||
| (Unaudited) | (Unaudited) | |||||||||||
|
Gross
operating revenue
|
||||||||||||
|
Real estate development and
sales
|
3 | (a) | 2,184,117 | 1,224,199 | ||||||||
|
Construction services rendered, net of
costs
|
30,352 | 13,201 | ||||||||||
|
Taxes on services and
revenues
|
(89,663 | ) | (44,841 | ) | ||||||||
|
Net
operating revenue
|
2,124,806 | 1,192,559 | ||||||||||
|
Operating
costs
|
||||||||||||
|
Real estate development
costs
|
(1,523,640 | ) | (814,201 | ) | ||||||||
|
Gross
profit
|
601,166 | 378,358 | ||||||||||
|
Operating
(expenses) income
|
||||||||||||
|
Selling expenses
|
(153,344 | ) | (87,504 | ) | ||||||||
|
General and administrative
expenses
|
(172,832 | ) | (104,990 | ) | ||||||||
|
Depreciation and
amortization
|
(24,166 | ) | (29,606 | ) | ||||||||
|
Amortization of gain on partial sale of
FIT Residential and other, net
|
157,800 | - | ||||||||||
|
Other, net
|
(79,094 | ) | (13,303 | ) | ||||||||
|
Operating
profit before financial income (expenses)
|
329,530 | 142,955 | ||||||||||
|
Financial
income (expenses)
|
||||||||||||
|
Financial expenses
|
(159,336 | ) | (24,272 | ) | ||||||||
|
Financial income
|
106,399 | 64,389 | ||||||||||
|
Income
before taxes on income and noncontrolling interests
|
276,593 | 183,072 | ||||||||||
|
Current income tax and social
contribution expense
|
(15,659 | ) | (13,639 | ) | ||||||||
|
Deferred tax
|
(49,245 | ) | (36,817 | ) | ||||||||
|
Total tax expenses
|
15 | (64,904 | ) | (50,456 | ) | |||||||
|
Income
before noncontrolling interests
|
211,689 | 132,616 | ||||||||||
|
Noncontrolling
interests
|
(53,471 | ) | (35,540 | ) | ||||||||
|
Net
income for the nine-month period
|
158,218 | 97,076 | ||||||||||
|
Outstanding
shares at the end of the period (in thousands)
|
14 | (a) | 130,508 | 129,963 | ||||||||
|
Net income
per thousand outstanding shares at the end of the
period - R$
|
1.2123 | 0.7469 | ||||||||||
The accompanying
notes are an integral part of these financial statements.
Gafisa
S.A.
For
the Nine-month Period Ended September 30, 2009 (unaudited)
In
thousands of Brazilian reais
|
Capital
reserves
|
Income
reserves
|
|||||||||||||||||||||||||||||||||||
|
Capital
stock
|
Treasury
shares
|
Stock
options reserve
|
Capital
reserves
|
Legal
reserve
|
Statutory
reserve
|
For
investments
|
Retained
earnings
|
Total
|
||||||||||||||||||||||||||||
|
At
December 31, 2008
|
1,229,517 | (18,050 | ) | 47,829 | 134,296 | 21,081 | 159,213 | 38,533 | - | 1,612,419 | ||||||||||||||||||||||||||
|
Capital
increase - exercise of stock options
|
4,380 | - | - | - | - | - | - | - | 4,380 | |||||||||||||||||||||||||||
|
Stock option plan
|
- | - | 8,459 | - | - | - | - | - | 8,459 | |||||||||||||||||||||||||||
|
Net income for the
period
|
- | - | - | - | - | - | - | 158,218 | 158,218 | |||||||||||||||||||||||||||
|
At
September 30, 2009 (unaudited)
|
1,233,897 | (18,050 | ) | 56,288 | 134,296 | 21,081 | 159,213 | 38,533 | 158,218 | 1,783,476 | ||||||||||||||||||||||||||
The accompanying
notes are an integral part of these financial statements.
Gafisa
S.A.
For
the nine-month periods ended September 30, 2009 and 2008
In
thousands of Brazilian reais
|
2009
|
2008
|
|||||||
| (Unaudited ) | (Unaudited ) | |||||||
|
Cash
flows from operating activities
|
||||||||
|
Net income
|
158,218 | 97,076 | ||||||
|
Expenses (income) not affecting cash and
cash equivalents
|
||||||||
|
Depreciation and
amortization
|
30,189 | 30,253 | ||||||
|
Goodwill
/ Negative goodwill amortization
|
(6,023 | ) | (647 | ) | ||||
|
Disposal of fixed
assets
|
4,980 | - | ||||||
|
Stock option expenses
|
15,062 | 16,550 | ||||||
|
Deferred gain on sale of
investment
|
(157,800 | ) | - | |||||
|
Unrealized interest and charges,
net
|
123,347 | 86,114 | ||||||
|
Deferred tax
|
49,245 | 36,082 | ||||||
|
Noncontrolling
interests
|
39,919 | 30,768 | ||||||
|
Decrease (increase) in
assets
|
||||||||
|
Receivables from
clients
|
(1,261,866 | ) | (590,489 | ) | ||||
|
Properties for sale
|
266,545 | (517,440 | ) | |||||
|
Other accounts
receivable
|
57,759 | (114,676 | ) | |||||
|
Deferred selling
expenses
|
223 | 117 | ||||||
|
Prepaid expenses
|
8,889 | (11,668 | ) | |||||
|
Increase (decrease) in
liabilities
|
||||||||
|
Obligations for purchase of
land
|
(94,395 | ) | 337,694 | |||||
|
Taxes and contributions
|
31,595 | 30,472 | ||||||
|
Provision for
contingencies
|
62,610 | 2,270 | ||||||
|
Materials and service
suppliers
|
81,602 | 13,860 | ||||||
|
Advances from clients
|
76,637 | (38,631 | ) | |||||
|
Salaries, payroll charges and profit
sharing
|
31,518 | (14,236 | ) | |||||
|
Other accounts payable
|
35,829 | (13,880 | ) | |||||
|
Cash
used in operating activities
|
(445,917 | ) | (620,411 | ) | ||||
|
Cash
flows from investing activities
|
||||||||
|
Property and equipment
|
(34,999 | ) | (32,714 | ) | ||||
|
Restricted cash in guarantee to
loans
|
(74,409 | ) | - | |||||
|
Cash
used in investing activities
|
(109,408 | ) | (32,714 | ) | ||||
|
Cash
flows from financing activities
|
||||||||
|
Capital increase
|
4,380 | 7,672 | ||||||
|
Loans and financing
obtained
|
1,418,227 | 692,663 | ||||||
|
Repayment of loans and
financing
|
(567,655 | ) | (102,695 | ) | ||||
|
Contributions from venture
partners
|
- | 300,000 | ||||||
|
Assignment of credits,
net
|
860 | 42,463 | ||||||
|
Proceeds
from subscription of redeemable equity interest in
securitization
|
49,973 | - | ||||||
|
Assignment of
credits receivable - CCI
|
69,316 | - | ||||||
|
Dividends
paid
|
- | (26,970 | ) | |||||
|
Cash
provided by financing activities
|
975,101 | 913,133 | ||||||
|
Net
increase in cash and cash equivalents
|
419,776 | 260,008 | ||||||
|
Cash and cash equivalents (net of
restricted cash in guarantee to loans)
|
||||||||
|
At the beginning of the
period
|
528,574 | 517,420 | ||||||
|
At the end of the
period
|
948,350 | 777,428 | ||||||
|
Net
increase in cash and cash equivalents
|
419,776 | 260,008 | ||||||
The accompanying
notes are an integral part of these financial statements.
Gafisa
S.A.
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
|
1
|
Operations
|
Gafisa
S.A. (the "Company") started its commercial operations in 1997 with
the objectives of: (a) promoting and managing all forms of real estate ventures
on its own behalf or for third parties; (b) purchasing, selling and negotiating
real estate properties in general, including provision of financing to real
estate clients; (c) carrying out civil construction and civil engineering
services; (d) developing and implementing marketing strategies related to its
own or third party real estate ventures; and (e) investing in other Brazilian or
foreign companies which have similar objectives as the Company's.
The Company forms
jointly-controlled ventures (Special Purpose Entities - SPEs) and participates
in consortia and condominiums with third parties as a means of meeting its
objectives. The controlled entities share the structure and corporate,
managerial and operating costs with the Company.
On
September 1, 2008, the Company and Construtora Tenda S.A. ("Tenda") merged Tenda
and Fit Residencial Empreendimentos Imobiliários Ltda. (“Fit Residencial”), by
means of a Merger Protocol and Justification. On October 3, 2008, this Merger
Protocol and Justification was approved by Gafisa’s Board of Directors, as well
as the first Amendment to the Protocol. Upon exchange of Fit Residencial quotas
for Tenda shares, the Company received 240,391,470 common shares, representing
60% of total and voting capital of Tenda after the merger of Fit Residencial, in
exchange for 76,757,357 quotas of Fit Residencial. The Tenda shares received by
the Company in exchange for Fit Residencial quotas will have the same rights,
attributed on the date of the merger of the shares by the Company, and will
receive all benefits, including dividends and distributions of capital that may
be declared by Tenda as from the merger approval date. On October 21, 2008, the
merger of Fit Residencial into Tenda was approved at an Extraordinary
Shareholders’ Meeting by the Company’s shareholders (Note 8).
On
February 27, 2009, Gafisa and Odebrecht Empreendimentos Imobiliários S.A.
announced the dissolution of their partnership in Bairro Novo Empreendimentos
Imobiliários S.A., terminating the Shareholders’ Agreement in effect between the
partners. Accordingly, Gafisa is no longer a partner in Bairro Novo
Empreendimentos Imobiliários S.A.. The real estate ventures that were being
conducted together by the parties began started to be carried out separately,
Gafisa will develop the Bairro Novo Cotia real estate venture, whereas Odebrecht
Empreendimentos Imobiliários S.A. will develop other ventures of the dissolved
partnership, in addition to operating Bairro Novo Empreendimentos Imobiliários
S.A..
On
June 29, 2009, Gafisa S.A. and Construtora Tenda S.A. entered into a Private
Instrument for Assignment and Transfer of Quotas and Other Covenants, in which
Gafisa assigns and transfers to Tenda 41,341,895 quotas of Cotia1 Empreendimento
Imobiliário for the net book value of R$ 41,342.
Gafisa
S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
On
October 21, 2009, the Company informed that it intends to present to its
shareholders by the end of 2009 a proposal for merging all shares of its
subsidiary, which conditions are still being negotiated with the Independent
Special Committee. If the merger is approved, Tenda, which is currently a 60%
owned subsidiary of Gafisa, will become a wholly-owned subsidiary of Gafisa
(Note 20).
|
2
|
Presentation
of the nine-month period
Information
|
The condensed
consolidated financial statements as at September 30, 2009 and for the
nine-month periods ended September 30, 2009 and 2008 are unaudited. These
condensed financial statements include all adjustments consisting of normal
recurring adjustments which, in the opinion of our management, are necessary for
a fair presentation of our condensed consolidated financial position, results of
operations and cash flows for the interim periods presented.
The condensed
consolidated financial statements should be read in conjunction with our
financial statements prepared for the year ended December 31, 2008. The results
for the nine-month period ended September 30, 2009 are not necessarily
indicative of the results to be reported for the entire year ending December 31,
2009, or for periods in the future. The accounting policies adopted in preparing
these unaudited interim financial statements are consistent with those used in
the preparation of the audited financial statements for the year ended December
31, 2008, except that goodwill is no longer amortized pursuant to new Brazilian
generally accepted accounting practices adopted from 2009 on.
The condensed
consolidated balance sheet at December 31, 2008 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by accounting practices adopted in Brazil for
presentation of complete annual financial statements. The financial statements
presented herein do not include the parent company´s stand alone financial
statements and are not intended to be used for statutory purposes. The Summary
of Principal Differences between Brazilian GAAP and US GAAP (Note 21) is not
required by Corporate Law and is presented only for purposes of these financial
statements.
Certain amounts in
the comparative financial statements as of December 31, 2008 and the notes
thereto have been reclassified to be consistent with the current
presentation.
|
(a)
|
Basis
of presentation
|
The condensed
consolidated interim financial statements were prepared in accordance with
accounting practices adopted in Brazil as determined by the Brazilian Corporate
Law ("Corporate Law"), the Accounting Standards Committee ("CPC"), the Federal
Accounting Council ("CFC"), the IBRACON - Institute of Independent Auditor of
Brazil ("IBRACON") and additional
regulations and resolutions of the Brazilian Securities Commission ("CVM")
(collectively, "Brazilian GAAP").
Gafisa
S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
The Company and its
subsidiaries opted as provided for by the CVM/SNC/SEP Circular Letter No.
02/2009, to present information for the nine-month period ended September 30,
2008 on a comparative basis to the current period.
Law No. 11.638/07
enacted on December 28, 2007 introduced changes to the Corporate Law to be
applied as from financial statements presented for the year ended December 31,
2008. To assure
consistency of presentation, the Company and it subsidiaries have retroactively
applied changes to Brazilian GAAP, introduced by the newly formed CPC and the
provisions of Law No. 11.638/07 from January 1, 2006. The effects of changes to
Brazilian GAAP on the unaudited results of operations for the nine-month period
ended September 30, 2008 are as follows:
|
(Unaudited)
|
||||
|
As originally
reported
|
139,781 | |||
|
Adjustment to present value of assets
and liabilities
|
4,418 | |||
|
Stock option plans
|
(16,550 | ) | ||
|
Warranty provision
|
(3,494 | ) | ||
|
Depreciation of sales stands,
facilities, model apartments and related furnishings
|
(9,334 | ) | ||
|
Noncontrolling interest
|
(8,018 | ) | ||
|
Other, including deferred
taxes
|
(9,727 | ) | ||
|
As presented
herein
|
97,076 | |||
The income tax and
social contribution effects arising from the initial adoption of the Law
11.638/07, upon election to adopt the provisions of Law 11,941/09 were recorded
based on the pre-existing tax regulations. Gafisa S.A. and its
subsidiaries’ elections to follow the provisions of the RTT (Transitory Tax
Regime), as provided for by Law 11,941/09, were declared in the corporate income
tax returns filed in 2009.
|
(b)
|
Use
of estimates
|
The preparation of
nine-month period information in conformity with Brazilian GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the nine-month period information and the reported amounts of
revenues and expenses during the reporting period. The nine-month period
information includes estimates that are used to determine certain items,
including, among others, the estimated costs of the ventures,
Gafisa
S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
allowance for
doubtful accounts, warranty provision, provisions necessary for the impairment
of assets, the provision for credits not recognized related to deferred tax, and
the recognition of contingent liabilities. Actual results may differ from the
estimates.
|
(c)
|
Consolidation
principles
|
The consolidated
nine-month period information includes the accounts of Gafisa S.A. and those of
all of its subsidiaries (Note 8), with separate disclosure of the participation
of noncontrolling shareholders. The proportional consolidation method is used
for investments in jointly-controlled investees, which are all governed by
shareholder agreements; as a consequence, assets, liabilities, revenues and
costs are consolidated based on the proportion of the equity interest the
Company holds in the capital of the investee.
All significant
intercompany accounts and transactions are eliminated upon consolidation,
including investments, current accounts, dividends receivable, income and
expenses and unrealized results among consolidated companies, net of taxes.The
accounting policies are applied consistently, in all consolidated companies.
Transactions and balances with related parties, shareholders and investees are
disclosed in the respective notes. The statement of changes in
shareholders' equity reflects the changes in Gafisa S.A.'s parent company's
books.
|
3
|
Significant
Accounting Practices
|
The most
significant accounting practices adopted in the preparation of the nine-month
period information are as follows:
|
(a)
|
Recognition
of results
|
|
(i)
|
Real
estate development and sales
|
Revenues, as well
as costs and expenses directly related to real estate development units sold and
not yet finished, are recognized over the course of the construction period and
the following procedures are adopted:
For completed
units, the result is recognized when the sale is made, regardless of the receipt
of the contractual amount, provided that the following conditions are met: (a)
the result is
determinable, that
is, the collectibility of the sale price is reasonably assured or the amount
that will not be collected can be estimated, and (b) the earnings process is
virtually complete,
that is, the
Company is not obliged to perform significant activities after the sale to earn
the profit. The collectibility of the sales price is demonstrated by the
client's commitment to pay, which in turn is supported by initial and continuing
investment.
Gafisa
S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
In
the sales of unfinished units, the following procedures and rules were
observed:
|
.
|
The incurred
cost (including the costs related to land) corresponding to the units sold
is fully appropriated to the
result.
|
|
.
|
The
percentage of incurred cost (including costs related to land) is measured
in relation to total estimated cost, and this percentage is applied on the
revenues from units sold, determined in accordance with the terms
established in the sales contracts, thus determining the amount of
revenues and selling expenses to be
recognized.
|
|
.
|
Any amount of
revenues recognized that exceeds the amount received from clients is
recorded as current or non-current assets. Any amount received in
connection with the sale of units that exceeds the amount of revenues
recognized is recorded as "Obligations for purchase of land and advances
from clients".
|
|
.
|
Interest and
inflation-indexation charges on accounts receivable as from the time the
client takes possession of the property, as well as the adjustment to
present value of accounts receivable, are appropriated to the result from
the development and sale of real estate using the accrual basis of
accounting.
|
|
.
|
The financial
charges on accounts payable for the acquisition of land and real estate
credit operations during the construction period are appropriated to the
cost incurred, and recognized in results upon the sale of the units of the
venture to which they are directly
related.
|
Deferred taxes on
the difference between the revenues from real estate development and the
accumulated revenues subject to tax are calculated and recognized when the
difference in revenues is recognized.
The other income
and expenses, including advertising and publicity, are appropriated to the
results as they are incurred using the accrual basis of accounting.
|
(ii)
|
Construction
services
|
Revenues from real
estate services consist primarily of amounts received in connection with
construction management activities for third parties, technical management and
management of real estate; revenues are recognized as services are
rendered.
Gafisa
S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
|
(iii)
|
Revenues
and costs related to barter
transactions
|
As
per CPC (O) 01, “Real Estate Development Entities”, for barter transactions of
land in exchange for units, the value of land acquired by the Company is
calculated based on the fair value of real estate units to be delivered, and
recorded in inventories of Properties for sale against liabilities for Advances
from clients, at the time the barter agreement is signed. Revenues, as well as
costs incurred from barter transactions are appropriated to income over the
course of construction period of the projects based on the financial measure of
completion.
|
(b)
|
Cash
and cash equivalents
|
Consist primarily
of bank certificates of deposit and investment funds, denominated in reais,
having a ready market and original maturity of 90 days or less or in regard to
which there are no penalties or other restrictions for early redemption,
recognized at market value.
Investment funds in
which the Company is the sole owner are fully consolidated.
|
(c)
|
Receivables
from clients
|
These are stated at
cost plus accrued interest and indexation adjustments, net of adjustment to
present value. The allowance for doubtful accounts, when necessary, is provided
in an amount considered sufficient by management to meet expected
losses.
The installments
due are indexed based on the National Civil Construction Index (INCC) during the
construction phase, and based on the General Market Prices Index (IGP-M) after
delivery of the units.
|
(d)
|
Certificates
of real estate receivables (CRI)
|
The Company assigns
receivables for the securitization and issuance of mortgage-backed securities
("CRI"). When this assignment does not involve right of recourse, it is recorded
as a reduction of accounts receivable. When the transaction involves recourse
against the Company, the accounts receivable sold is maintained on the balance
sheet. The financial guarantees, when a participation is acquired (subordinated
CRI) and maintained to secure the receivables that were assigned, are recorded
in the balance sheet in non-current receivables at fair value.
|
(e)
|
Investment
Fund of Receivables ("FIDC”)
|
The Company
consolidates Investment Funds of Receivables (FIDC) in which it holds
subordinated quotas, subscribed and paid in by the Company in
receivables.
Gafisa
S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
Pursuant to CVM
Instruction No. 408, the consolidation by the Company of FDIC arises from the
evaluation of the underlying and economic reality of these investments,
considering, among others: (a) whether the Company still have control over the
assigned receivables, (b) whether it still retains any right in relation to
assigned receivables, (c) whether it still bears the risks and responsibilities
for the assigned receivables, and (d) whether the Company fundamentally or
usually pledges guarantees to FIDC investors in relation to the expected
receipts and interests, even informally.
When consolidating
the FIDC in its financial statements, the Company discloses the receivables in
the group of accounts of receivables from clients and the FIDC net worth is
reflected in consolidated noncontrolling interests, the balance of subordinated
quotas held by the Company being eliminated in this consolidation
process.
The financial costs
of these transactions are appropriated on pro rata basis in the adequate heading
of financial expenses.
|
(f)
|
Real
estate credit certificate (“CCI”)
|
The Company carries
out the assignment and/or securitization of receivables related to credits of
statutory lien on completed real estate ventures. This securitization is carried
out upon the issuance of the real estate credit certificate (CCI), which is
assigned to financial institutions that grant credit.
|
(g)
|
Properties
for sale
|
Land is stated at
cost of acquisition. Land is recorded only after the deed of property
is registered, not registered in the financial statements during the negotiation
phase, not depending on the success probability or stage of
negotiation. The Company and its subsidiaries also acquire land
through barter transactions where, in exchange for the land acquired, it
undertakes to deliver (a) real estate units under development or (b) part of the
sales revenues originating from the sale of the real estate units. Land acquired
through barter transaction is stated at fair value.
Properties are
stated at construction cost, which does not exceed the net realizable
value. In the case of real estate developments in progress, the
portion in inventories corresponds to the cost incurred for units that have not
yet been sold. The cost comprises construction (materials, own or
outsourced labor and other related items) and land, including financial charges
appropriated to the development as incurred during the construction
phase.
When the cost of
construction of properties for sale exceeds the expected cash flow from sales,
once completed or still under construction, an impairment charge is recognized
in the period when the book value is considered no longer to be recoverable.
This analysis is
Gafisa
S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
consistently
applied to residential ventures targeted at the low, medium and high income
markets, regardless of their geographic region or construction
phase.
Properties for sale
are reviewed to evaluate the recovery of the book value of each real estate
development when events or changes in macroeconomic scenarios indicate that the
book value may not be recoverable. If the book value of a real estate
development is not recoverable, compared to its realizable value through
expected cash flows, a provision is recorded.
The Company
capitalizes interest on developments during the construction phase, arising from
the National Housing System and other credit lines that are used for financing
the construction of developments (limited to the corresponding financial expense
amount).
|
(h)
|
Deferred
selling expenses
|
Brokerage
expenditures are recorded in results following the same percentage-of-completion
criteria adopted for the recognition of revenues and costs of units sold, based
on the cost incurred in relation to the budgeted cost. The charges related to
sales commission of the buyer are not recognized as revenue or expense of the
Company.
|
(i)
|
Warranty
provision
|
As
per CPC (O) 01, “Real Estate Development Entities”, the Company and its
subsidiaries presented at September 30, 2009 and December 31, 2008 a provision
to cover expenditures for repairing construction defects covered during the
warranty period, amounting to R$ 15,707 and R$ 14,452, respectively, except for
the subsidiaries that operate with outsourced companies, which are the own
guarantors of the constructions services provided. The warranty
period is five years from the delivery of the unit.
|
(j)
|
Prepaid
expenses
|
These are taken to
income in the period to which they relate.
|
(k)
|
Property
and equipment
|
Recorded at cost.
Depreciation is calculated based on the straight-line method considering the
estimated useful life of the assets, as follows: vehicles - 5 years; (ii) office
equipment and other installations - 10 years; and (iii) sales stands,
facilities, model apartments and related furnishings - 1 year.
As per CPC (O) 01, “Real Estate
Development Entities”, expenditures incurred for the construction of sales
stands, facilities, model apartments and related furnishings are capitalized as
Property and equipment. Depreciation commences upon launch of the
development and is recorded over the average term of one year and subject to
periodical analysis of asset impairment.
Gafisa
S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
|
(l)
|
Intangible
assets
|
Intangible assets
relate to the acquisition and development of computer systems and software
licenses, recorded at acquisition cost, and are amortized over a period of up to
five years.
|
(m)
|
Investments
in subsidiaries and jointly-controlled
investees
|
|
(i)
|
Net
equity value
|
If
the Company holds more than half of the voting capital of another company, the
latter is considered a subsidiary and is consolidated. In situations where
shareholder agreements grant the other party veto rights affecting the Company's
business decisions with regards to its subsidiary, such affiliates are
considered to be jointly-controlled companies and are recorded on the equity
method.
Cumulative
movements after acquisitions are adjusted in cost of investment. Unrealized
gains or transactions between the Company and its affiliates and subsidiary
companies are eliminated in proportion to the Company.'s interest; unrealized
losses are also eliminated, unless the transaction provides evidence of
impairment of the asset transferred.
When the Company's
interest in the losses of subsidiaries is equal to or higher than the amount
invested, the Company recognizes the residual portion of the net capital
deficiency since it assumes obligations to make payments on behalf of these
companies or for advances for future capital increase.
The accounting
practices of acquired subsidiaries are aligned with those of the parent company,
in order to ensure consistency with the practices adopted by the
Company.
|
(ii)
|
Goodwill
and negative goodwill on the acquisition of
investments
|
The Company’s
investments in subsidiaries include goodwill when the acquisition cost exceeds
the book value of net tangible assets of the acquired subsidiary and negative
goodwill when the acquisition cost is lower.
Up
to December 31, 2008, the goodwill is amortized in accordance with the
underlying economic basis which considers factors such as the land bank, the
ability to generate results
Gafisa
S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
from developments
launched and/or to be launched and other inherent factors. Pursuant to OCPC02,
from January 1, 2009 goodwill is no longer amortized in results for the
period.
The Company
annually evaluates at the balance sheet date whether there are any indications
of permanent loss and potential adjustments to measure the residual portion not
amortized of recorded goodwill, and records an impairment provision, if
required, to adjust the carrying value of goodwill to recoverable amounts or to
realizable values. If the book value exceeds the recoverable amount, the amount
thereof is reduced.
Goodwill that
cannot be justified economically is immediately charged to results for the
year.
Negative goodwill
that is justified economically is appropriated to results at the extent the
assets which originated it are realized. Negative goodwill that is not justified
economically is recognized in results only upon disposal of the
investment.
|
(n)
|
Obligations
for purchase of land and advances from clients (barter
transactions)
|
These are
contractual obligations established for purchases of land in inventory (Property
for sale) which are stated at amortized cost plus interest and charges
proportional to the period (pro rata basis), when applicable, net of adjustment
to present value.
The obligations
related to barter transactions of land in exchange for real estate units are
stated at fair value, as advances from clients.
|
(o)
|
Selling
expenses
|
Selling expenses
include advertising, promotion, brokerage fees and similar expenses, are
appropriated to results when incurred.
|
(p)
|
Taxes
on income
|
Taxes on income in
Brazil comprise Federal income tax (25%) and social contribution (9%), as
recorded in the statutory accounting records, for entities on the taxable profit
regime, for which the composite statutory rate is 34%. Deferred taxes are
provided on all temporary tax differences, including those related to changes in
accounting practices.
As
permitted by tax legislation, certain subsidiaries and jointly-controlled
companies, the Company opted for the presumed profit regime. For these
companies, the income tax basis is calculated at the rate of 8% on gross
revenues plus financial income and for the social contribution basis at 12% on
gross revenues plus financial income, upon which the income tax and social
contribution rates, 25% and 9%, respectively, are applied.
Gafisa
S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
The deferred tax
assets are recognized to the extent that future taxable income is expected to be
available to be used to offset temporary differences based on the budgeted
future results prepared based on internal assumptions. New circumstances and
economic scenarios may change the estimates.
Deferred tax assets
arising from net operating losses have no expiration dates, though offset is
restricted to 30% of annual taxable income. Taxable entities on the presumed
profit regime cannot offset prior year losses against tax payable.
In
the event realization of deferred tax assets is not considered to be probable,
no amount is recorded (Note 15).
|
(q)
|
Other
current and non-current liabilities
|
These liabilities
are stated on the accrual basis at their known or estimated amounts, plus, when
applicable, the corresponding indexation charges and foreign exchange gains and
losses.
The liability for
future compensation of employee vacations earned is fully accrued.
The Company and its
subsidiaries do not offer private pension plans or retirement plan or other
post-employment benefits to employees.
|
(r)
|
Stock
option plans
|
As
approved by its Board of Directors, the Company offers to its selected
executives share-based compensation plans ("Stock Options").
CPC 10,
“Share-based Compensation”, requires that the options, calculated at the grant
date, be recognized as an expense against shareholders' equity, at the extent
service is rendered.
The fair value of
services received from the plan participants, in exchange for options, is
determined in relation to the fair value of shares, on the grant date of each
plan, and recognized as expense through the vesting
period.
|
(s)
|
Profit
sharing program for employees and
officers
|
The Company and its
subsidiaries provide for the distribution of profit sharing benefits and bonuses
to employees recognized in results in General and administrative
expenses.
Gafisa
S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
Additionally, the
Company and its subsidiaries’ bylaws establish the distribution of profit
sharing to executive officers (in an amount that does not exceed the lower of
(i) their annual compensation or (ii) 10% of the Company's net
income).
The bonus systems
operate on a three-tier performance-based structure in which the corporate
efficiency targets as approved by the Board of Directors must first be achieved,
followed by targets for the business units and finally individual performance
targets.
|
(t)
|
Present
value adjustment
|
In
conformity with CPC 12, "Adjustment to Present Value", the assets and
liabilities arising from long-term transactions were adjusted to present
value.
As
specified by CPC (O) 01, "Real Estate Development Entities", for
inflation-indexed receivables arising from installment sales of unfinished
units, the receivables formed prior to delivery of the units which does not
accrue interest, were discounted to present value. The reversal of the
adjustment to present value, considering that an important part of the Company’s
activities is to finance its customers, was made as a contra-entry to the real
estate development revenue group itself, consistent with the interest accrued on
the portion of accounts receivable related to the “after the keys”
period.
The financial charges of funds used in the
construction and finance of real estate ventures shall be capitalized. As
interest from funds used to finance the acquisition of land for development and
construction is capitalized, the accretion of the present value adjustment arising from the obligation is
recorded in Real estate development operating costs or against inventories of
Properties for sale, as the case may be, until the construction phase of the
venture is completed.
Accordingly,
certain asset and liability items are adjusted to present value based on
discount rates that reflect management's best estimate of the value of money
over time and the specific risks of the asset and the liability.
|
(u)
|
Cross-currency
interest rate swap and derivative
transactions
|
The Company has
derivative instruments for the purposes of mitigating the risk of its exposure
to the volatility of currencies, indices and interest rates, recognized at fair
value directly in income. In accordance with its treasury policies, the Company
does not acquire or issue derivative financial instruments for speculative
purposes.
Gafisa
S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
|
(v)
|
Financial
liabilities recorded at fair value
|
Pursuant to CPC 14,
"Financial Instruments: Recognition, Measurement and Evidence", financial
instruments are classified among four categories: (i) financial assets or
liabilities measured at fair value through income, (ii) held to maturity, (iii)
loans and receivables, and (iv) available for sale. The classification depends
upon the purpose for which the financial assets and liabilities were acquired.
Management classifies its financial assets and liabilities when initially
recognized. At September 30, 2009, the Company has financial assets and
liabilities that are categorized as (i) and (iii).
At
September 30, 2009 and December 31, 2008, the Company recorded certain loans
denominated in foreign currency as financial liabilities at fair value through
income. These transactions are directly linked to the cross-currency interest
rate swaps and are recognized at fair value. Changes in the fair value of
financial liabilities are directly recognized in results.
|
(w)
|
Impairment
of financial assets
|
At
each balance sheet date, or when events or changes in circumstances indicate
that the carrying value of an asset or group of assets may not be recoverable,
the Company evaluates whether there are any indications of impairment of a
financial asset or group of financial assets in relation to the market value,
and its ability to generate positive cash flows to support its realization. A
financial asset or group of financial assets is considered impaired when there
is objective evidence of a decrease in recoverable value as a result of one or
more events that occurred after the initial recognition of the asset, which
impact estimated future cash flows.
|
(x)
|
Debenture
and initial public offering
expenses
|
As
per CPC 08, "Transaction Costs and Premiums on Issuance of Securities", share
issuance expenses are accounted for as a direct reduction of capital
raised. In addition, transaction costs and premiums on issuance of
debt securities are amortized over the terms of the security and the balance is
presented net of issuance expenses.
|
(y)
|
Earnings
per share
|
Earnings per share
are calculated based on the number of shares outstanding at the balance sheet
date, net of treasury shares.
Gafisa
S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
|
4
|
Cash,
Cash Equivalents and Marketable
Securities
|
|
September
30, 2009
|
December
31, 2008
|
|||||||
| (Unaudited ) | ||||||||
|
Cash and cash
equivalents
|
||||||||
|
Cash and banks
|
215,133 | 73,538 | ||||||
|
Cash equivalents
|
||||||||
|
Bank Certificates of Deposits –
CDBs
|
490,491 | 185,334 | ||||||
|
Investment funds
|
161,125 | 149,772 | ||||||
|
Securities purchased under agreement
to resell
|
81,601 | 114,286 | ||||||
|
Other
|
- | 5,644 | ||||||
|
Total cash
and cash equivalents
|
948,350 | 528,574 | ||||||
|
Restricted
cash in guarantee to loans (Note 9)
|
151,337 | 76,928 | ||||||
|
Total cash,
cash equivalents and financial investments
|
1,099,687 | 605,502 | ||||||
At
September 30, 2009, Bank Deposit Certificates – CDBs include earned interest
from 95% to 104% (December 31, 2008 - 95% to 107%) of Interbank Deposit
Certificate – CDI, invested in first class financial institutions.
At
September 30, 2009 and December 31, 2008 the amount related to investment funds
is recorded at market value. Pursuant to CVM Instruction No. 408/04, financial
investments in investment funds in which the Company has an exclusive interest
are consolidated.
|
5
|
Receivables
from clients
|
|
September
30, 2009
|
December
31, 2008
|
|||||||
| (Unaudited ) | ||||||||
|
Real state
development and sales
|
3,369,569 | 2,115,498 | ||||||
|
(-)
Adjustment to present value
|
(79,942 | ) | (51,929 | ) | ||||
|
Services and
construction
|
79,511 | 54,096 | ||||||
|
Other
receivables
|
11,272 | 879 | ||||||
| 3,380,410 | 2,118,544 | |||||||
|
Current
|
1,718,110 | 1,254,594 | ||||||
|
Non-current
|
1,662,300 | 863,950 | ||||||
Gafisa
S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
The balance of
accounts receivable from units sold and not yet delivered is limited to the
portion of revenues accounted for net of the amounts already
received.
The balances of
advances from clients (development and services), which exceed the revenues
recorded in the period, amount to R$ 128,384 in consolidated at September 30,
2009 (December 31, 2008 - R$169,658), and are classified in Obligations for
purchase of land and advances from clients.
Accounts receivable
from completed real estate units delivered are in general subject to annual
interest of 12%, the financial income being recorded in income as "Revenue from
real estate development "; the interest recognized for the periods ended
September 30, 2009 and 2008 totaled R$ 38,915 and R$ 32,105,
respectively.
The allowance for
doubtful accounts for Tenda totaled R$ 19,628 and R$18,815 at
September 30, 2009 and December 31, 2008, respectively, and is considered
sufficient by the Company's management to cover future losses on the realization
of accounts receivable of this subsidiary.
An
allowance for doubtful accounts is not considered necessary, except for Tenda,
since the history of losses on accounts receivable is insignificant. The
Company's evaluation of the risk of loss takes into account that these credits
refer mostly to developments under construction, where the transfer of the
property deed only takes place after the settlement and/or negotiation of the
client receivables.
The total reversal
value of the adjustment to present value recognized in the real estate
development revenue for the periods ended September 30, 2009 and 2008 amounted
to R$ (16,904) and R$ (8,337), respectively.
On
March 31, 2009, the Company carried out a securitization of receivables
transaction, which consists of an assignment of a portfolio comprising select
residential and commercial real estate receivables arising from Gafisa and its
subsidiaries. This portfolio was assigned and transferred to “Gafisa FIDC” which
issued Senior and Subordinated quotas. This first issuance of senior quotas was
made through an offering restricted to qualified investors. Subordinated quotas
were subscribed exclusively by Gafisa. Gafisa FDIC acquired the portfolio of
receivables at a discount rate equivalent to the interest rate of finance
contracts.
Gafisa was hired by
Gafisa FDIC and will be remunerated for performing, among other duties, the
conciliation of the receipt of receivables owned by the fund and the collection
of past due receivables. The transaction structure provides for the substitution
of the Company as collection agent in case of non-fulfillment of the
responsibilities described in the collection service contract.
Gafisa
S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
The Company
assigned its receivables portfolio amounting to R$ 119,622 to Gafisa FIDC in
exchange for cash, at the transfer date, discounted to present value, for R$
88,664. The following two quota types were issued: Senior and Subordinated. The
subordinated quotas were exclusively subscribed by Gafisa S.A., representing
approximately 21% of the amount issued, totaling R$ 18,958 (present value) –
(Note 8). At September 30, 2009, it totaled R$ 14,041. Senior and Subordinated
quota receivables are indexed by IGP-M and incur interest at 12% per
year.
The Company
consolidated Gafisa FIDC in its financial statements, accordingly, it discloses
at September 30, 2009 receivables amounting to R$ 64,014 in the group of
accounts of receivables from clients, and R$ 49,973 is reflected in consolidated
noncontrolling interests, the balance of subordinated quotas held by the Company
being eliminated in this consolidation process.
On
June 26, 2009, the Company carried out a CCI transaction, which consists of an
assignment of a portfolio comprising select residential real estate credits from
Gafisa and its subsidiaries. The Company assigned its receivables portfolio
amounting to R$ 89,102 in exchange for cash, at the transfer date, discounted to
present value, of R$ 69,315, classified into the heading "Other accounts payable
- Credit Assignments".
8
book CCIs were issued, amounting to R$69,315 at the date of
issue. These 8 CCIs are backed by Receivables which installments fall
due on and up to June 26, 2014 (“CCI-Investor”).
CCI-Investor,
pursuant to Article 125 of the Brazilian Civil Code, carry general guarantees
represented by statutory liens on real estate units, effective as soon as the
conditional restrictions included in the registration are lifted, as reflected
in the real estate deed, (i) of the assignment of receivables from the assignors
to SPEs, as provided for in Article 167, item II, (21) of Law No. 6,015, of
December 31, 1973; and (ii) of the issue of CCI – Investor by SPEs, as provided
for in Article 18, paragraph 5 of Law No. 10,931/04.
Gafisa was hired
and will be remunerated for performing, among other duties, the conciliation of
the receipt of receivables, guarantee the CCIs, and the collection of past due
receivables. The transaction structure provides for the substitution of Gafisa
as collection agent in case of non-fulfillment of the responsibilities described
in the collection service contract.
Gafisa
S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
|
6
|
Properties
for sale
|
|
September
30, 2009
|
December
31, 2008
|
|||||||
| (Unaudited ) | ||||||||
|
Land
|
767,990 | 745,850 | ||||||
|
Property
under construction
|
827,042 | 1,181,930 | ||||||
|
Completed
units
|
148,507 | 96,491 | ||||||
|
Adjustment to
present value
|
18,893 | 4,705 | ||||||
| 1,762,432 | 2,028,976 | |||||||
|
Current
portion
|
1,376,236 | 1,695,130 | ||||||
|
Non-current
portion
|
386,196 | 333,846 | ||||||
The Company has
undertaken commitments to build units bartered for land, accounted for based on
the fair value of the bartered units. At September 30, 2009 and December 31,
2008, the balance of land acquired through barter transactions totaled R$ 80,680
and R$ 169,658.
As
mentioned in Note 9, the balance of financial charges at September 30, 2009 and
September 30, 2008 amounts to R$ 96,511 and R$ 67,119,
respectively.
The present value
adjustment included in the balance of property for sale account is related to
the balancing entry of the present value adjustment related to liabilities
incurred for acquisition of properties with no impact in the results (Note
13).
|
7
|
Other
accounts receivable
|
|
September
30, 2009
|
December
31, 2008
|
|||||||
| (Unaudited ) | ||||||||
|
Current
accounts related to real estate ventures (*)
|
8,249 | 107,982 | ||||||
|
Advances to
suppliers
|
49,519 | 58,274 | ||||||
|
Recoverable
taxes
|
32,888 | 18,905 | ||||||
|
Deferred PIS
and COFINS
|
2,773 | 11,213 | ||||||
|
Credit
assignment receivables
|
4,087 | 7,990 | ||||||
|
Client
refinancing to be released
|
5,266 | 4,392 | ||||||
|
Advances for
future capital increase
|
- | 1,645 | ||||||
|
Other
|
40,591 | 41,173 | ||||||
| 143,373 | 251,574 | |||||||
|
Current
|
93,722 | 182,775 | ||||||
|
Non-current
|
49,651 | 68,799 | ||||||
Gafisa
S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
|
(*)
|
The Company
participates in the development of real estate ventures with other
partners, directly or through related parties, through condominiums and/or
consortia. The management structure of these enterprises and the cash
management are centralized in the lead partner of the enterprise, which
manages the construction schedule and budgets. Thus, the lead partner
ensures that the investments of the necessary funds are made and allocated
as planned. The sources and use of resources of the venture are reflected
in these balances, observing the respective participation percentage,
which are not subject to indexation or financial charges and do not have a
predetermined maturity date. The average term for the development and
completion of the projects in which the resources are invested is between
24 and 30 months.
|
|
8
|
Investments
in subsidiaries
|
In January 2007,
upon the acquisition of 60% of Alphaville, arising from the merger of Catalufa
Participações Ltda., a capital increase of R$ 134,029 was approved upon the
issuance for public subscription of 6,358,116 common shares. This transaction
generated goodwill of R$ 170,941 recorded based on expected future
profitability, which was being partially amortized through December 31, 2008 to
match the estimated profit before taxes of Alphaville. From January 1, 2009, the
goodwill from the acquisition of Alphaville is no longer
amortized consistent with the changes to Brazilian GAAP; however, goodwill
is evaluated for impairment, at least annually. The Company has a
commitment to purchase the remaining 40% of Alphaville's capital stock based on
the fair value of Alphaville, to be determined at the
future acquisition dates, the purchase consideration for which cannot yet be
calculated and, consequently, is not recognized. The acquisition agreement
provides that the Company undertakes to purchase the remaining 40% of Alphaville
(20% within three years from the acquisition date and the remaining 20% within
five years from the acquisition date) for settlement in cash or shares, at the
Company's sole discretion.
On
October 26, 2007, the Company acquired 70% of Cipesa whereupon Gafisa S.A. and
Cipesa incorporated a new company, Cipesa Empreendimentos Imobiliários
Ltda. ("Nova Cipesa"), in which the Company holds a 70% interest and
Cipesa has 30%. Gafisa S.A. made a contribution in Nova Cipesa of R$ 50,000 in
cash and acquired the shares which Cipesa held in Nova Cipesa amounting for R$
15,000, paid on October 26, 2008. Cipesa is entitled to
Gafisa
S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
receive from the
Company a variable portion corresponding to 2% of the Total Sales Value (VGV),
as defined, of the projects launched by Nova Cipesa through 2014, not to exceed
R$ 25,000. Accordingly, the Company’s purchase consideration totaled R$ 90,000
and goodwill amounting to R$ 40,686 was recorded, based on expected future
profitability. From January 1, 2009, consistent with the changes to Brazilian
GAAP, the goodwill from the acquisition of Nova Cipesa is no longer amortized
but evaluated for impairment at least annually.
In
November 2007, the Company acquired for R$ 40,000 the remaining interest in
certain ventures with Redevco do Brasil Ltda. ("Redevco"). As a result of this
transaction, the Company recognized negative goodwill of R$ 32,222, based on
expected future results to match the estimated profit of these SPEs. In the
nine-month period ended September 30, 2009, the Company amortized negative
goodwill amounting to R$ 7,008 arising from the acquisition of these SPEs
(September 30, 2008 – R$ 7,423).
On
October 21, 2008, as part of the acquisition of its interest in Tenda (Note 1),
the Company contributed the net assets of Fit Residencial amounting to R$
411,241, acquiring 60% of the shareholders' equity of Tenda, which at that date
presented shareholders' equity book value of R$ 1,036,072, with an investment of
R$ 621,643. The sale of the 40% quotas of Fit Residencial to Tenda shareholders
in exchange for the Tenda shares generated negative goodwill of R$ 210,402,
which is based on expected future results, reflecting the gain on the sale of
the interest in Fit Residencial (Gain on the exchange of shares). This negative
goodwill is being amortized over the average construction period (through
delivery of the units) of the real estate ventures of Fit Residencial at October
21, 2008. In the nine-month period ended September 30, 2009, the Company
amortized R$ 157,800 of the gain on the partial sale of Fit
Residencial.
|
(a)
|
Ownership
interests
|
|
(i)
|
Information
on investees
|
|
Interest
- %
|
3
|
Shareholders’
Equity
|
4
|
Net
Income (Loss)
|
5
|
||||||||
|
Investees
|
September
30, 2009
|
December
31, 2008
|
September
30, 2009
|
December
31, 2008
|
September
30, 2009
|
September
30, 2008
|
|||||||
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
||||||
|
Tenda
|
60.00
|
60.00
|
1,121,372
|
1,062,213
|
55,711
|
-
|
|||||||
|
Fit
Residencial
|
-
|
-
|
-
|
-
|
-
|
(5,892)
|
|||||||
|
Bairro
Novo
|
-
|
50.00
|
-
|
8,164
|
-
|
(13,338)
|
|||||||
|
AUSA
|
60.00
|
60.00
|
89,346
|
69,211
|
19,359
|
41,691
|
|||||||
|
Cipesa
Holding
|
70.00
|
100.00
|
42,518
|
62,157
|
(992)
|
(1,047)
|
|||||||
|
Península
SPE1 S.A.
|
50.00
|
6
|
50.00
|
7
|
(4,698)
|
8
|
(1,139
|
)
|
(3,009)
|
9
|
858
|
10
|
|
|
Península
SPE2 S.A.
|
50.00
|
11
|
50.00
|
12
|
180
|
13
|
98
|
14
|
82
|
15
|
879
|
16
|
|
|
Res. das
Palmeiras SPE Ltda.
|
100.00
|
17
|
100.00
|
18
|
2,296
|
19
|
2,545
|
20
|
6
|
21
|
169
|
22
|
|
|
Gafisa SPE 27
Ltda
|
100.00
|
23
|
-
|
24
|
13,561
|
25
|
-
|
26
|
(1,331)
|
27
|
-
|
28
|
|
Gafisa
S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
|
Interest
- %
|
3
|
Shareholders’
Equity
|
4
|
Net
Income (Loss)
|
5
|
||||||||
|
Investees
|
September
30, 2009
|
December
31, 2008
|
September
30, 2009
|
December
31, 2008
|
September
30, 2009
|
September
30, 2008
|
|||||||
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
||||||
|
Gafisa SPE 28
Ltda
|
100.00
|
29
|
-
|
30
|
(3,388)
|
-
|
(1,683)
|
-
|
|||||
|
Gafisa SPE 30
Ltda
|
100.00
|
31
|
-
|
32
|
17,816
|
33
|
-
|
34
|
(747)
|
35
|
-
|
36
|
|
|
Gafisa SPE 31
Ltda
|
100.00
|
37
|
-
|
38
|
26,880
|
39
|
-
|
40
|
(553)
|
41
|
-
|
42
|
|
|
Gafisa SPE 35
Ltda
|
100.00
|
43
|
-
|
44
|
5,334
|
45
|
-
|
46
|
(1,334)
|
-
|
|||
|
Gafisa SPE 36
Ltda
|
100.00
|
47
|
-
|
48
|
3,841
|
49
|
-
|
50
|
(1,454)
|
51
|
-
|
52
|
|
|
Gafisa SPE 37
Ltda
|
100.00
|
53
|
-
|
54
|
3,760
|
55
|
-
|
56
|
(400)
|
57
|
-
|
58
|
|
|
Gafisa SPE 38
Ltda
|
100.00
|
59
|
-
|
60
|
7,421
|
61
|
-
|
62
|
595
|
63
|
-
|
||
|
Gafisa SPE 39
Ltda
|
100.00
|
-
|
7,658
|
-
|
1,314
|
-
|
|||||||
|
Gafisa SPE 41
Ltda
|
100.00
|
-
|
29,298
|
-
|
(5,178)
|
-
|
|||||||
|
Villagio
Trust
|
50.00
|
-
|
4,239
|
-
|
(616)
|
-
|
|||||||
|
Gafisa SPE 40
Ltda.
|
50.00
|
50.00
|
5,789
|
5,841
|
237
|
1,535
|
|||||||
|
Gafisa SPE 42
Ltda.
|
100.00
|
64
|
50.00
|
65
|
12,358
|
66
|
6,997
|
67
|
2,357
|
68
|
6,990
|
69
|
|
|
Gafisa SPE 44
Ltda.
|
40.00
|
70
|
40.00
|
71
|
3,590
|
72
|
(377
|
)
|
(150)
|
73
|
(157)
|
74
|
|
|
Gafisa SPE 45
Ltda.
|
100.00
|
75
|
99.80
|
76
|
453
|
77
|
1,058
|
78
|
(1,570)
|
79
|
(4,078)
|
80
|
|
|
Gafisa SPE 46
Ltda.
|
60.00
|
81
|
60.00
|
82
|
5,946
|
83
|
5,498
|
84
|
(1,713)
|
85
|
3,605
|
86
|
|
|
Gafisa SPE 47
Ltda.
|
80.00
|
87
|
80.00
|
88
|
16,673
|
89
|
6,639
|
90
|
(255)
|
91
|
(181)
|
92
|
|
|
Gafisa SPE 48
Ltda.
|
100.00
|
93
|
99.80
|
94
|
-
|
95
|
21,656
|
96
|
1,674
|
97
|
3,745
|
98
|
|
|
Gafisa SPE 49
Ltda.
|
100.00
|
99
|
99.80
|
100
|
206
|
101
|
(58
|
)
|
(3)
|
102
|
(11)
|
103
|
|
|
Gafisa SPE 53
Ltda.
|
80.00
|
104
|
60.00
|
105
|
4,839
|
106
|
2,769
|
107
|
1,847
|
108
|
2,449
|
109
|
|
|
Gafisa SPE 55
Ltda.
|
100.00
|
110
|
99.80
|
-
|
20,540
|
2,776
|
(2,830)
|
||||||
|
Gafisa SPE 65
Ltda.
|
80.00
|
111
|
70.00
|
112
|
3,452
|
113
|
(281
|
)
|
605
|
114
|
(346)
|
115
|
|
|
Gafisa SPE 68
Ltda.
|
100.00
|
116
|
99.80
|
117
|
-
|
118
|
-
|
119
|
(92)
|
120
|
(1)
|
121
|
|
|
Gafisa SPE 72
Ltda.
|
80.00
|
122
|
60.00
|
123
|
1,189
|
(22
|
)
|
(238)
|
(31)
|
||||
|
Gafisa SPE 73
Ltda.
|
80.00
|
124
|
70.00
|
125
|
3,556
|
126
|
(155
|
)
|
(52)
|
127
|
(203)
|
128
|
|
|
Gafisa SPE 74
Ltda.
|
100.00
|
129
|
99.80
|
130
|
(342)
|
131
|
(330
|
)
|
(13)
|
132
|
(245)
|
133
|
|
|
Gafisa SPE 59
Ltda.
|
100.00
|
134
|
99.80
|
135
|
(5)
|
136
|
(2
|
)
|
(3)
|
137
|
-
|
138
|
|
|
Gafisa SPE 76
Ltda.
|
50.00
|
139
|
99.80
|
140
|
84
|
141
|
-
|
142
|
(1)
|
143
|
(1)
|
144
|
|
|
Gafisa SPE 78
Ltda.
|
100.00
|
145
|
99.80
|
146
|
-
|
147
|
-
|
148
|
-
|
149
|
(1)
|
||
|
Gafisa SPE 79
Ltda.
|
100.00
|
150
|
99.80
|
151
|
(2)
|
152
|
(1
|
)
|
(2)
|
153
|
(1)
|
154
|
|
|
Gafisa SPE 75
Ltda.
|
100.00
|
155
|
99.80
|
156
|
(72)
|
157
|
(27
|
)
|
(45)
|
158
|
-
|
159
|
|
|
Gafisa SPE 80
Ltda.
|
100.00
|
160
|
99.80
|
161
|
(2)
|
162
|
-
|
(2)
|
(1)
|
||||
|
Gafisa SPE-85
Empr. Imob.
|
80.00
|
163
|
60.00
|
164
|
5,609
|
165
|
(756
|
)
|
3,304
|
166
|
-
|
167
|
|
|
Gafisa SPE-86
Ltda.
|
-
|
168
|
99.80
|
169
|
-
|
170
|
(82
|
)
|
(228)
|
171
|
-
|
172
|
|
|
Gafisa SPE-81
Ltda.
|
100.00
|
173
|
99.80
|
174
|
1
|
175
|
1
|
176
|
-
|
-
|
|||
|
Gafisa SPE-82
Ltda.
|
100.00
|
177
|
99.80
|
178
|
1
|
179
|
1
|
180
|
-
|
181
|
-
|
182
|
|
|
Gafisa SPE-83
Ltda.
|
100.00
|
183
|
99.80
|
184
|
1
|
185
|
1
|
186
|
-
|
187
|
-
|
188
|
|
|
Gafisa SPE-87
Ltda.
|
100.00
|
189
|
99.80
|
190
|
201
|
191
|
1
|
192
|
-
|
193
|
-
|
194
|
|
|
Gafisa SPE-88
Ltda.
|
100.00
|
195
|
99.80
|
196
|
5,660
|
197
|
1
|
198
|
3,865
|
199
|
-
|
200
|
|
|
Gafisa SPE-89
Ltda.
|
100.00
|
201
|
99.80
|
202
|
34,151
|
203
|
1
|
204
|
6,316
|
205
|
-
|
206
|
|
|
Gafisa SPE-90
Ltda.
|
100.00
|
207
|
99.80
|
208
|
1
|
1
|
-
|
-
|
|||||
|
Gafisa SPE-84
Ltda.
|
100.00
|
99.80
|
10,477
|
1
|
2,871
|
-
|
|||||||
|
Dv Bv SPE
S.A.
|
50.00
|
50.00
|
464
|
(439
|
)
|
903
|
889
|
||||||
|
DV SPE
S.A.
|
50.00
|
50.00
|
1,871
|
932
|
939
|
(172)
|
|||||||
|
Gafisa SPE 22
Ltda.
|
100.00
|
209
|
100.00
|
210
|
5,934
|
211
|
5,446
|
212
|
488
|
213
|
1,151
|
214
|
|
|
Gafisa SPE 29
Ltda.
|
70.00
|
215
|
70.00
|
216
|
(210)
|
217
|
257
|
218
|
(317)
|
219
|
345
|
220
|
|
|
Gafisa SPE 32
Ltda.
|
80.00
|
221
|
80.00
|
4,903
|
(760
|
)
|
584
|
(185)
|
|||||
|
Gafisa SPE 69
Ltda.
|
100.00
|
222
|
99.80
|
223
|
1,893
|
224
|
(401
|
)
|
(247)
|
225
|
(4)
|
226
|
|
|
Gafisa SPE 70
Ltda.
|
55.00
|
227
|
55.00
|
228
|
12,685
|
229
|
6,696
|
230
|
(63)
|
231
|
(1)
|
232
|
|
|
Gafisa SPE 71
Ltda.
|
80.00
|
233
|
70.00
|
2,765
|
(794
|
)
|
1,776
|
(747)
|
|||||
|
Gafisa SPE 50
Ltda.
|
80.00
|
234
|
80.00
|
235
|
10,359
|
236
|
7,240
|
237
|
3,354
|
238
|
1,367
|
239
|
|
|
Gafisa SPE 51
Ltda.
|
95.00
|
240
|
90.00
|
241
|
-
|
242
|
15,669
|
243
|
8,096
|
244
|
6,112
|
245
|
|
Gafisa
S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
|
Interest
- %
|
3
|
Shareholders’
Equity
|
4
|
Net
Income (Loss)
|
5
|
||||||||
|
Investees
|
September
30, 2009
|
December
31, 2008
|
September
30, 2009
|
December
31, 2008
|
September
30, 2009
|
September
30, 2008
|
|||||||
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
||||||
|
Gafisa SPE 61
Ltda.
|
100.00
|
246
|
99.80
|
247
|
(18)
|
248
|
(14
|
)
|
(3)
|
249
|
(14)
|
250
|
|
|
Tiner Empr. e
Part. Ltda.
|
45.00
|
251
|
45.00
|
252
|
15,629
|
253
|
26,736
|
254
|
(893)
|
255
|
11,761
|
256
|
|
|
O Bosque
Empr. Imob. Ltda.
|
60.00
|
257
|
30.00
|
258
|
8,761
|
259
|
15,854
|
260
|
(811)
|
261
|
-
|
262
|
|
|
Alta
Vistta
|
50.00
|
263
|
50.00
|
264
|
(2,452)
|
265
|
3,428
|
266
|
(5,881)
|
267
|
2,535
|
268
|
|
|
Dep. José
Lages
|
50.00
|
269
|
50.00
|
270
|
651
|
34
|
767
|
161
|
|||||
|
Sitio
Jatiuca
|
50.00
|
50.00
|
9,088
|
1,259
|
7,829
|
2,517
|
|||||||
|
Spazio
Natura
|
50.00
|
50.00
|
1,400
|
1,400
|
(1)
|
(20)
|
|||||||
|
Parque
Águas
|
50.00
|
50.00
|
(190)
|
(1,661
|
)
|
438
|
(1,214)
|
||||||
|
Parque
Arvores
|
50.00
|
271
|
50.00
|
272
|
363
|
273
|
(1,906
|
)
|
1,266
|
274
|
(1,081)
|
275
|
|
|
Dubai
Residencial
|
50.00
|
276
|
50.00
|
277
|
8,017
|
278
|
5,374
|
279
|
683
|
280
|
(229)
|
281
|
|
|
Cara de
Cão
|
-
|
282
|
65.00
|
283
|
-
|
284
|
40,959
|
-
|
-
|
||||
|
Costa
Maggiore
|
50.00
|
285
|
50.00
|
286
|
3,302
|
287
|
3,892
|
288
|
1,374
|
289
|
3,430
|
290
|
|
|
Gafisa SPE-91
Ltda.
|
100.00
|
291
|
-
|
292
|
1
|
293
|
-
|
294
|
-
|
295
|
-
|
296
|
|
|
Gafisa SPE-92
Ltda.
|
100.00
|
297
|
-
|
298
|
(107)
|
299
|
-
|
300
|
(108)
|
-
|
|||
|
Gafisa SPE-93
Ltda.
|
100.00
|
301
|
-
|
302
|
(26)
|
303
|
-
|
304
|
(27)
|
305
|
-
|
306
|
|
|
Gafisa SPE-94
Ltda.
|
100.00
|
307
|
-
|
308
|
(1)
|
309
|
-
|
310
|
(2)
|
311
|
-
|
312
|
|
|
Gafisa SPE-95
Ltda.
|
100.00
|
313
|
-
|
314
|
(3)
|
315
|
-
|
316
|
(4)
|
317
|
-
|
318
|
|
|
Gafisa SPE-96
Ltda.
|
100.00
|
319
|
-
|
320
|
(63)
|
321
|
-
|
322
|
(64)
|
323
|
-
|
324
|
|
|
Gafisa SPE-97
Ltda.
|
100.00
|
325
|
-
|
326
|
2
|
327
|
-
|
328
|
1
|
329
|
-
|
330
|
|
|
Gafisa SPE-98
Ltda.
|
100.00
|
331
|
-
|
332
|
(38)
|
333
|
-
|
334
|
(39)
|
335
|
-
|
336
|
|
|
Gafisa SPE-99
Ltda.
|
100.00
|
337
|
-
|
338
|
(25)
|
339
|
-
|
340
|
(26)
|
341
|
-
|
342
|
|
|
Gafisa
SPE-100 Ltda.
|
100.00
|
343
|
-
|
344
|
1
|
345
|
-
|
346
|
-
|
347
|
-
|
348
|
|
|
Gafisa
SPE-101 Ltda.
|
100.00
|
349
|
-
|
350
|
1
|
351
|
-
|
352
|
-
|
353
|
-
|
354
|
|
|
Gafisa
SPE-102 Ltda.
|
100.00
|
355
|
-
|
356
|
1
|
357
|
-
|
358
|
-
|
359
|
-
|
360
|
|
|
Gafisa
SPE-103 Ltda.
|
100.00
|
361
|
-
|
362
|
(43)
|
363
|
-
|
364
|
(44)
|
365
|
-
|
366
|
|
|
Gafisa
SPE-104 Ltda.
|
100.00
|
367
|
-
|
368
|
1
|
369
|
-
|
370
|
-
|
371
|
-
|
372
|
|
|
Gafisa
SPE-105 Ltda.
|
100.00
|
373
|
-
|
374
|
1
|
375
|
-
|
376
|
-
|
377
|
-
|
378
|
|
|
Gafisa
SPE-106 Ltda.
|
100.00
|
379
|
-
|
380
|
1
|
381
|
-
|
382
|
-
|
383
|
-
|
384
|
|
|
Gafisa
SPE-107 Ltda.
|
100.00
|
385
|
-
|
386
|
1
|
387
|
-
|
388
|
-
|
389
|
-
|
390
|
|
|
Gafisa
SPE-108 Ltda.
|
100.00
|
391
|
-
|
392
|
1
|
393
|
-
|
394
|
-
|
395
|
-
|
396
|
|
|
Gafisa
SPE-109 Ltda.
|
100.00
|
397
|
-
|
398
|
1
|
399
|
-
|
400
|
-
|
401
|
-
|
402
|
|
|
Gafisa
SPE-110 Ltda.
|
100.00
|
403
|
-
|
404
|
1
|
405
|
-
|
406
|
-
|
407
|
-
|
408
|
|
|
Gafisa
SPE-111 Ltda.
|
100.00
|
-
|
1
|
-
|
-
|
-
|
|||||||
|
Gafisa
SPE-112 Ltda.
|
100.00
|
-
|
1
|
-
|
-
|
-
|
|||||||
|
Gafisa
SPE-113 Ltda.
|
100.00
|
-
|
1
|
-
|
-
|
-
|
|||||||
|
City Park
Brotas Emp. Imob. Ltda
|
50.00
|
-
|
846
|
-
|
826
|
-
|
|||||||
|
City Park
Acupe Emp. Imob. Ltda
|
50.00
|
-
|
1,309
|
-
|
809
|
-
|
|||||||
|
Gafisa
FDIC
|
100.00
|
-
|
14,041
|
-
|
-
|
-
|
|||||||
|
(b)
|
Goodwill
(negative goodwill) on acquisition of subsidiaries and deferred gain on
partial sale of investments
|
Gafisa
S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
|
September
30, 2009 (Unaudited)
|
December
31, 2008
|
|||||||||||||||
|
Accumulated
|
||||||||||||||||
|
Cost
|
amortization
|
Net
|
Net
|
|||||||||||||
|
Goodwill
|
||||||||||||||||
|
Alphaville
|
170,941 | (18,085 | ) | 152,856 | 152,856 | |||||||||||
|
Nova Cipesa
|
40,686 | - | 40,686 | 40,686 | ||||||||||||
|
Other
|
3,741 | (2,195 | ) | 1,546 | 1,546 | |||||||||||
| 215,368 | (20,280 | ) | 195,088 | 195,088 | ||||||||||||
|
Negative
goodwill
|
||||||||||||||||
|
Redevco
|
(32,222 | ) | 19,723 | (12,499 | ) | (18,522 | ) | |||||||||
|
Deferred
gain on partial sale
of
FIT Residencial investment
|
||||||||||||||||
|
Tenda transaction
|
(210,402 | ) | 198,808 | (11,594 | ) | (169,394 | ) | |||||||||
|
9
|
Loans
and Financing, net of Cross-Currency Interest Rate
Swaps
|
|
Type
of operation
|
Annual
interest rates
|
September
30, 2009
|
December
31, 2008
|
|||||||||
|
(Unaudited)
|
||||||||||||
|
Working
capital
|
||||||||||||
|
Denominated in Yen (i)
|
1.4%
|
131,305 | 166,818 | |||||||||
|
Swaps - Yen/CDI (ii)
|
Yen +
1.4%/105% CDI
|
(7,296 | ) | (53,790 | ) | |||||||
|
Denominated in
US$ (i)
|
7%
|
146,739 | ||||||||||
|
Swaps - US$/CDI (ii)
|
US$ +
7%/104% CDI
|
- | (32,962 | ) | ||||||||
|
Other
|
0.66% to
3.29% + CDI
|
608,118 | 435,730 | |||||||||
| 732,127 | 662,535 | |||||||||||
|
National
Housing System – SFH (iv)
|
TR + 6.2% to
11.4%
|
473,615 | 372,255 | |||||||||
|
Downstream
merger obligations (iii)
|
TR + 10% to
12.0%
|
- | 8,810 | |||||||||
|
Other
|
TR+
6.2%
|
1,204 | 4,576 | |||||||||
| 1,206,946 | 1,048,176 | |||||||||||
|
Current
portion
|
570,307 | 447,503 | ||||||||||
|
Non-current
portion
|
636,639 | 600,673 | ||||||||||
(i) Loans
and financing classified at fair value through income (Note
16(b)(ii)).
(ii) Derivatives
classified as financial assets at fair value through income (Note
16(b)(ii)).
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
Rates:
|
|
.
|
CDI –
Interbank Deposit Certificate.
|
|
|
.
|
TR –
Referential Rate.
|
(iii)
Downstream merger obligations correspond to debt assumed from former
shareholders with maturities up to 2013.
(iv)
Funding for working capital – SFH and for developments correspond to credit
lines from financial institutions.
The Company has
financing agreements with the SFH, the resources from which are released to the
Company as construction progresses. At September 30, 2009, the Company has
resources approved to be released for approximately 93 ventures amounting to R$
1,650,046 that will be used in future periods, at the extent these developments
progress physically and financially, according to the Company’s project
schedule.
Consolidated
current and non-current portions at September 30, 2009 mature as
follows:
|
September
30, 2009
|
||
|
(Unaudited)
|
||
|
2009
|
193,736
|
|
|
2010
|
527,583
|
|
|
2011
|
384,820
|
|
|
2012
|
66,933
|
|
|
2013
|
33,874
|
|
|
1,206,946
|
Loans and financing
are guaranteed by the Company, mortgage of the units, assignment of rights,
receivables from clients and the proceeds from the sale of our properties in the
amount of R$ 3,507,784 (not audited).
Additionally, the
consolidated balance of accounts pledged in guarantee totals R$ 151,337 at
September 30, 2009 (Note 4).
The Company
obtained loans (working capital) from financial institutions and, in order
to mitigate the effects of foreign exchange exposure on loans, it
has contracted swaps to cover the full amount of the working capital loans (Note
16). In this context, at September 30, 2009, the Company elected to apply the
fair value option and record both the loan and respective derivative instruments
at fair value through income.
Financial expenses
from loans, financings and debentures are capitalized as part of the cost of
each venture, according to the use of funds, and appropriated to results based
on the criterion adopted for recognizing revenue, or allocated to results, as
shown below:
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
|
September
30, 2009
|
September
30, 2008
|
|||||||
|
(Unaudited)
|
(Unaudited)
|
|||||||
|
Gross
financial charges
|
85,190 | 29,731 | ||||||
|
Capitalized
financial charges
|
(21,078 | ) | (13,683 | ) | ||||
|
Net financial
charges
|
64,112 | 16,048 | ||||||
|
Financial
charges included in Properties for sale
|
||||||||
|
Opening
balance
|
97,238 | 59,764 | ||||||
|
Capitalized
financial charges
|
21,078 | 13,683 | ||||||
|
Charges
appropriated to income
|
(21,805 | ) | (6,327 | ) | ||||
|
Closing
balance
|
96,511 | 67,120 | ||||||
The portion of
capitalized interest on the balance of properties for sale for the period ended
September 30, 2009 totaled R$ 71,214 and R$ 93,740 as of December 31,
2008.
|
10
|
Debentures
|
In
September 2006, the Company issued its Second Debenture Placement Program, which
allows it to place up to R$ 500,000 in non-convertible simple subordinated
debentures secured by a general guarantee.
In
June 2008, the Company issued its Third Debenture Placement Program, which
allows it to place R$ 1,000,000 in simple debentures with a general guarantee
maturing in two years.
In
April 2009, the subsidiary Tenda obtained approval for its First Program of
Debenture Distribution, which allows it to place up to R$ 600,000 in
non-convertible simple subordinated debentures secured by a general guarantee,
with semi-annual maturities between October 1, 2012 and April 1, 2014. The funds
raised through the issuance will be exclusively used to finance real
estate ventures focused only on the popular segment.
In
August 2009, the Company obtained approval for its sixth issuance of
non-convertible simple debentures in two series, secured by a general guarantee,
maturing in two years and unit face value at the issuance date of R$ 10,000,
totaling R$ 250,000.
Under the Second
and Third Programs, the Company placed 24,000 and 25,000 series debentures,
respectively, corresponding to R$ 240,000 and R$ 250,000, with the following
features:
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
|
Program/issuances
|
Amount
|
Annual
remuneration
|
Maturity
|
September
30, 2009
|
December
31, 2008
|
||||||
|
(Unaudited)
|
|
||||||||||
|
Second
program/first issuance
|
240,000
|
CDI +
3.25%
|
September
2011
|
192,449
|
248,679
|
||||||
|
Third
program/first issuance
|
250,000
|
107.20%
CDI
|
June
2018
|
258,816
|
255,266
|
||||||
|
Sixth
program/first issuance
|
250,000
|
CDI + 2% a
3.25%
|
August
2011
|
253,655
|
-
|
||||||
|
First
program/first issuance (Tenda)
|
600,000
|
TR+8%
|
April
2014
|
619,861
|
-
|
||||||
|
1,324,781
|
503,945
|
||||||||||
|
Current
portion
|
80,781
|
61,945
|
|||||||||
|
Non-current
portion
|
1,244,000
|
442,000
|
Consolidated
current and non-current portions at September 30, 2009 mature as
follows:
|
September
30, 2009
|
||||
|
(Unaudited)
|
||||
|
2009
|
26,619 | |||
|
2010
|
102,162 | |||
|
2011
|
346,000 | |||
|
2012
|
275,000 | |||
|
2013
|
425,000 | |||
|
2014 and
thereafter
|
150,000 | |||
| 1,324,781 | ||||
The Company has
restrictive debenture covenants which limit its ability to perform certain
actions, such as the issuance of debt, and that could require the early
redemption or refinancing of loans if the Company were to breach the covenants.
The first issuance of the Second Program and the first issuance of the Third
Program have cross-restrictive covenants in which an event of default or early
maturity of any debt above R$ 5,000 and R$ 10,000, respectively, requires the
Company to early amortize the first issuance of the Second Program.
On
July 21, 2009, the Company renegotiated with the debenture holders the
restrictive debenture covenants of the Second Program, and obtained the approval
for taking out the covenant that limited the Company’s net debt to R$ 1.0
billion and increasing the financial flexibility, changing the calculation of
the ratio between net debt and shareholders’ equity. As a result of these
changes, interest repaid by the Company increased to CDI + 3.25% per
year.
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
The actual ratios
and minimum and maximum amounts stipulated by these restrictive covenants and
measured under Brazilian GAAP at September 30, 2009 and December 31, 2008 are as
follows:
|
September
30, 2009
|
December
31, 2008
|
|||||||
|
(Unaudited)
|
||||||||
|
Second
program – first issuance
|
||||||||
|
Total debt, less debt of projects, less
cash, cash equivalents,
and financial investments cannot exceed
75% of
shareholders’ equity plus noncontrolling
shareholders’ participation
|
15 | % | N/A | |||||
|
Total
debt, less SFH debt, less cash, cash equivalents,
and financial investments cannot exceed 75% of shareholders’
equity
|
N/A | 35 | % | |||||
|
Total receivables from clients from
development and
services, plus inventory of finished
units, required to
be over 2.0 times total
debt
|
2.6
times
|
3.3
times
|
||||||
|
Total debt, less cash, cash equivalents
and financial
investments, required to be under
R$ 1.0 billion
|
N/A | R$ 946,600 | ||||||
|
Third
program – first issuance
|
||||||||
|
Total debt, less SFH debt, less cash,
cash equivalents,
and financial investments cannot exceed
75% of
shareholders’ equity
|
54 | % | 35 | % | ||||
|
Total accounts receivable plus
inventory of finished
units required to be over 2.2 times net
debt
|
4.5
times
|
5.5
times
|
||||||
As
of September 30, 2009, the Company was in compliance with the aforementioned
clauses and other non-restrictive clauses.
|
11
|
Other
accounts payable
|
|
September
30, 2009
|
December
31, 2008
|
|||||||
|
(unaudited)
|
||||||||
|
Obligation to
venture partners (i)
|
300,000 | 300,000 | ||||||
|
Credit
assignments (Note 5)
|
128,712 | 67,552 | ||||||
|
Acquisition
of investments
|
26,976 | 30,875 | ||||||
|
Dividends to
ventures’ partners
|
4,458 | 16,398 | ||||||
|
Advance for
future capital increase
|
1,180 | - | ||||||
|
Other
accounts payable
|
82,829 | 72,867 | ||||||
| 544,155 | 487,692 | |||||||
|
Current
portion
|
181,312 | 97,933 | ||||||
|
Non-current
portion
|
362,843 | 389,759 | ||||||
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
|
(i)
|
In January
2008, the Company formed an unincorporated venture (SCP), the main
objective of which is to hold interests in other real estate development
companies. The SCP received contributions of R$ 313,084 through September
30, 2009 (represented by 13,084,000 Class A quotas fully paid-in by the
Company and 300,000,000 Class B quotas from the other venture partner).
The SCP will preferably use these funds to acquire equity investments and
increase the capital of its investees. As the decision to invest or not is
made jointly by all quotaholders, the venture is treated as a variable
interest entity and the Company deemed to be the primary beneficiary; at
September 30, 2009, Obligations to venture partners amounting to R$
300,000 mature on January 31, 2014. The SCP has a defined term which ends
on January 31, 2014 at which time the Company is required to redeem the
venture partner's interest. The venture partner receives an annual
dividend substantially equivalent to the variation in the Interbank
Certificate of Deposit (CDI) rate. The SCP's charter provides for the
compliance with certain covenants by the Company, in its capacity as lead
partner, which include the maintenance of minimum indices of net debt and
receivables. At September 30, 2009, the SCP and the Company were in
compliance with these clauses.
|
|
12
|
Commitments
and provision for contingencies
|
The Company and its
subsidiaries are party in lawsuits and administrative proceedings at several
courts and government agencies that arise from the normal course of business,
involving tax, labor, civil and other matters. Management, based on information
provided by its legal counsel and analysis of the pending claims and, with
respect to the labor claims, based on past experience regarding the amounts
claimed, recognized a provision in an amount considered sufficient to cover the
probable losses.
In
the nine-month period ended September 30, 2009, the changes in the provision for
contingencies are summarized as follows:
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
|
September
30, 2009
|
||||
|
(Unaudited)
|
||||
|
Balance at
the beginning of the period
|
53,530 | |||
|
Additions
|
75,986 | |||
|
Reversals and
settlements
|
(9,177 | ) | ||
|
Balance at
the end of the period
|
120,339 | |||
|
Escrow
deposits
|
(50,318 | ) | ||
|
Balance at
the end of the period
|
70,021 | |||
|
(a)
|
Tax,
labor and civil lawsuits
|
|
September
30, 2009
|
December
31, 2008
|
|||||||
| (Unaudited) | ||||||||
|
Civil
lawsuits
|
84,200 | 27,779 | ||||||
|
Tax
lawsuits
|
24,567 | 19,609 | ||||||
|
Labor
claims
|
11,572 | 9,976 | ||||||
|
Court-mandated
escrow deposits
|
(50,318 | ) | (3,834 | ) | ||||
| 70,021 | 53,530 | |||||||
|
Current
|
10,512 | 17,567 | ||||||
|
Non-current
|
59,509 | 35,963 | ||||||
As
of September 30, 2009, the provisions for contingencies for civil lawsuits
included R$ 71,322 related to legal cases in which the Company was cited as a
successor in foreclosure actions in which the original debtor was a former
shareholder of the Company; Cimob Companhia Imobiliária (“Cimob”), among other
shareholder related parties. The plaintiff claims that the Company
should be held liable for the debts of Cimob. During the nine-month period ended
September 30, 2009, the Company recorded additional provision in the amount of
R$ 65,638 following unfavorable judicial decisions, which led the Company to
seek new legal opinions and reevaluate the estimate of probable loss. Guarantee
insurance provides coverage for R$17,678, a further R$36,903 is deposited in
escrow, in connection with the blocking of Gafisa’s bank accounts, and there is
also the retaining of Gafisa’s treasury shares to guarantee the foreclosure. The
Company has filed appeals against all decisions, as it believes that reference
to Gafisa in the lawsuits is not legally justifiable, and Management is
confident that its position will prevail enabling the escrow deposits to be
released. In other similar cases, the Company has obtained favorable
decisions in which it was awarded final and unappealable decisions overturning
claims where the Company was initially found to be liable for certain debts of
Cimob. The ultimate outcome of the Company’s appeal, however, cannot be
predicted at this time.
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
Our subsidiary
Alphaville is a party in judicial lawsuits and administrative proceedings
related to Excise Tax (IPI) and Value-added Tax on Sales and Services (ICMS) on
two imports of aircraft in 2001 and 2005, respectively, under leasing agreements
without purchase option. The likelihood of loss in the ICMS case is
estimated by legal counsel as (i) probable in regard to the principal and
interest, and (ii) remote in regard to the fine for noncompliance with ancillary
obligations. The amount of the contingency estimated by legal counsel as a
probable loss amounts to R$ 12,267 and is recorded in a provision at September
30, 2009.
At
September 30, 2009, the Company and its subsidiaries are monitoring
other lawsuits and risks, the likelihood of which, based on the position of
legal counsel, is possible but not probable, totaling approximately
R$ 81,325, according to the historical average of lawsuits and for which
management believes a provision for loss is not necessary.
|
(b)
|
Commitment
to complete developments
|
The Company is
committed to deliver units to owners of land who exchange land for real estate
units developed by the Company.
The Company is also
committed to complete units sold and to comply with the requirements of the
building regulations and licenses approved by the proper
authorities.
As
described in Note 4, at September 30, 2009, the Company has resources approved
and recorded as financial investments guaranteed which will be released at the
extent ventures progresses in the total amount of R$ 151,337 to meet these
commitments and R$76,928 at December 31, 2008.
|
13
|
Obligations
for purchase of land and advances from
clients
|
|
September
30, 2009
|
December
31, 2008
|
|||||||
|
(Unaudited)
|
||||||||
|
Obligations
for purchase of land
|
427,039 | 392,762 | ||||||
|
Advances from
clients
|
||||||||
|
Development and
services
|
128,384 | 90,363 | ||||||
|
Barter transactions
|
80,680 | 169,658 | ||||||
| 636,103 | 652,783 | |||||||
|
Current
|
488,935 | 421,584 | ||||||
|
Non-current
|
147,168 | 231,199 | ||||||
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
The present value
adjustment accreted to Real estate development operating costs for the periods
ended September 30, 2009 and 2008 amount to R$ (3,217) and R$ 145,
respectively.
|
14
|
Shareholders’
Equity
|
|
(a)
|
Capital
|
At
September 30, 2009 and December 31, 2008, the Company's capital totaled
R$1,233,897 and R$ 1,229,517 respectively, represented by 133,633,318 and
133,087,518, respectively, nominative Common shares without par value, 3,124,972
of which were held in treasury as of those dates.
On
April 30, 2009, the distribution of minimum mandatory dividends for 2008 was
approved in the total amount of R$ 26,106, to be paid by yearend December 31,
2009.
As
from May 9 to September 15, 2009, capital increases were approved in the amount
of R$ 4,380, related to the stock option plan and the exercise of 545,800 common
shares.
On
September 24, 2009, the trading at stock exchange of up to 2,825,229 shares held
in treasury was approved by the Company, as the circumstances that resulted in
the retaining of such shares in treasury no longer exist.
|
(b)
|
Stock
option plans
|
|
(i)
|
Gafisa
|
The Company
provides six stock option plans. The first plan was launched in 2000 and is
managed by a committee that periodically creates new stock option plans,
determining their terms, which, among other things, (i) define the length of
service that is required for employees to be eligible to the benefits of the
plans, (ii) select the employees that will be entitled to participate, and (iii)
establish the purchase prices of the preferred shares to be exercised under the
plans.
To
be eligible for the plans (plans from 2000 to 2002), participant employees are
required to contribute 10% of the value of total benefited options on the date
the option is granted and, additionally, for each of the following five years,
18% of the price of the grant per year. The
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
exercise price of
the grant is inflation adjusted (IGP-M index), plus annual interest of 3%. The
stock option may be exercised in one to five years subsequent to the initial
date of the work period established in each of the plans. The shares are usually
available to employees over a period of ten years after their
contribution.
To
the extent the employees make advances for the purchase of the shares during the
vesting period the Company records the cash receipt against a liability account.
There were no advanced payments in 2009 and 2008.
The Company and its
subsidiaries may decide to issue new shares or transfer the treasury shares to
the employees in accordance with the clauses established in the plans. The
Company has the right of first refusal on shares issued under the plans in the
event of dismissals and retirement. In such cases, the amounts advanced are
returned to the employees, in certain circumstances, at amounts that correspond
to the greater of the market value of the shares (as established in the rules of
the plans) or the amount inflation-indexed (IGP-M) plus annual interest from 3%
to 6%.
In
2008, the Company and its subsidiaries launched a new stock option plan. In
order to become eligible for the grant, employees are required to contribute
from 25% to 80% of their annual net bonus to exercise the options within 30 days
from the program date.
On
June 26, 2009, the Company issued a new stock option plan granting 1,300,000
options. In addition, the exchange of the 2,740,000 options of the 2007 and 2008
plans for 1,900,000 options granted under this new stock option plan was
approved.
The assumptions
adopted for recording the stock option plan for 2009 were the following:
expected volatility of 40%, expected share dividends of 1.91%, and risk-free
interest rate at 8.99%.
From July 1, 2009,
the Company’s management opted for using the Binomial and Monte Carlo models for
pricing the options granted in replacement for the Black-Scholes model, because
on its understanding these models are capable of including and calculating with
a wider range of variables and assumptions comprising the plans of the Company.
The effect of this model replacement was brought about prospectively on July 1,
2009, with the recording of income amounting to R$ 2,224 for the nine-month
period ended September 30, 2009.
The changes in the
number of stock options and corresponding weighted average exercise prices are
as follows:
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
|
September 30, 2009
|
December 31,
2008
|
|||||||||||||||
|
(Unaudited)
|
||||||||||||||||
|
Number of
options
|
Weighted average exercise price –
in Reais
|
Number of
options
|
Weighted average exercise price –
in Reais
|
|||||||||||||
|
Options outstanding at the
beginning of the period
|
5,930,275 | 26.14 | 5,174,341 | 22.93 | ||||||||||||
|
Options
granted
|
3,200,000 | 17.06 | 2,145,793 | 31.81 | ||||||||||||
|
Options
exercised
|
(545,800 | ) | 16.15 | (441,123 | ) | 16.72 | ||||||||||
|
Options
expired
|
(2,740,000 | ) | 32.99 | (3,675 | ) | 20.55 | ||||||||||
|
Options
cancelled
|
(197,742 | ) | 32.99 | (945,061 | ) | 20.55 | ||||||||||
|
Options outstanding at the end of
the period
|
5,646,733 | 13.97 | 5,930,275 | 26.14 | ||||||||||||
|
Options exercisable at the end of
the period
|
1,503,123 | 27.38 | 4,376,165 | 28.00 | ||||||||||||
|
in
reais
|
|||||
|
September
30, 2009
|
December
31, 2008
|
||||
|
(Unaudited)
|
|
||||
|
Exercise
price per share at the end of the period
|
7.99-41.07
|
7.86-39.95
|
|||
|
Weighted
average of exercise price at the option grant date
|
18.70
|
21.70
|
|||
|
Weighted
average market price per share at the grant date
|
22.38
|
27.27
|
|||
|
Market price
per share at the end of the period
|
26.68
|
10.49
|
The options granted
will confer their holders the right to subscribe the Company's shares, after
completing one to five years of employment with the Company (conditions on
exercise of options apply), and will expire after ten years from the grant
date.
The Company
recognized stock option expenses of R$ 15,062 and R$ 16,550 for the
nine-month periods ended September 30, 2009 and 2008, respectively, recorded in
Operating expenses. The amounts recognized in the parent company represent the
realization of the capital reserve in shareholders’ equity.
|
(ii)
|
Tenda
|
Tenda has a total of three stock option
plans, the first two were
approved in June 2008, and the other one in April 2009. These plans, limited to the maximum of
5% of total capital shares and approved by the Board of Directors,
stipulate the general
terms, which, among other
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
things, (i) define the length of service
that is required for employees to be eligible to the benefits of the plans, (ii)
select the employees that will be entitled to participate, and (iii) establish
the purchase prices of the preferred shares to be exercised under the
plans.
In the option granted in 2008, when
exercising the option the base price will be adjusted according to the market value of shares,
based on the average price in the 20 trading sessions prior to the commencement of each
annual exercise period. The
exercise price is adjusted according to a fixed table of values, according to
the share value in the market, at the time of the two exercise periods for each
annual lot. In the options granted in 2009, the vesting price is
adjusted by the IGP-M variation, plus interests 3%. The stock option may
be exercised by beneficiaries, who shall partially use their annual bonuses, as
awarded, in up to 10 years subsequent to the initial date of the work period
established in each of the plans. The shares are usually available to employees
over a period of two to five years after their contribution.
|
September 30,
2009
|
December 31,
2008
|
|||||||||||||||
|
(Unaudited)
|
||||||||||||||||
|
Number
of options
|
Weighted
average exercise price – in Reais
|
Number
of options
|
Weighted
average exercise price – in Reais
|
|||||||||||||
|
Options
outstanding at the beginning of the period
|
2,070,000 | 7.20 | - | - | ||||||||||||
|
Options granted
|
6,089,718 | 1.27 | 2,640,000 | 7.20 | ||||||||||||
|
Options exercised
|
(151,917 | ) | 2.63 | - | - | |||||||||||
|
Options cancelled
|
(1,870,583 | ) | 5.16 | (570,000 | ) | 7.20 | ||||||||||
|
Options
outstanding at the end of the period
|
6,137,218 | 1.52 | 2,070,000 | 7.20 | ||||||||||||
The market price of Tenda shares at
September 30, 2009 was R$ 5.35.
From the quarter ended September 30,
2009, the market value of each option granted was estimated at the grant date
using the Binomial and Monte Carlo option pricing models in replacement for the
Black-Scholes model.
Tenda recognized
stock option expenses of R$ 6,176 for the nine-month periods ended
September 30, 2009 recorded in Operating expenses.
|
(iii)
|
Alphaville
|
The subsidiary
Alphaville has three stock option plans, the first launched in 2007 which was
approved on June 26, 2007 at the Annual Shareholders' and of the Board of
Directors’ Meetings.
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
The changes in the
number of stock options and their corresponding weighted average exercise prices
for the year are as follows:
|
September 30,
2009
|
December 31,
2008
|
|||||||||||||||
|
(Unaudited)
|
||||||||||||||||
|
Number
of options
|
Weighted
average exercise price - Reais
|
Number
of options
|
Weighted
average exercise price – Reais
|
|||||||||||||
|
Options
outstanding at the beginning of the period
|
2,138 | 7,610.23 | 1,474 | 6,522.92 | ||||||||||||
|
Options
granted
|
- | - | 720 | 7,474.93 | ||||||||||||
|
Options cancelled
|
(60 | ) | - | (56 | ) | 6,522.92 | ||||||||||
|
Options
outstanding at the end of the period
|
2,078 | 7,610.23 | 2,138 | 6,843.52 | ||||||||||||
At
September 30, 2009, 729 options were exercisable. The exercise prices per option
on September 30, 2009 were from R$ 8,467.64 to R$ 8,596.03 (December
31, 2008 – R$ 8,238.27 to R$ 8,376.26).
The market value of each option granted
was estimated at the grant date using the Binomial option pricing
model.
Alphaville recorded income of the stock option
plan amounting to R$ 89 for the period ended September 30, 2009 as a result
of the replacement of the Black-Scholes for the Binomial option pricing
model.
Alphaville
recognized stock option expenses of R$ 428 and R$ 1,447 for the nine-month
periods ended September 30, 2009 and 2008, respectively, recorded in Operating
expenses.
|
15
|
Deferred
Taxes
|
|
September
30, 2009
|
December
31, 2008
|
|||||||
| (Unaudited) | ||||||||
|
Assets
|
||||||||
|
Net operating loss
carryforwards
|
100,446 | 76,640 | ||||||
|
Temporary differences
|
||||||||
|
Tax versus prior book
basis
|
112,671 | 52,321 | ||||||
|
CPC accounting
standards
|
46,936 | 39,680 | ||||||
|
Tax credits from downstream
mergers
|
3,892 | 21,611 | ||||||
| 263,945 | 190,252 | |||||||
|
Liabilities
|
||||||||
|
Differences between income taxed on
cash and recorded on accrual
basis
|
271,952 | 202,743 | ||||||
|
Negative goodwill
|
79,504 | 18,266 | ||||||
|
Temporary differences - CPC accounting
standards
|
23,789 | 18,122 | ||||||
| 375,245 | 239,131 | |||||||
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
The Company
calculates its taxes based on the recognition of results proportionally to the
receipt of the contracted sales, in accordance with the tax rules determined by
the Federal Revenue Service (SRF) Instruction 84/79, which differs from the
calculation of the accounting revenues based on the costs incurred versus total
estimated cost. The tax basis will crystallize over an average period of
four years as cash inflows arise and the conclusion of the corresponding
projects.
Other than for
Tenda, the Company has not recorded a deferred income tax asset on the tax
losses and social contribution tax loss carryforwards of its subsidiaries which
adopt the taxable income regime and do not have a history of taxable income for
the past three years.
The estimates of
future taxable income consider variables that are related, among other things,
to the Company's performance and the behavior of the market in which it
operates, as well as certain economic factors. Actual results could differ from
these estimates. Based on estimated future taxable income, the expected recovery
profile of the income tax and social contribution net operating loss
carryforwards is as follows:
|
2009
|
5,289 | |||
|
2010
|
33,192 | |||
|
2011
|
47,168 | |||
|
2012
|
2,129 | |||
|
Thereafter
|
24,893 | |||
|
Total
|
112,671 | |||
The reconciliation
of the statutory to effective tax rate is as follows:
|
September
30, 2009
|
September
30, 2008
|
|||||||
| (Unaudited) | (Unaudited) | |||||||
|
Income before
taxes on income and noncontrolling interest
|
276,593 | 183,072 | ||||||
|
Income tax
calculated at the standard rate - 34%
|
(94,042 | ) | (62,244 | ) | ||||
|
Net effect of
subsidiaries taxed on presumed profit regime
|
35,766 | 7,919 | ||||||
|
Stock option
plan
|
(5,966 | ) | (6,673 | ) | ||||
|
Negative
goodwill amortization
|
(5,203 | ) | ||||||
|
Prior period
income tax and social contribution tax losses
|
115 | 1,123 | ||||||
|
Other
non-deductible items, net
|
4,426 | 9,419 | ||||||
|
Income tax
and social contribution expense
|
(64,904 | ) | (50,456 | ) | ||||
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
Additionally, the
reconciliation of the effective tax rate in the parent company mainly arises
from the equity in results and the use of tax losses recorded from prior years
over the current year.
|
16
|
Financial
Instruments
|
The Company
participates in operations involving financial instruments, all of which are
recorded on the balance sheet, for the purposes of meeting its operating needs
and reducing its exposure to credit, currency and interest rate risks. These
risks are managed by control policies, specific strategies and determination of
limits, as follows:
|
(a)
|
Risk
considerations
|
(i) Credit
risk
The Company and its
subsidiaries restrict their exposure to credit risks associated with banks and
cash and cash equivalents, investing in highly-rated financial institutions in
short-term securities.
With regards to
accounts receivable, the Company restricts its exposure to credit risks through
sales to a broad base of clients and ongoing credit analysis. Additionally,
there is no history of losses due to the existence of liens for the recovery of
its products in the cases of default during the construction
period.
Other than for
Tenda, the Company has not recorded a provision to cover losses for the recovery
of receivables related to real estate units delivered at September 30, 2009 and
December 31, 2008. There was no significant concentration of credit risks
related to clients for the periods presented.
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
(ii) Currency
risk
The Company
participates in operations involving derivative financial instruments for the
purposes of mitigating the effects of fluctuations in foreign exchange
rates.
In
the periods ended September 30, 2009 and September 30, 2008, R$ 7,296 and R$
13,597 related to the net positive result of cross-currency interest rate swap
operations was recognized in Financial income (expenses), matching the results
of these operations with the fluctuation in foreign currencies in the Company's
financial information.
The nominal value
of the swap contracts was R$ 100,000 and R$ 200,00 at September 30, 2009 and
December 31, 2008, respectively. The unrealized gains (losses) of these
operations at September 30, 2009 and December 31, 2008 are as follows (Note
9):
|
Net
unrealized gains (losses)
|
|||||||||||
|
Reais
|
Percentage
|
from
derivative instruments
|
|||||||||
|
Rate
swap contracts -
|
Nominal
|
Original
|
|||||||||
|
(US
Dollar and Yen for CDI)
|
value
|
index
|
Swap
|
September30,
2009
|
September
30, 2008
|
||||||
|
(Unaudited)
|
|
(Unaudited)
|
|||||||||
|
Banco ABN
Amro Real S.A.
|
100,000
|
Yen +
1.4%
|
105% of
CDI
|
7,296
|
4,501
|
||||||
|
Banco
Votorantim S.A.
|
100,000
|
US Dollar +
7%
|
104% of
CDI
|
-
|
9,096
|
||||||
|
200,000
|
7,296
|
13,597
|
|||||||||
The Company does
not sell in foreign currency.
(iii) Interest
rate risk
The interest rates
on loans and financing are disclosed in Note 9. The interest rates contracted on
financial investments are disclosed in Note 4. Accounts receivable from real
estate units delivered (Note 5) are subject to annual interest of
12%.
Additionally, as
disclosed in Notes 7 and 11, a significant portion of the balances from related
parties and with partners in the ventures are not subject to financial
charges.
|
(b)
|
Valuation
of financial instruments
|
The main financial
instruments receivable and payable are described below, as well as the criteria
for their valuation.
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
(i) Cash
and cash equivalents
The market value of
these assets does not differ significantly from the amounts presented
on the balance sheets (Note 4). The contracted rates reflect usual
market conditions. Investment funds in which the Company has an exclusive
interest make transactions with derivatives, among others. As mentioned in Note
4, at September 30 and December 31, 2008 the amount accounted for investment
funds is recorded at market value.
(ii) Loans
and financing and debentures
Loans and financing
are recorded based on the contractual interest rates of each operation, except
for loans denominated in foreign currency, which are stated at fair value.
Interest estimates for contracting operations with similar terms and amounts are
used for the determination of market value. The terms and conditions of loans
and financing and debentures obtained are presented in Notes 9 and 10. The fair
value of the other loans and financing, recorded based on the contractual
interest of each operation, does not significantly differ from the amounts
presented in the financial statements.
|
(c)
|
Sensitivity
analysis
|
A
sensitivity analysis of the risks of material losses that could accrue from
financial instrument transactions, based on management's best estimate of the
most likely scenario (Scenario I), is presented below. Additionally, a further
two scenarios are presented, as required by the CVM, pursuant to Instruction No.
475/08, by stressing the variables by 25% and 50%, respectively, (Scenarios II
and III).
At
September 30, 2009, the Company had one foreign exchange derivative contracts
with Banco ABN Amro Real S.A.: cross-currency interest rate swap from Yen for
R$100,000, at a fixed cost of 1.4% per year per asset position, and Yen at a
cost of 105% of CDI. Beginning on November 9, 2007 and maturity on October 29,
2009.
The risk factors in
the sensitivity analysis were the variations in R$/Yen exchange rates, and in
the CDI rate. Management considers that the risk is limited to the CDI variation
as the swap operation has the effect of mitigating the currency volatility
risk.
The following
scenarios were considered:
|
|
.
|
Scenario I: Likely –
Management considered the market yield curves at September 30, 2009 for
the maturity dates of derivative
transactions:
|
- R$/JPY 0.01975
and CDI rate at 8.71% on October 29, 2009.
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
|
|
.
|
Scenario II: Appreciation/Devaluation by
25% of risk variables used in
pricing.
|
|
|
.
|
Scenario IIII: Appreciation/Devaluation
by 50% of risk variables used in
pricing.
|
A
sensitivity analysis of the risks of material losses that could accrue from
financial instrument transactions, including derivatives, based on management's
best estimate of the most likely scenario (Scenario I), is presented below.
Additionally, a further two scenarios are presented, as required by CVM
Instruction No. 475/08, by stressing the variables by 25% and 50%, respectively,
(Scenarios II and III).
Impact
on exchange rate scenarios
| Scenario (*) | ||||||||||||||||||||||
|
|
I | II |
III
|
|||||||||||||||||||
|
Transaction
|
Risk |
Expected
|
Devaluation
|
Appreciation
|
Devaluation
|
Appreciation
|
||||||||||||||||
|
"Swap" (asset
position - Yen)
|
Apprec./Dev. of Yen | - | 32,826 | 32,747 | 65,652 | (65,652 | ) | |||||||||||||||
|
Debt
denominated in Yen
|
Apprec./Dev. of Yen | - | 32,747 | 32,826 | 65,493 | (65,493 | ) | |||||||||||||||
| Net effect of Yen devaluation | - | 79 | (79 | ) | 159 | (159 | ) | |||||||||||||||
(*) Scenarios I, II and III - Likely, Possible and Remote, respectively.
Impact
on interest rate scenarios
| Scenario (*) | ||||||||||||||||||||||
|
|
I | II |
III
|
|||||||||||||||||||
|
Transaction
|
Risk |
Expected
|
Devaluation
|
Appreciation
|
Devaluation
|
Appreciation
|
||||||||||||||||
|
ABN Amro swap
- liability position balance in CDI on maturity date (October 29,
2009)
|
Appreciation of CDI | 124,814 | 125,018 | 124,606 | 125,219 | 124,394 | ||||||||||||||||
(*) Scenarios
I, II and III - Likely, Possible and Remote, respectively.
At
September 30, 2009, the liability position balances for CDI was ABN swap
transaction: R$124,009.
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
A
sensitivity analysis of these transactions does not change the debt balance at
the base date, since the CDI rate used for projecting the debt is the same used
to discount to present value.
The source of the
data used to determine the exchange rate adopted in the base scenarios was the
Brazilian Mercantile & Futures Exchange ("BMF"), as management believes that
this is the most reliable and independent source, and which represents the
market consensus on these quotations.
The US Dollar and
Yen data were sourced from the BMF website on September 30, 2009 for the
maturity dates.
|
17
|
Related
Parties
|
|
(a)
|
Transactions
with related parties
|
|
September
30,
|
December
31,
|
|||||||
|
Current
account
|
2009
|
2008 | ||||||
|
(Unaudited)
|
||||||||
|
Condominiums
and consortia
|
||||||||
|
Alpha 4
|
(4,452 | ) | (466 | ) | ||||
|
Consórcio Ezetec &
Gafisa
|
29,440 | 9,341 | ||||||
|
Consórcio Ezetec Gafisa
|
- | (9,300 | ) | |||||
|
Cond. Constr. Empr.
Pinheiros
|
2,823 | 2,132 | ||||||
|
Condomínio Parque da
Tijuca
|
(208 | ) | 235 | |||||
|
Condomínio em Const. Barra
Fir.
|
(46 | ) | (46 | ) | ||||
|
Civilcorp
|
711 | 791 | ||||||
|
Condomínio do Ed. Barra
Premiu
|
105 | 105 | ||||||
|
Consórcio Gafisa Rizzo
|
44 | (273 | ) | |||||
|
Evolução Chacara das
Flores
|
7 | 7 | ||||||
|
Condomínio Passo da Patria
II
|
569 | 569 | ||||||
|
Cond. Constr. Palazzo
Farnese
|
(17 | ) | (17 | ) | ||||
|
Alpha 3
|
(1,838 | ) | (214 | ) | ||||
|
Condomínio Iguatemi
|
3 | 3 | ||||||
|
Consórcio Quintas Nova
Cidade
|
36 | 36 | ||||||
|
Consórcio Ponta Negra
|
2,508 | 3,838 | ||||||
|
Consórcio SISPAR &
Gafisa
|
4,509 | 1,995 | ||||||
|
Cd. Advanced Ofs. Gafisa -
Metro
|
(865 | ) | (417 | ) | ||||
|
Condomínio Acqua
|
(3,647 | ) | (2,629 | ) | ||||
|
Cond. Constr. Living
|
(620 | ) | 1,478 | |||||
|
Consórcio Bem Viver
|
(274 | ) | 5 | |||||
|
Cond. Urbaniz. Lot Quintas
Rio
|
(3,390 | ) | (486 | ) | ||||
|
Cond. Constr. Homem de
Melo
|
83 | 83 | ||||||
|
Consórcio OAS Gafisa -
Garden
|
(9,910 | ) | (1,759 | ) | ||||
|
Cond.
Constr. La Traviata
|
(271 | ) | ||||||
|
Cond. em Constr.
Lacedemonia
|
57 | 57 | ||||||
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
|
September
30,
|
December
31,
|
|||||||
|
Current
account
|
2009
|
2008 | ||||||
|
(Unaudited)
|
||||||||
|
Evolução New Place
|
(671 | ) | (665 | ) | ||||
|
Consórcio Gafisa Algo
|
722 | 711 | ||||||
|
Columbia Outeiro dos
Nobres
|
(153 | ) | (153 | ) | ||||
|
Evolução - Reserva do
Bosque
|
11 | 5 | ||||||
|
Evolução - Reserva do
Parque
|
59 | 122 | ||||||
|
Consórcio Gafisa &
Bricks
|
611 | (26 | ) | |||||
|
Cond. Constr. Fernando
Torres
|
136 | 135 | ||||||
|
Cond. de Const. Sunrise
Reside
|
382 | 18 | ||||||
|
Evolução Ventos do
Leste
|
123 | 159 | ||||||
|
Consórcio Quatro
Estações
|
(1,328 | ) | (1,340 | ) | ||||
|
Cond. em Const. Sampaio
Viana
|
951 | 951 | ||||||
|
Cond. Constr. Monte
Alegre
|
1,456 | 1,456 | ||||||
|
Cond. Constr. Afonso de
Freitas
|
1,674 | 1,674 | ||||||
|
Consórcio New Point
|
1,348 | 1,472 | ||||||
|
Evolução - Campo Grande
|
612 | 618 | ||||||
|
Condomínio do Ed. Oontal
Beach
|
(486 | ) | 43 | |||||
|
Consórcio OAS Gafisa -
Garden
|
(7,661 | ) | 430 | |||||
|
Cond. Constr. Infra
Panamby
|
(187 | ) | (483 | ) | ||||
|
Condomínio Strelitzia
|
(936 | ) | (851 | ) | ||||
|
Cond. Constr. Anthuriun
|
2,485 | 4,319 | ||||||
|
Condomínio Hibiscus
|
2,677 | 2,715 | ||||||
|
Cond. em Constr
Splendor
|
1,813 | (1,848 | ) | |||||
|
Condomínio Palazzo
|
1, 286 | 793 | ||||||
|
Cond. Constr. Doble
View
|
(3,298 | ) | (1,719 | ) | ||||
|
Panamby - Torre K1
|
416 | 887 | ||||||
|
Condomínio Cypris
|
(1,722 | ) | (1,436 | ) | ||||
|
Cond em Constr Doppio
Spazio
|
(3, 222 | ) | (2,407 | ) | ||||
|
Consórcio
|
6,631 | 2,493 | ||||||
|
Consórcio Planc e
Gafisa
|
809 | 270 | ||||||
|
Consórcio Gafisa & Rizzo
(susp.)
|
1,520 | 1,239 | ||||||
|
Consórcio Gafisa OAS -
Abaeté
|
(8,625 | ) | 3,638 | |||||
|
Cond. do Clube Quintas do
Rio
|
1 | 1 | ||||||
|
Cons. OAS-Gafisa Horto
Panamby
|
(9,044 | ) | 9,349 | |||||
|
Consórcio OAS e Gafisa - Horto
Panamby
|
(2,001 | ) | (27 | ) | ||||
|
Consórcio Ponta Negra - Ed.
Marseille
|
- | (1,033 | ) | |||||
|
Consórcio Ponta Negra - Ed.
Nice
|
(9,885 | ) | (4,687 | ) | ||||
|
Manhattan Square
|
(2,075 | ) | 600 | |||||
|
Cons. Eztec Gafisa Pedro
Luis
|
(11,380 | ) | (3,589 | ) | ||||
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
|
September
30,
|
December
31,
|
|||||||
|
Current
account
|
2009
|
2008 | ||||||
|
(Unaudited)
|
||||||||
|
Consórcio Planc Boa
Esperança
|
1,316 | 603 | ||||||
|
Consórcio OAS e Gafisa -
Tribeca
|
209 | (144 | ) | |||||
|
Consórcio OAS e Gafisa -
Soho
|
- | (167 | ) | |||||
|
Consórcio Gafisa &
GM
|
(81 | ) | (40 | ) | ||||
|
Consórcio Ventos do
Leste
|
(1 | ) | (1 | ) | ||||
|
Bairro Novo Cotia
|
9,506 | (6,137 | ) | |||||
|
Bairro Novo Camaçari
|
1,260 | (2,585 | ) | |||||
|
Bairro Novo Fortaleza
|
- | 2 | ||||||
|
Bairro Novo Nova Iguaçu
|
- | (330 | ) | |||||
|
Bairro Novo Cia.
Aeroporto
|
- | (55 | ) | |||||
|
Consórcio B Novo Ap.
Gioania
|
- | (210 | ) | |||||
|
Consórcio B Novo
Campinas
|
- | (261 | ) | |||||
| 9,385 | 9,577 | |||||||
|
Other
SPEs
|
||||||||
|
Gafisa SPE 10 S.A.
|
(9,580 | ) | 2,051 | |||||
|
Gafisa Vendas I. Imob.
Ltda.
|
2,384 | 2,384 | ||||||
|
Projeto Alga
|
(25,000 | ) | (25,000 | ) | ||||
|
Outros
|
(351 | ) | - | |||||
| (32,547 | ) | (20,565 | ) | |||||
|
SPEs
|
||||||||
|
Alphaville
Urbanismo S.A.
|
5,588 | - | ||||||
|
FIT Resid. Empreend. Imob.
Ltda.
|
(1,423 | ) | 12,058 | |||||
|
Bairro Novo Emp Imob
S.A.
|
1,968 | 1,968 | ||||||
|
Cipesa Empreendimentos
Imobil.
|
(398 | ) | (398 | ) | ||||
|
The house
|
80 | 80 | ||||||
|
Gafisa SPE 46 Empreend.
Imob.
|
9,161 | 8,172 | ||||||
|
Gafisa SPE 40 Emp. Imob.
Ltda.
|
878 | 1,288 | ||||||
|
Vistta
Ibirapuera
|
1,073 | - | ||||||
|
Blue II Plan. Prom. e Venda
Lt.
|
(10,636 | ) | 911 | |||||
|
SAÍ AMARELA S.A.
|
(1,393 | ) | (1,138 | ) | ||||
|
GAFISA SPE-49 Empre. Imob.
Ltda.
|
(2 | ) | (2 | ) | ||||
|
London Green
|
9 | - | ||||||
|
Gafisa SPE-35 Ltda.
|
(1,379 | ) | (129 | ) | ||||
|
Gafisa SPE 38 Empr. Imob.
Ltda.
|
312 | 109 | ||||||
|
LT Incorporadora SPE
Ltda.
|
(531 | ) | (527 | ) | ||||
|
Res. das Palmeiras Inc. SPE
Lt.
|
1,246 | 1,246 | ||||||
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
|
September
30,
|
December
31,
|
|||||||
|
Current
account
|
2009
|
2008 | ||||||
|
(Unaudited)
|
||||||||
|
Gafisa SPE 41 Empr. Imob.
Ltda.
|
1,773 | 1,534 | ||||||
|
Acqua
Residencial
|
196 | - | ||||||
|
Dolce VitaBella Vita SPE
S.A.
|
(102 | ) | 32 | |||||
|
Saira Verde Empreend. Imobil.
Lt.
|
991 | 214 | ||||||
|
Gafisa SPE 22 Ltda.
|
600 | 630 | ||||||
|
CSF Prímula
|
2,511 | - | ||||||
|
Gafisa SPE 39 Empr. Imobil.
Ltda.
|
(606 | ) | (304 | ) | ||||
|
DV SPE S.A.
|
(564 | ) | (571 | ) | ||||
|
CSF
Santtorino
|
5 | - | ||||||
|
Gafisa SPE 48 Empreend.
Imobili.
|
(188 | ) | 159 | |||||
|
Espacio
Laguna
|
286 | - | ||||||
|
Gafisa SPE-53 Empre. Imob.
Ltda.
|
(39 | ) | (94 | ) | ||||
|
Jardim II Planej. Prom. Vda.
Ltda.
|
(2,993 | ) | (2,990 | ) | ||||
|
Gafisa SPE 37 Empreend.
Imobil.
|
(271 | ) | (398 | ) | ||||
|
Gafisa SPE-51 Empre. Imob.
Ltda.
|
790 | 810 | ||||||
|
Gafisa SPE 36 Empr. Imob.
Ltda.
|
(647 | ) | (1,205 | ) | ||||
|
Gafisa SPE 47 Empreend.
Imobili.
|
566 | 146 | ||||||
|
Sunplace SPE Ltda.
|
415 | 415 | ||||||
|
Sunplaza
Personal Office
|
10,316 | |||||||
|
Sunshine SPE Ltda.
|
563 | 1,135 | ||||||
|
Gafisa SPE 30 Ltda.
|
(1,206 | ) | (1,217 | ) | ||||
|
Gafisa SPE-50 Empr. Imob.
Ltda.
|
(2,796 | ) | (221 | ) | ||||
|
Tiner Campo Belo I Empr.
Imobil.
|
525 | 6,972 | ||||||
|
Gafisa SPE-33 Ltda.
|
2,321 | 2,321 | ||||||
|
Jardim I Planej. Prom. Vda.
Ltda.
|
6,581 | 6,662 | ||||||
|
Verdes Praças Inc. Imob. SPE
Lt.
|
(38 | ) | (38 | ) | ||||
|
Gafisa SPE 42 Empr. Imob.
Ltda.
|
(120 | ) | 64 | |||||
|
Península I SPE S.A.
|
(696 | ) | (1,267 | ) | ||||
|
Península 2 SPE S.A.
|
2,489 | 865 | ||||||
|
Blue I SPE Ltda.
|
2,642 | 74 | ||||||
|
Blue II Plan. Prom. e Venda
Lt.
|
(6 | ) | - | |||||
|
Blue II Plan. Prom. e Venda
Lt.
|
(3 | ) | - | |||||
|
Weber
Art
|
(148 | ) | ||||||
|
Olimpic
Chácara Santo Antonio
|
21 | |||||||
|
Gafisa SPE-55 Empr. Imob.
Ltda.
|
(54 | ) | (2 | ) | ||||
|
Gafisa SPE 32
|
(2,370 | ) | (2,304 | ) | ||||
|
Cyrela Gafisa SPE Ltda.
|
2,984 | 2,834 | ||||||
|
Unigafisa Part SCP
|
(7,074 | ) | 1,040 | |||||
|
Villagio Panamby Trust
S.A.
|
2,271 | 749 | ||||||
|
Diodon Participações
Ltda.
|
1,680 | 13,669 | ||||||
|
Diodon Participações
Ltda.
|
131 | - | ||||||
|
Gafisa SPE 44 Empreend.
Imobili.
|
221 | 175 | ||||||
|
Gafisa S.A.
|
1,437 | 1,218 | ||||||
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais, unless otherwise
stated
| September 30, |
December
31,
|
|||||||
|
Current
account
|
2009
|
2008 | ||||||
| (Unaudited) | ||||||||
|
Spazio Natura Emp. Imob.
Ltd.
|
4 | - | ||||||
|
Dep. José Lages Emp. Imob.
S.
|
1,345 | - | ||||||
|
O Bosque E. Imob. Ltda.
|
120 | - | ||||||
|
Gafisa SPE 65 Empreend. Imob.
Ltd.
|
168 | 321 | ||||||
|
Cara de Cão
|
(2,967 | ) | - | |||||
|
Laguna
|
(390 | ) | - | |||||
|
Gafisa SPE-72
|
(24 | ) | 1 | |||||
|
Gafisa SPE-52 E. Imob.
Ltda.
|
42 | 42 | ||||||
|
Gafisa SPE-32 Ltda.
|
2,220 | 2,220 | ||||||
|
Terreno
Ribeirão/Curupira
|
1,352 | 1,360 | ||||||
|
Edif. Nice
|
(95 | ) | (95 | ) | ||||
|
Gafisa SPE-71
|
(61 | ) | 124 | |||||
|
Zildete
|
(64 | ) | - | |||||
|
Clube Baiano de Tênis
|
313 | - | ||||||
|
Gafisa SPE-73
|
1 | 1 | ||||||
|
Gafisa SPE 69
Empreendimentos
|
(159 | ) | (72 | ) | ||||
|
Gafisa SPE 43 Empr. Imob.
Ltda.
|
5 | - | ||||||
|
Gafisa SPE-74 Emp. Imob.
Ltda.
|
(519 | ) | 1 | |||||
|
Gafisa SPE 59 Empreend. Imob.
Ltda.
|
(1 | ) | 1 | |||||
|
Gafisa SPE-67 Emp.
Ltda.
|
1 | |||||||
|
Gafisa SPE 68
Empreendimentos
|
1 | 1 | ||||||
|
Gafisa SPE-76 Emp. Imob.
Ltda.
|
(10 | ) | 24 | |||||
|
Gafisa SPE-77 Emp. Imob.
Ltda.
|
3,303 | 3,289 | ||||||
|
Gafisa SPE-78 Emp. Imob.
Ltda.
|
9 | 1 | ||||||
|
Gafisa SPE-79 Emp. Imob.
Ltda.
|
1 | 1 | ||||||
|
Gafisa SPE 70
Empreendimentos
|
1,352 | (746 | ) | |||||
|
Gafisa SPE 61 Empreendimento
I
|
(13 | ) | (12 | ) | ||||
|
Soc. em Cta. de Particip.
Gafisa
|
(878 | ) | (878 | ) | ||||
|
Gafisa SPE-85 Emp. Imob.
Ltda.
|
(1,334 | ) | (96 | ) | ||||
|
Gafisa SPE-84 Emp. Imob.
Ltda.
|
212 | 381 | ||||||
|
Sítio
Jatiúca Empr. Imob. SPE Ltda.
|
1,266 | - | ||||||
|
DEPUT
JOSE LAJES Empreend. Imob. Ltda.
|
71 | - | ||||||
|
OAS
City Park Brotas Empr. Imob.
|
925 | - | ||||||
|
City
Park Acupe Emp. Imob.
|
252 | - | ||||||
|
Gafisa
SPE 83 Emp. Imob. Ltda.
|
201 | - | ||||||
|
Gafisa
SPE 87 Emp. Imob. Ltda
|
19 | - | ||||||
|
Gafisa
SPE 88 Emp. Imob. Ltda
|
394 | - | ||||||
|
Gafisa
SPE 89 Emp. Imob. Ltda
|
(868 | ) | - | |||||
|
Gafisa
SPE 90 Emp. Imob. Ltda
|
126 | - | ||||||
|
Gafisa
SPE 75 Emp. Imob. Ltda
|
30 | - | ||||||
|
Grand
Park – Arvores
|
(700 | ) | - | |||||
|
Gafisa SPE-77 Emp.
|
(104 | ) | 1,463 | |||||
|
Mário Covas SPE
Empreendimento
|
(816 | ) | (208 | ) | ||||
|
Imbui I SPE Empreendimento
Imob.
|
1 | 1 | ||||||
Gafisa
S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais,
unless otherwise stated
|
September
30,
|
December
31,
|
|||||||
|
Current
account
|
2009
|
2008
|
||||||
| (Unaudited) | ||||||||
|
Acedio SPE Empreend. Imob.
Ltda.
|
2 | 2 | ||||||
|
Maria Inês SPE Empreend.
Imob.
|
(2 | ) | (2 | ) | ||||
|
Gafisa SPE 64 Empreendimento
I
|
1 | (50 | ) | |||||
|
Fit Jd. Botânico SPE
Emp.
|
(39 | ) | - | |||||
|
Cipesa
Empreendimentos Imob.
|
6 | - | ||||||
| 31,645 | 61,821 | |||||||
|
Other
|
||||||||
|
Camargo Corrêa Des. Imob.
S.A.
|
917 | 916 | ||||||
|
Gênesis Desenvol. Imob.
S.A.
|
(216 | ) | (216 | ) | ||||
|
Empr. Icorp. Boulevard SPE
Lt.
|
56 | 56 | ||||||
|
Cond. Const. Barra First
Class
|
31 | 31 | ||||||
|
Klabin Segall S.A.
|
532 | 532 | ||||||
|
Edge Incorp. e Part.
Ltda.
|
146 | 146 | ||||||
|
Multiplan Plan. Particip. e
Ad.
|
100 | 100 | ||||||
|
Administ. Shopping Nova
América
|
90 | 90 | ||||||
|
Ypuã Empreendimentos
Imob.
|
200 | 4 | ||||||
|
Cond. Constr. Jd. Des.
Tuiliere
|
(124 | ) | (124 | ) | ||||
|
Rossi AEM Incorporação
Ltda.
|
3 | 3 | ||||||
|
Patrimônio Constr. e Empr.
Ltda.
|
307 | 307 | ||||||
|
Camargo Corrêa Des. Imob.
S.A.
|
39 | 39 | ||||||
|
Cond Park Village
|
(107 | ) | (107 | ) | ||||
|
Boulevard0 Jardins Empr.
Incorp.
|
(89 | ) | (89 | ) | ||||
|
Rezende Imóveis e
Construções
|
809 | 809 | ||||||
|
São José Constr. e Com.
Ltda.
|
543 | 543 | ||||||
|
Condomínio Civil
Eldorado
|
276 | 276 | ||||||
|
Tati Construtora Incorp.
Ltda.
|
286 | 286 | ||||||
|
Columbia Engenharia
Ltda.
|
431 | 431 | ||||||
|
Civilcorp Incorporações
Ltda.
|
4 | 4 | ||||||
|
Waldomiro Zarzur Eng. Const.
Lt.
|
1,801 | 1,801 | ||||||
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais,
unless otherwise stated
|
September
30,
|
December
31,
|
|||||||
|
Current
account
|
2009
|
2008
|
||||||
| (Unaudited) | ||||||||
|
Rossi Residencial S.A.
|
431 | 431 | ||||||
|
RDV 11 SPE Ltda.
|
(781 | ) | (781 | ) | ||||
|
Jorges Imóveis e
Administrações
|
1 | 1 | ||||||
|
Camargo Corrêa Des. Imob.
S.A.
|
(661 | ) | (673 | ) | ||||
|
Camargo Corrêa Des. Imob.
S.A.
|
(323 | ) | (323 | ) | ||||
|
Patrimônio Const. Empreend.
Ltda.
|
155 | 155 | ||||||
|
Alta Vistta Maceió
(Controle)
|
3,960 | 2,318 | ||||||
|
Forest Ville (OAS)
|
813 | 807 | ||||||
|
Garden Ville (OAS)
|
272 | 276 | ||||||
|
JTR - Jatiuca Trade
Residence
|
4,796 | 880 | ||||||
|
Acquarelle (Controle)
|
15 | 1 | ||||||
|
Riv Ponta Negra - Ed.
Nice
|
1,748 | 353 | ||||||
|
Palm Ville (OAS)
|
200 | 185 | ||||||
|
Art. Ville (OAS)
|
273 | 180 | ||||||
|
Oscar
Freire Open View
|
(282 | ) | - | |||||
|
Open
View Galeno de Almeida
|
(127 | ) | - | |||||
|
Incons
Empreend. Imob. SP
|
4,646 | - | ||||||
|
Carlyle RB2 AS
|
(1,774 | ) | - | |||||
|
Partifib P. I. Fiorata
Lt.
|
(488 | ) | - | |||||
|
Partifib
P. I. Volare Ltda
|
(373 | ) | - | |||||
|
Outros
|
- | 32 | ||||||
| 18,536 | 9,680 | |||||||
| 8,249 | 60,513 |
|
18
|
Insurance
|
The Company and its
subsidiaries have insurance policies against engineering risk, barter guarantee,
guarantee for the completion of the work and civil liability related to
unintentional personal damages caused to third parties and material damages to
tangible assets, as well as against fire hazards, lightning strikes, electrical
damages, natural disasters and gas explosion. The contracted coverage is
considered sufficient by management to cover possible risks involving its assets
and/or responsibilities. In view of their nature, the risk
assumptions made are not included in the scope of the review of nine-month
period information nor audit of the annual financial statements. Accordingly,
they were not reviewed nor audited by our independent public
accountants.
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais,
unless otherwise stated
|
19
|
Segment
information
|
Beginning in 2007,
following the acquisition, formation and merger of Alphaville, FIT Residencial,
Bairro Novo and Tenda, the Company's chief executive officer assesses segment
information on the basis of different business corporate segments and economic
data rather than based on the geographic regions of its operations.
The Company's chief
executive officer, who is responsible for allocating resources among the
businesses and monitoring their progress, uses economic present value data,
which is derived from a combination of historical and forecasted operating
results. The Company provides below a measure of historical profit or loss,
selected segment assets and other related information for each reporting
segment.
This information is
gathered internally and used by management to develop economic present value
estimates, provided to the chief executive officer for making operating
decisions, including the allocation of resources among segments. The information
is derived from the statutory accounting records which are maintained in
accordance with the accounting practices adopted in Brazil. The reporting
segments do not separate operating expenses, total assets and depreciation. No
revenues from an individual client represented more than 10% of net sales and/or
services.
|
September
30, 2009
|
||||||||||||||||
|
(Unaudited)
|
||||||||||||||||
| Gafisa S.A. ( *) |
Tenda(**)
|
Alphaville
|
Total
|
|||||||||||||
|
Net operating
revenue
|
1,218,156 | 726,098 | 180,552 | 2,124,806 | ||||||||||||
|
Operating
costs
|
(909,191 | ) | (496,226 | ) | (118,223 | ) | (1,523,640 | ) | ||||||||
|
Gross
profit
|
308,965 | 229,872 | 62,329 | 601,166 | ||||||||||||
|
Gross margin
- %
|
25.4 | % | 31.7 | % | 34.5 | % | 28.3 | % | ||||||||
|
Net income
(loss) for the period
|
112,831 | 33,563 | 11,824 | 158,218 | ||||||||||||
|
Receivables
from clients (current and non-current)
|
2,113,616 | 1,059,130 | 207,664 | 3,380,410 | ||||||||||||
|
Properties
for sale
|
1,251,641 | 357,130 | 153,661 | 1,762,432 | ||||||||||||
|
Other
assets
|
774,723 | 967,412 | 46,562 | 1,788,697 | ||||||||||||
|
Total
assets
|
4,139,980 | 2,383,672 | 407,887 | 6,931,539 | ||||||||||||
|
(*)
|
Includes all
subsidiaries, except Tenda and
Alphaville.
|
|
(**)
|
Includes
Tenda and Bairro Novo.
|
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais,
unless otherwise stated
|
September
30, 2008
|
||||||||||||||||||||
|
(Unaudited)
|
||||||||||||||||||||
| Gafisa S.A. (* ) |
Alphaville
|
FIT
Residencial
|
Bairro
Novo
|
Total
|
||||||||||||||||
|
Net operating
revenue
|
951,808 | 169,247 | 70,718 | 786 | 1,192,559 | |||||||||||||||
|
Operating
costs
|
(652,491 | ) | (109,253 | ) | (51,919 | ) | (538 | ) | (814,201 | ) | ||||||||||
|
Gross
profit
|
299,317 | 59,994 | 18,799 | 248 | 378,358 | |||||||||||||||
|
Gross margin
- %
|
31.4 | % | 35.4 | % | 26.6 | % | 31.6 | % | 31.7 | % | ||||||||||
|
Net income
(loss) for the year
|
100,880 | 18,307 | (15,442 | ) | (6,669 | ) | 97,076 | |||||||||||||
|
Receivables
from clients (current and
non-current)
|
1,354,677 | 145,520 | 61,147 | 789 | 1,562,133 | |||||||||||||||
|
Properties
for sale
|
1,257,997 | 117,201 | 161,474 | 3,049 | 1,539,721 | |||||||||||||||
|
Other
assets
|
1,252,357 | 48,382 | 59,567 | 6,070 | 1,366,376 | |||||||||||||||
|
Total
assets
|
3,865,031 | 311,103 | 282,188 | 9,908 | 4,468,230 | |||||||||||||||
|
(*)
|
Includes all
subsidiaries, except AUSA, FIT Residencial and Bairro
Novo
|
|
20
|
Subsequent
events
|
|
(i)
|
Issuance
of simple debentures in the total amount of R$
600,000
|
At
the Board of Directors Meeting held on October 15, 2009, the seventh issuance of
non-convertible simple debentures was approved in a single and undivided lot,
sole series, in the total amount of R$ 600,000, maturing in five years counted
from the date of issuance, in order to finance the building of real estate
ventures.
|
(ii)
|
Proposal
for merger of all shares of subsidiary Construtora
Tenda
|
On
October 21, 2009 the Company announced that it intends to present to its
shareholders a proposal for exchange all shares of its subsidiary Tenda, which
conditions are still being negotiated with the Independent Special
Committee.
The Management has
the understanding that the adequate exchange rate would be between 0.188 and
0.200 share of Gafisa for one share of Tenda. In case the parties negotiate
terms that are mutually satisfactory, the respective Board of Directors will
call a shareholders’ meeting up to November 20, 2009 for resolving about the
merger.
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais,
unless otherwise stated
If
such merger is approved, Tenda will become a wholly-owned subsidiary of Gafisa,
accordingly, its shares will no longer be traded on the Novo Mercado of
BM&F/BOVESPA, keeping its public company registration.
|
21
|
Supplemental
Information - Summary of Principal
|
Differences
between Brazilian GAAP and US GAAP
|
(a)
|
Description
of the GAAP differences
|
The Company's
accounting policies comply with, and its consolidated financial statements are
prepared in accordance with Brazilian GAAP. The Company has retroactively applied
the changes in Brazilian GAAP introduced by the newly formed CPC and the provisions of Law 11638/2007 as
from January 1, 2006 (Note 2(a)).
As a result of the changes to Brazilian
GAAP introduced in 2008 which were applied retroactively to January 1, 2006 a
number of differences between Brazilian GAAP and US GAAP, as originally
reported, were eliminated. The changes to Brazilian GAAP did not affect the
balances originally reported under US GAAP.
Pursuant to these
changes, from January 1, 2009 goodwill is no longer amortized in results for the
period.
A
summary of the Company's principal accounting policies that differ significantly
from US GAAP is set forth below.
|
(i)
|
Principles
of consolidation
|
Under Brazilian
GAAP, the consolidated financial statements include the accounts of Gafisa S.A.
and those of all its subsidiaries listed in Note 8. The proportional
consolidation method is used for investments in jointly-controlled investees,
which are all governed by shareholders' agreements; accordingly, the assets,
liabilities, revenues and costs are consolidated based on the proportion of the
equity interest held in the capital of the corresponding investee.
Under US GAAP,
because such investments provide substantive participating rights granted to the
noncontrolling shareholder they preclude the Company from consolidating the
entities. Accordingly, for purposes of US GAAP these investments are treated on
the equity basis of accounting.
Under US GAAP,
proportional consolidation is permitted only in limited circumstances, including
for the construction sector. Accordingly, for purposes of US GAAP the remaining
investments are treated on the equity basis of accounting. Although these
differences in GAAP
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais,
unless otherwise stated
do
not affect the Company's net income or shareholders' equity, the line items in
the consolidated balance sheet and statement of income are
affected.
|
(ii)
|
Revenue
recognition
|
Under Brazilian
GAAP, real estate development revenues, costs and related expenses are
recognized using the percentage-of-completion method of accounting by measuring
progress towards completion in terms of actual costs incurred versus total
budgeted expenditures for each stage of a development. Land is treated as a
portion of budgeted construction costs and is appropriated proportionally to
development. Under the percentage-of-completion method of accounting, revenues
for work completed are recognized prior to receipt of actual cash proceeds or
vice-versa. Revenues and costs are recognized under the percentage-of-completion
method when certain tests are met.
Under US GAAP, the
basis for the measurement to determine if construction is beyond a preliminary
stage is different from Brazilian GAAP. US GAAP requires construction to be
beyond a preliminary stage and substantial sales to have been incurred to ensure
the project will not be discontinued before revenue can be recognized.
Construction is not beyond a preliminary stage if engineering and design work,
execution of construction contracts, site clearance and preparation, excavation,
and completion of the building foundation are incomplete.
|
(iii)
|
Capitalized
interest
|
Under Brazilian
GAAP, the Company capitalizes interest on the developments during the
construction phase, on loans from the National Housing Finance System and other
credit lines that are used for financing the construction of developments
(limited to the corresponding financial expense amount). Under US GAAP, interest
cost incurred during the period that assets are under construction is included
in the cost of such assets. Interest cost should be included as a component of
the historical cost of assets intended for sale or lease that are constructed as
separate and discrete projects.
|
(iv)
|
Stock
option plan
|
Under Brazilian
GAAP, the rights to acquire shares granted to employees and executive officers
under the stock options plan were recorded as an expense as from January 1,
2006, the transition date for the adoption of Law 11638/2007. Previously, under
Brazilian GAAP, the
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais,
unless otherwise stated
stock option plans
did not result in any expense being recorded. The purchase of the stock by the
employees is recorded as an increase in capital stock for the amount of the
purchase price. Under Law 11638/2007 and the accounting guidance provided by CPC
10, the stock option plans are treated as equity awards and measured at fair
value at the grant date, no further adjustments are made at the balance sheet
dates to reflect changes in fair values.
Under US GAAP,
beginning in 2006, the Company adopted the new US GAAP standard for Share-based
Payment. As the awards are indexed to the IGP-M plus annual interest of 6%, the
employee share options have been accounted for as liability awards under the
terms of US GAAP. The liability-classified awards are remeasured at fair value
through the statement of income at each reporting period until settlement. The
fair value of employee share options and similar instruments was estimated using
the Black-Scholes option-pricing model through June 30, 2009 (Note
22(c)(ii)), and thereafter using the Binomial and Monte
Carlo models.
|
(v)
|
Earnings
per share
|
Under Brazilian
GAAP, net income per share is calculated based on the number of shares
outstanding at the balance sheet date.
Under US GAAP,
the presentation of earnings per share is required for public companies,
including earnings per share from continuing operations and net income per share
on the face of the income statement, and the per share effect of changes in
accounting principles, discontinued operations and extraordinary items either on
the face of the income statement or in a note. A dual presentation is required:
basic and diluted. Computations of basic and diluted earnings per share data
should be based on the weighted average number of shares outstanding during the
period and all dilutive potential shares outstanding during each period
presented, respectively.
The Company has
issued employee stock options (Note 14(b)), the dilutive effects of which are
reflected in diluted earnings per share by application of the "treasury stock
method". Under the treasury stock method, earnings per share are calculated as
if options were exercised at the beginning of the period, or at time of
issuance, if later, and as if the funds received were used to purchase the
Company's own stock. When the stock options' exercise price was greater than the
average market price of shares, diluted earnings per share are not affected by
the stock options. Under US GAAP, potentially dilutive securities are not
considered in periods where there is a loss as the impact would be anti
dilutive.
The table below
presents the determination of net income available (loss allocated) to Common
and Preferred shareholders and weighted average Common and Preferred shares
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais,
unless otherwise stated
outstanding used to
calculate basic and diluted earnings (loss) per share.
|
September
30, 2009
|
September
30, 2008
|
|||||||||||||||
|
(Unaudited)
|
||||||||||||||||
|
Common
|
Total
|
Common
|
Total
|
|||||||||||||
|
Basic
numerator
|
||||||||||||||||
|
Dividends proposed
|
- | - | - | - | ||||||||||||
|
US GAAP undistributed earnings
(unallocated losses)
|
(53,497 | ) | (53,497 | ) | 142,493 | 142,493 | ||||||||||
|
Allocated US GAAP undistributed earnings
(unallocated losses) available for Common
shareholders
|
(53,497 | ) | (53,497 | ) | 142,493 | 142,493 | ||||||||||
|
Basic
denominator (in thousands of shares)
|
||||||||||||||||
|
Weighted-average number of
shares
|
130,196 | 129,572 | ||||||||||||||
|
Basic earnings (loss) per share - US
GAAP - R$
|
(0.41 | ) | 1.10 | |||||||||||||
|
Diluted
numerator
|
||||||||||||||||
|
Dividends proposed
|
- | - | - | - | ||||||||||||
|
US GAAP undistributed earnings
(unallocated losses)
|
(53,497 | ) | (53,497 | ) | 142,493 | 142,495 | ||||||||||
|
Allocated US
GAAP undistributed earnings(unallocated losses) available
for Common
shareholders
|
(53,497 | ) | (53,497 | ) | 142,493 | 142,493 | ||||||||||
|
Diluted
denominator (in thousands of shares)
|
||||||||||||||||
|
Weighted-average number of
shares
|
130,196 | 129,572 | ||||||||||||||
|
Stock options
|
- | 680 | ||||||||||||||
|
Diluted weighted-average number of
shares
|
130,196 | 130,252 | ||||||||||||||
|
Diluted earnings (loss) per share - US
GAAP - R$
|
(0.41 | ) | 1.09 | |||||||||||||
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais,
unless otherwise stated
|
(vi)
|
Business
combinations
|
Under Brazilian
GAAP, goodwill arises from the difference between the amount paid and the
Brazilian GAAP book value (normally also the tax basis) of the net assets
acquired. This goodwill is normally attributed to the difference between the
book value and the market value of assets acquired or justified based on
expectation of future profitability and is amortized over the remaining useful
lives of the assets or up to ten years. As indicated in Note 3 (m) (ii),
effective January 1, 2009, goodwill is no longer amortized, pursuant to new
Generally Accepted Accounting Practices in Brazil. Negative goodwill arises
under Brazilian GAAP when the book value of assets acquired exceeds the purchase
consideration; negative goodwill is not generally amortized but is realized upon
disposal of the investment, except when it is based on future results. For US
GAAP purpose, when a business combination process generates negative goodwill,
this amount is allocated first to non-current assets acquired and any remaining
amount is recognized as an extraordinary gain. Additionally, investments in
affiliates, including the corresponding goodwill on the acquisition of such
affiliates are tested, at least, annually for impairment.
Under US GAAP, fair values are assigned to acquired assets and
liabilities in business combinations, including identifiable assets. Any
residual amount is allocated to goodwill.
Goodwill is not amortized
but, instead, is assigned to an entity's reporting unit and tested for
impairment at least annually. The differences in relation to Brazilian GAAP
arise principally from the measurement of the consideration paid under US GAAP
using the fair value of shares and put options issued, and the effects of
amortization which are no longer recorded for US GAAP
purposes.
For Brazilian GAAP purposes, the net
balance of goodwill at
September 30, 2009 was R$195,088 and as of December 31, 2008 was R$ 215,296,
which was amortized
to income over a period of
up to 10 years until
December 31, 2008; negative
goodwill at September 30,
2009 and December 31, 2008
was R$ 12,499
and R$ 18,522 recorded
as "Negative Goodwill on acquisition of subsidiaries"; and the negative goodwill
on the Tenda acquisition of R$ 169,394 at December 31, 2008 was classified at "Deferred gain on sale
of investment".
For US GAAP purposes, the total net balance of goodwill at September 30, 2009 and December 31, 2008 was R$ 31,416.
|
(a)
|
Tenda
transaction
|
Under Brazilian
GAAP, the acquisition was consummated on October 21, 2008. A part of the
acquisition of interest in Tenda, the Company contributed the net assets of FIT
Residencial amounting to R$ 411,241, acquiring 60% of the shareholders'
equity of Tenda (book value of the 60% interest representing an investment in
net assets of R$ 621,643), which had a total shareholders' equity book
value of R$ 1,036,072.
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais,
unless otherwise stated
Under Brazilian
GAAP, the sale of the 40% owneship interest in FIT Residencial to Tenda
shareholders in exchange for the Tenda shares generated negative goodwill of
R$ 210,402, reflecting the gain on the sale of the interest in FIT
Residencial. Through December 31, 2008, this negative goodwill was amortized
over the average construction period (through delivery of the units) of the real
estate ventures of FIT Residencial at October 21, 2008. During the nine-month
period ended September 30, 2009, the Company amortized R$ 157,800 of the
negative goodwill, represented by the gain on the partial sale of Fit
Residencial. From October 22 to December 31, 2008 under Brazilian GAAP, the
Company amortized R$ 41,008 of the gain of partial sale.
Under US GAAP, the
Company recorded the transfer of FIT Residencial as a partial sale to the
noncontrolling shareholders of Tenda and a gain of R$205,527 was recorded in the
net income for the period from October 22, 2008 through December 31, 2008. For
the reconciling the US GAAP net income, the Company also reversed the
amortization of the deferred gain under Brazilian GAAP of R$157,800 (R$ 41,008
for the period from October 22, 2008 through December 31, 2008). The recognition of gain upon exchange of
40% ownership interest in FIT Residencial for 60% ownership interest
in Tenda is presented as follows:
|
Tenda
purchase consideration
|
367,703 | |||
|
FIT
Residencial US GAAP book value (40%)
|
162,176 | |||
| 205,527 |
Under US GAAP, the
total cost of the acquisition has been allocated to the assets acquired and the
liabilities assumed based on their respective fair values. Acquired intangible assets
include, R$ 14,558 assigned to existing development contracts, which are
amortized over the estimated useful lives up to 5 years. For the nine-month
period ended September 30, 2009, the amount of R$ 2,185 was amortized and
R$ 10,911 was assigned to registered trademarks, which were determined to
have indefinite useful lives, and are not amortized
The preliminary
fair value allocation on the assets acquired and liabilities assumed at the
acquisition date are as follows:
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais,
unless otherwise stated
|
Fair
value - %
|
||||||||
|
At
100
|
At
60
|
|||||||
|
Current
assets
|
539,741 | 323,845 | ||||||
|
Non-current
receivables
|
252,453 | 151,472 | ||||||
|
Properties
for sale - non current
|
174,168 | 104,501 | ||||||
|
Intangible
assets
|
42,449 | 25,469 | ||||||
|
Other
assets
|
101,191 | 60,714 | ||||||
|
Total assets acquired
|
1,110,002 | 666,001 | ||||||
|
Total
liabilities assumed
|
(497,164 | ) | (298,298 | ) | ||||
|
Net assets acquired
|
612,838 | 367,703 | ||||||
|
(b)
|
Alphaville
transaction
|
On
October 2, 2006, the Company signed an agreement to acquire 100% of the capital
of Alphaville, a company which develops and sells residential condominiums
throughout Brazil. This transaction was consummated on January 8, 2007 and was
approved by the Brazilian anti-trust authority (CADE) on June 18, 2007 without
any restriction. The Company initially acquired 60% of Alphaville's shares for
R$ 198,400, of which R$20,000 was paid in cash and the remaining
R$ 178,400 in the Company's own shares. In connection with the acquisition,
the Company issued 6,358,616 new Common shares with a book value of
R$ 134,029 which were contributed in full settlement of the amount due in
shares as part of the purchase consideration. For purpose of determining the
purchase consideration, the fair value of these shares was based on the average
BOVESPA quoted stock price over a thirty day period prior to the date the
agreement was signed. The Company has a commitment to purchase the remaining 40%
of Alphaville's capital, not yet measurable and consequently not recorded, that
will be based on a fair value appraisal of Alphaville prepared at the future
acquisition dates. The acquisition agreement provides that the Company has a
commitment to purchase the remaining 40% of Alphaville (20% within three years
from the acquisition date and the remaining 20% within five years from the
acquisition date) in cash or shares, at the Company's sole
discretion.
The total cost of
the acquisition has been allocated to the assets acquired and the liabilities
assumed based on their respective fair values. Goodwill, none of which is
deductible for tax purposes, and other intangibles recorded in connection with
the acquisition totaled R$ 4,052 and R$ 184,656,
respectively.
Acquired intangible
assets include, R$ 168,072 assigned to existing development contracts,
which is being amortized as developments are sold and R$ 16,583 assigned to
registered trademarks, which were determined to have indefinite useful lives,
and are not amortized.
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais,
unless otherwise stated
The fair values of
assets acquired and liabilities assumed at the acquisition date are as
follows:
|
Fair
value - %
|
||||||||
|
At
100
|
At
60
|
|||||||
|
Current
assets
|
69,371 | 41,623 | ||||||
|
Non-current
receivables
|
73,478 | 44,087 | ||||||
|
Other
assets
|
17,379 | 10,427 | ||||||
|
Intangible
assets
|
307,760 | 184,656 | ||||||
|
Total assets acquired
|
467,988 | 280,793 | ||||||
|
Total
liabilities assumed
|
(144,064 | ) | (86,438 | ) | ||||
|
Net assets acquired
|
323,924 | 194,355 | ||||||
For the nine-month
period ended September 30, 2009, the Company amortized R$ 13,013
(nine-month period ended September 30, 2008 - R$ 14,557) of the fair value
assigned in the purchase price allocation.
|
(c)
|
Cipesa
transaction
|
On
October 26, 2007, the Company acquired 70% of Cipesa. The Company and Cipesa
formed a new company, Cipesa Empreendimentos Imobiliários Ltda. ("Nova Cipesa"),
in which Gafisa has 70% of the capital and Cipesa has 30%. Gafisa contributed to
Nova Cipesa R$ 50,000 in cash and acquired shares of Cipesa in Nova Cipesa
in the amount of R$ 15,000 payable over one year. Additionally, Cipesa is
entitled to receive from the Company a variable portion of 2% of the Total Sales
Value ("VGV") of the projects launched by Nova Cipesa through 2014, not to
exceed R$ 25,000, totaling the acquisition amount of
R$ 90,000.
The total cost of
the acquisition has been allocated to the assets acquired and the liabilities
assumed based on their respective fair values. Goodwill, none of which is
deductible for tax purposes, and inventory recorded in connection with the
acquisition totaled R$ 24,091 and R$ 51,597,
respectively.
The fair values of
assets acquired and liabilities assumed at the acquisition date are as
follows:
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais,
unless otherwise stated
|
Fair
value - %
|
||||||||
|
At
100
|
At
70
|
|||||||
|
Current
assets
|
96,675 | 67,673 | ||||||
|
Other
assets
|
8 | 5 | ||||||
|
Total assets acquired
|
96,683 | 67,678 | ||||||
|
Total
liabilities assumed
|
(2,527 | ) | (1,769 | ) | ||||
|
Net assets acquired
|
94,156 | 65,909 | ||||||
|
(d)
|
Redevco
transaction
|
Through November
2007, the Company held interests in investees together with Redevco through
special purpose entities, as follow: Blue I (66.67%), Blue II (50%), Jardim
Lorean (50%) and Sunplace (50%). In November 2007, the Company acquired the
remaining interests in each entity for R$ 40,000.
The total cost of
the acquisition has been allocated to the assets acquired and the liabilities
assumed based on their respective fair values. Negative goodwill for those
entities totaled R$ 11,434, which was allocated as a pro rata reduction to
the acquired assets. This negative goodwill results primarily from market and
business conditions, in which the fair value assigned mainly to inventories and
receivables exceeded the respective acquisition cost.
The combined fair
values of assets acquired and liabilities assumed at the acquisition date are as
follows:
|
Combined
fair value at 100%
|
||||
|
Current
assets
|
139,983 | |||
|
Non-current
receivables
|
16,813 | |||
|
Other
assets
|
170 | |||
|
Total assets acquired
|
156,966 | |||
|
Total
liabilities assumed
|
(76,745 | ) | ||
|
Net assets acquired
|
80,221 | |||
|
(vii)
|
Fair
value option for financial
liabilities
|
Under Brazilian GAAP, pursuant to
CPC 14, the Company elected to apply the "fair value
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais,
unless otherwise stated
option" for certain
working capital loans since 2007.
US GAAP permits companies to
choose to measure many financial instruments and certain other items at fair
value in order to mitigate volatility in reported earnings caused by measuring
related assets and liabilities differently without having to apply complex hedge
accounting provisions. The Company adopted the new US GAAP standard at January
1, 2008 and elected to adopt the fair value option for working capital loans
denominated in foreign currency (Note 9). The difference in relation to
Brazilian GAAP arises from the adoption date for the fair value
measurement.
|
(viii)
|
Classification
of balance sheet line items
|
Under Brazilian
GAAP, the classification of certain balance sheet items is presented differently
from US GAAP. The Company has recast its consolidated balance sheet under
Brazilian GAAP to present a condensed consolidated balance sheet in accordance
with US GAAP (Note 22(d)(i)). The reclassifications are summarized as
follows:
Under US GAAP, the
proportional consolidation of investees and subsidiaries is eliminated and in
its place the associated companies are presented using the equity method of
accounting and controlled subsidiaries are fully consolidated presenting their
respective noncontrolling interests.
For purposes of US
GAAP, the sale of receivables is not considered a true sale, if the entities do
not meet the pre-requisites of a qualifying special purpose entity, as defined
by US GAAP. These receivables from clients continue to be reported as receivable
balances. The cash proceeds received from the transfer of the receivables are
presented as a liability. For purpose of the presentation of the balance sheet,
R$ 10,394 and R$ 12,843 were adjusted for US GAAP as at September 30, 2009
and December 31, 2008, reflecting an increase in receivables from clients, which
is offset by an increase of a liability.
Under Brazilian
GAAP, the deferred gain recorded on the acquisition of the Diodon receivables
portfolio is recorded on the balance sheet in Negative goodwill on acquisition
of subsidiaries. Under US GAAP, the gain is treated as a component of the fair
value of the assets acquired.
Under Brazilian
GAAP, certain court-mandated escrow deposits made into court are netted against
the corresponding contingency provisions. For purposes of US GAAP, as these do
not meet the right of offset criteria, such deposits are presented as assets and
not netted against liabilities.
Under Brazilian
GAAP, debt issuance costs are netted against the loan balance, whereas under US GAAP such
costs are presented as deferred expenses in current and non-current
assets.
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais,
unless otherwise stated
Under Brazilian
GAAP, deferred income taxes are not netted and assets are shown separately from
liabilities. For US GAAP purposes, deferred tax assets and liabilities are
netted and classified as current or non-current based on the classification of
the underlying temporary difference. Similarly, certain judicial escrow deposits
are netted against contingency provisions and debt issuance costs netted against
the liabilities under Brazilian GAAP.
Under Brazilian
GAAP, noncontrolling interests are recorded as minority interests shown
separately from
equity. For US GAAP purposes, noncontrolling interests are reported within
equity
of noncontrolling interests in the consolidated financial
statements.
|
(ix)
|
Classification
of statement of income line items
|
Under Brazilian
GAAP, in addition to the issues noted above, the classification of certain
income and expense items is presented differently from US GAAP. The Company has
recast its statement of income under the Brazilian GAAP to present a condensed
consolidated statement of income in accordance with US GAAP (Note 22(d)(ii)).
The reclassifications are summarized as follows:
|
.
|
Brazilian
listed companies are required to present the investment in
jointly-controlled associated companies on the proportional consolidation
method. For purposes of US GAAP, the
Company has eliminated the effects of the proportional consolidation and
reflected its interest in the results of investees on a single line item
(Equity in results) in the recast consolidated statement of income under
US GAAP.
|
|
.
|
Interest
income and interest expense, together with other financial charges, are
displayed within operating income in the statement of income presented in
accordance with Brazilian GAAP. Such amounts have been reclassified to
non-operating income and expenses in the condensed consolidated statement
of income in accordance with US
GAAP.
|
|
.
|
The net
income differences between Brazilian GAAP and US GAAP (Note 22(b)(i)) were
incorporated in the statement of income in accordance with US
GAAP.
|
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais,
unless otherwise stated
|
.
|
Under
Brazilian GAAP, noncontrolling interests are recorded as minority
interests shown separately from equity. For US GAAP purposes,
noncontrolling interests are reported within equity of
noncontrolling interests in the consolidated financial
statements.
|
|
(b)
|
Reconciliation
of significant differences between
|
Brazilian
GAAP and US GAAP
|
(i)
|
Net
income
|
|
Nine-month
period ended
|
|||||||||
|
Note
|
September
30, 2009
|
September
30, 2008
|
|||||||
|
Net income
under Brazilian GAAP
|
158,218 | 97,076 | |||||||
|
Revenue recognition - net operating
revenue
|
22(a)(ii)
|
(364,789 | ) | 74,718 | |||||
|
Revenue recognition - operating
costs
|
22(a)(ii)
|
257,079 | (39,057 | ) | |||||
|
Amortization of capitalized
interest
|
22(a)(iii)
|
- | (9,356 | ) | |||||
|
Stock compensation (expense)
reversal
|
22(a)(iv)
|
12,685 | 34,962 | ||||||
|
Reversal of goodwill amortization of
Alphaville
|
22(a)(vi)
|
- | 6,972 | ||||||
|
Reversal of negative goodwill
amortization of Redevco and Tenda
|
22(a)(vi)
|
(164,800 | ) | (7,423 | ) | ||||
|
Business Combination of
Tenda
|
22(a)(vi)
|
(2,185 | ) | - | |||||
|
Business Combination of
Alphaville
|
22(a)(vi)
|
(13,013 | ) | (14,557 | ) | ||||
|
Business Combination of
Redevco
|
22(a)(vi)
|
3,169 | - | ||||||
|
Other
|
(61 | ) | 115 | ||||||
|
Noncontrolling interests on adjustments
above
|
38,957 | 4,489 | |||||||
|
Deferred income tax on adjustments
above
|
20,793 | (5,446 | ) | ||||||
|
Net income
(loss) attributable to Gafisa under US GAAP
|
(53,947 | ) | 142,493 | ||||||
|
Net income
attributable to noncontrolling interests under US GAAP
|
17,892 | 32,223 | |||||||
|
Net income
(loss) under US GAAP
|
(36,055 | ) | 174,716 | ||||||
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais,
unless otherwise stated
|
Nine-month
period ended
|
|||||||||
|
Note
|
September
30,2009
|
September
30, 2008
|
|||||||
|
Weighted-average
number of shares outstanding for the period (in
thousands) (i) Common
shares
|
130,196 | 129,572 | |||||||
|
Earnings
(loss) per share
|
|||||||||
|
Common (i)
|
|||||||||
|
Basic
|
(0.41 | ) | 1.10 | ||||||
|
Diluted
|
(0.41 | ) | 1.09 | ||||||
|
Reconciliation
from US GAAP net income (loss) attributable to Gafisa to US GAAP net
income(loss) available to Common shareholders
|
|||||||||
|
US GAAP net income
(loss)
|
(53,497 | ) | 142,493 | ||||||
|
US GAAP net
income (loss) available to Common shareholders (basic
earnings)
|
(53,497 | ) | 142,493 | ||||||
|
Reconciliation
from US GAAP net income (loss) attributable to Gafisa to US GAAP net
income (loss) available to
Common shareholders
|
|||||||||
|
US GAAP net Income
(loss)
|
(53,497 | ) | 142,493 | ||||||
|
US GAAP net
income (loss) available to common shareholders (diluted
earnings)
|
(53,497 | ) | 142,493 |
|
(ii)
|
Shareholders'
equity
|
|
Note
|
September
30,2009
|
December
31, 2008
|
|||||||
|
Shareholders'
equity under Brazilian GAAP
|
1,783,476 | 1,612,419 | |||||||
|
Revenue recognition - net operating
revenue
|
22(a)(ii)
|
(710,424 | ) | (344,635 | ) | ||||
|
Revenue recognition - operating
costs
|
22(a)(ii)
|
474,406 | 217,327 | ||||||
|
Capitalized interest
|
22(a)(iii)
|
99,897 | 99,897 | ||||||
|
Amortization of capitalized
interest
|
22(a)(iii)
|
(94,126 | ) | (94,126 | ) | ||||
|
Liability-classified stock
options
|
22(a)(iv)
|
(1,869 | ) | (2,221 | ) | ||||
|
Receivables from clients - SFAS
140
|
22(a)(viii)
|
10,394 | 12,843 | ||||||
|
Liability assumed - SFAS
140
|
22(a)(viii)
|
(10,394 | ) | (12,843 | ) | ||||
|
Reversal of goodwill amortization of
Alphaville
|
22(a)(vi)
|
18,234 | 18,234 | ||||||
|
Reversal of negative goodwill
amortization of Redevco
and Tenda
|
22(a)(vi)
|
(218,627 | ) | (53,819 | ) | ||||
|
Gain on the transfer of FIT
Residencial
|
22(a)(vi)
|
205,527 | 205,527 | ||||||
|
Business Combination –
Tenda
|
22(a)(vi)
|
14,219 | 16,404 | ||||||
|
Business Combination –
Alphaville
|
22(a)(vi)
|
(35,115 | ) | (22,102 | ) | ||||
|
Business Combination –
Redevco
|
22(a)(vi)
|
3,169 | - | ||||||
|
Other
|
(524 | ) | 266 | ||||||
|
Noncontrolling interests on adjustments
above
|
64,062 | 20,237 | |||||||
|
Deferred income tax on adjustments
above
|
71,223 | 49,687 | |||||||
|
Shareholders'
equity under US GAAP
|
1,673,528 | 1,723,095 | |||||||
|
Noncontrolling
interests under US GAAP
|
525,377 | 451,342 | |||||||
|
Total
shareholder’s equity under US GAAP
|
2,198,905 | 2,174,437 | |||||||
Gafisa
S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais,
unless otherwise stated
Condensed
changes in shareholders'
equity
under US GAAP
|
September
30,2009
|
December
31,
2008
|
|||||||
|
(Unaudited)
|
||||||||
|
At beginning
of the year
|
1,723,095 | 1,481,446 | ||||||
|
Capital increase, net of issuance
expenses
|
4,380 | 7,671 | ||||||
|
Net income (loss) attributable to
Gafisa
|
(53,947 | ) | 299,658 | |||||
|
Minimum mandatory
dividend
|
- | (26,104 | ) | |||||
|
Noncontrolling
interests
|
525,377 | 411,766- | ||||||
|
At end of the
year
|
2,198,905 | 2,174,437 | ||||||
Condensed
shareholders' equity
under
US GAAP
|
September
30,2009
|
December
31,
2008
|
|||||||
|
(Unaudited)
|
(Unaudited)
|
|||||||
|
Shareholders'
equity
|
||||||||
|
Common shares,
comprising 130,508,346 shares
outstanding (2008 - 129,962,546)
|
1,203,878 | 1,199,498 | ||||||
|
Treasury shares
|
(14,595 | ) | (14,595 | ) | ||||
|
Appropriated retained
earnings
|
484,245 | 538,192 | ||||||
|
Total Gafisa
shareholder’s equity
|
1,673,528 | 1,723,095 | ||||||
|
Noncontrolling
interests
|
525,377 | 451,342 | ||||||
|
Total
shareholders’ equity
|
2,198,905 | 2,174,437 | ||||||
|
(c)
|
US
GAAP supplemental information
|
|
(i)
|
Recent
US GAAP accounting pronouncements
|
The Financial
Accounting Standards Board (“FASB”) recently issued a number of Statements of
Financial Accounting Standards and interpretations; the standards and
interpretations described below have not had or are not expected to have a
material impact on the financial position and results of operations of the
Company, unless otherwise indicated.
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais,
unless otherwise stated
|
(a)
|
Accounting
pronouncements
adopted
|
In
December 2007, the FASB issued a new standard on accounting for business
combinations, which replaced a prior standard. This statement retains the
fundamental requirements of the prior standard that the acquisition method
of accounting (which was called the purchase method) be used for all business
combinations and for an acquirer to be identified for each business combination.
This statement defines the acquirer as the entity that obtains control of one or
more businesses in the business combination and establishes the acquisition date
as the date that the acquirer achieves control. The prior standard did not
define the acquirer, although it included guidance on identifying the acquirer,
as does this Statement. This statement’s scope is broader than that of the prior
standard, which applied only to business combinations in which control was
obtained by transferring consideration.
The result of
applying this statements guidance on recognizing and measuring assets and
liabilities in a step acquisition was to measure them at a blend of historical
costs and fair values, a practice that provided less relevant,
representationally faithful, and comparable information than will result from
applying this statement. In addition, this statement’s requirement to measure
the noncontrolling interest in the acquiree at fair value will result in
recognizing the goodwill attributable to the noncontrolling interest in addition
to that attributable to the acquirer, which improves the completeness of the
resulting information and makes it more comparable across entities. By applying
the same method of accounting, the acquisition method, to all transactions and
other events in which one entity obtains control over one or more other
businesses, this statement improves the comparability of the information about
business combinations provided in financial reports. This statement applies
prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after
December 15, 2008. The Company has applied this pronouncement on a
prospective basis for each new business combination effective January 1,
2009 pursuant to the aforementioned application timetable.
In
December 2007, the FASB issued a new standard on accounting, which
clarifies that a noncontrolling interest in a subsidiary is an ownership
interest in the consolidated entity that should be reported as equity in the
consolidated financial statements. This statement is effective for fiscal years,
and interim periods within those fiscal years, beginning on or after
December 15, 2008 (that is, January 1, 2009, for entities with
calendar year-ends). Earlier adoption is prohibited. The effective date of this
Statement is the same as that of the related new standard on business
combination. The Company has applied this Statement prospectively as of
January 1, 2009, except for the presentation and disclosure requirements.
The presentation and disclosure requirements have been applied retrospectively
for all periods presented.
In
March 2008, the FASB issued a new standard on disclosures about derivative
instruments and hedging activities. The new standard is intended to improve
financial reporting about
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais,
unless otherwise stated
derivative
instruments and hedging activities by requiring enhanced disclosures to enable
investors to better understand their effects on an entity’s financial position,
financial performance, and cash flows. It is effective for financial statements
issued for fiscal years and interim periods beginning after November 15,
2008, with early application encouraged. The Company adopted this statement
effective January 1, 2009.
In
May 2009, the FASB issued a new standard on subsequent events. The objective of
this Statement is to establish principles and requirements for subsequent
events. In particular, this Statement sets forth: (i) the period
after the balance sheet date during which management of a reporting entity shall
evaluate events or transactions that may occur for potential recognition or
disclosure in the financial statements (ii) the circumstances under which
an entity shall recognize events or transactions occurring after the balance
sheet date in its financial statements and (iii) the disclosures that an
entity shall make about events or transactions that occurred after the balance
sheet date. This statement is effective for interim or annual financial periods
ending after June 15, 2009. The Company adopted this statement effective
June 30, 2009. The Company has evaluated subsequent events through November
13, 2009.
|
(b)
|
Accounting
pronouncements not yet
adopted
|
In
June 2009, the FASB issued a new standard on accounting for transfers of
financial assets. The objective of this statement is to improve the relevance,
representational faithfulness, and comparability of the information that a
reporting entity provides in its financial reports about a transfer of financial
assets; the effects of a transfer on its financial position, financial
performance, and cash flows; and a transferor’s continuing involvement in
transferred financial assets. This statement amends a prior standard on
accounting for transfers and servicing of financial assets and extinguishments
of liabilities. This statement must be applied as of the beginning of each
reporting entity’s first annual reporting period that begins after
November 15, 2009, for interim periods within that first annual reporting
period and for interim and annual reporting periods thereafter. Earlier
application is prohibited. This statement must be applied to transfers occurring
on or after the effective date. The Company is currently assessing the impact of
this statement on its consolidated financial statements.
In
June 2009, the FASB issued a new standard amending a prior standard related to
variable interest entities. The objective of this statement is to amend certain
requirements of consolidation of variable interest entities, to improve
financial reporting by enterprises involved with variable interest entities and
to provide more relevant and reliable information to users of financial
statements. This statement shall be effective as of the beginning of each
reporting entity’s first annual reporting period that begins after
November 15, 2009, for interim periods within that first annual reporting
period, and for interim and annual reporting periods thereafter. Earlier
application is prohibited. The Company is currently assessing the impact of this
statement on its consolidated financial statements.
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais,
unless otherwise stated
The FASB issued ASU
2009-01, “Amendments based on Statement of Financial Accounting Standards Nº.
168 – The FASB Accounting Standards Codification and the Hierarchy of Generally
Accepted Accounting Principles”, in June 2009 to codify in ASC 105, “Generally
Accepted Accounting Principles”, which was issued to establish the Codification
as the sole source of authoritative US GAAP recognized by the FASB, excluding
SEC guidance, to be applied by nongovernamental entities. The Company has
adopted the provisions of ASU 2009-01 in these consolidated financial
statements, and there was no impact.
|
(ii)
|
Additional
information - stock option plan
|
The Company has
adopted the US GAAP modified prospective transition method and the
liability-classified awards were measured at fair market value as of January 1,
2006. The assumptions were: weighted historical volatility of 29%; expected
dividend yield of 0%; annual risk-free interest rate of 8%, and; expected
average total lives of 1.6 years.
As
of September 30, 2009, all the liability-classified awards were remeasured at
their fair value and amounted to R$ 1,869 (period ended December
31, 2008 - R$ 2,221). The reversal of stock compensation expense (General and
administrative expenses) related to the stock option plans totaled a reversal of
R$ 12,685 in the period ended September 30, 2009 (2008 - reversal of
R$ 34,962). The assumptions were: weighted historical volatility of 70%
(2008 - 54%); expected dividend yield of 0.2% (2008 - 0.6%); average annual
risk-free interest rate of 10.1% (2008 - 12%), and; expected average total lives
of 2.6 years in 2009 and 2008. As of September 30, 2009, the compensation cost
related to nonvested stock options to be recognized in future periods was
R$ 9,205 (2008 - R$ 7,236) and its weighted average recognition period
was approximately 2.8 years in 2009 (2008 – 2.6 years).
|
(iii)
|
Fair
value of financial instruments
|
|
(a)
|
Adoption
of new US GAAP standard
|
The Company adopted a new US GAAP standard, effective January 1, 2008, (Note 22
(a) (viii)), which, among other things, requires enhanced disclosures about
assets and liabilities carried at fair value.
As defined in US GAAP, fair value is the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date (exit price).
However, as permitted under US GAAP, the Company utilizes a mid-market
pricing convention (the mid-point price between bid and ask prices) as a
practical expedient for valuing the majority of its assets and liabilities
measured and reported at fair value. The Company utilizes market data or
assumptions that market participants would use in pricing
the
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais,
unless otherwise stated
asset or liability, including
assumptions about risk and the risks inherent in the inputs to the valuation
technique. These inputs can be readily observable, market corroborated, or
generally unobservable. The Company primarily applies the market approach for
recurring fair value measurements and endeavors to utilize the best available
information. Accordingly, the Company utilizes valuation techniques that
maximize the use of observable inputs and minimize the use of unobservable
inputs. The Company is able to classify fair value balances based on the
observability of those inputs. US GAAP establishes a fair value hierarchy that
prioritizes the inputs used to measure fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (Level 1 measurement) and the lowest priority to
unobservable inputs (Level 3 measurement). The three levels of the fair value
hierarchy defined by US
GAAP are as
follows:
|
(i)
|
Level 1 - quoted prices are
available in active markets for identical assets or liabilities as of the
reporting date. Active markets are those in which transactions for
the asset or liability occur in sufficient frequency and volume to provide
pricing information on an ongoing basis. Level 1 primarily consists of
financial instruments such as exchange-traded derivatives and listed
equities.
|
|
(ii)
|
Level 2 - pricing inputs are other
than quoted prices in active markets included in level 1, which are either
directly or indirectly observable as of the reported date. Level 2
includes those financial instruments that are valued using models or other
valuation methodologies. These models are primarily industry-standard
models that consider various assumptions, including quoted forward prices
for commodities, time value, volatility factors, and current market and
contractual prices for the underlying instruments, as well as other
relevant economic measures. Substantially all of these assumptions are
observable in the marketplace throughout the full term of the instrument,
can be derived from observable data or are supported by observable levels
at which transactions are executed in the marketplace. Instruments in this
category include non-exchange-traded derivatives such as over-the-counter
forwards and options.
|
|
(iii)
|
Level 3 - pricing inputs include
significant inputs that are generally less observable from objective
sources. These inputs may be used with internally developed methodologies
that result in management's best estimate of fair value. At each balance
sheet date, the Company performs an analysis of all instruments subject to
US GAAP and includes in Level 3 all of
those whose fair value is based on significant unobservable
inputs.
|
The following table sets forth by level
within the fair value hierarchy the company's financial assets and liabilities
that were accounted for at fair value on a recurring basis as of September 30, 2009. As required by US GAAP, financial assets and liabilities are
classified in their entirety based on the lowest level of input that is
significant to the fair value measurement. The company's assessment of the significance
of a particular input to the fair value measurement requires judgment and may
affect the valuation of fair value assets and liabilities and their placement
within the fair value hierarchy levels.
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais,
unless otherwise stated
|
Fair
value measurements at September 30, 2009
|
||||||||||||||||
|
(Unaudited)
|
||||||||||||||||
| Quoted prices in active markets for identical assets (Level 1 ) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) |
Total
|
|||||||||||||
|
Assets
|
||||||||||||||||
|
Marketable securities
|
- | 733,217 | - | 733,217 | ||||||||||||
|
Derivatives
|
- | 7,296 | - | 7,296 | ||||||||||||
|
Liabilities
|
||||||||||||||||
|
Working capital loans
|
- | 131,305 | - | 131,305 | ||||||||||||
|
(b)
|
Fair
value measurements
|
The following
estimated fair value amounts have been determined using available market
information and appropriate valuation methodologies. However, considerable
judgment is required to interpret market data and to develop the estimates of
fair value. Accordingly, the estimates presented herein are not necessarily
indicative of the amounts the Company could realize in a current market
exchange. The use of different market assumptions and/or estimation
methodologies may have a material effect on the estimated fair
values.
The following
methods and assumptions were used to estimate the fair value of each class of
financial instruments for which it is practicable to estimate that value.
Potential income tax ramifications related to the realization of unrealized
gains and losses that would be incurred in an actual sale or settlement have not
been taken into consideration.
The carrying
amounts for cash and cash equivalents, trading debt securities, accounts and
notes receivable and current liabilities approximates their fair values. The
fair value of long-term debt is based on the discounted value of contractual
cash flows. The discount rate is estimated based on the market forecasted curves
for the remaining cash flow of each obligation.
The estimated fair
values of financial instruments are as follows:
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais,
unless otherwise stated
|
September
30, 2009
|
December
31, 2008
|
|||||||||||||||
|
Carrying
amounts
|
Fair
value
|
Carrying
amounts
|
Fair
value
|
|||||||||||||
|
Financial
assets
|
||||||||||||||||
|
Cash and cash
equivalents
|
948,350 | 948,350 | 510,504 | 510,504 | ||||||||||||
|
Restricted cash
|
151,337 | 151,337 | 76,928 | 76,928 | ||||||||||||
|
Receivables from clients, net -
current
portion
|
1,718,110 | 1,718,110 | 1,060,845 | 1,060,845 | ||||||||||||
|
Receivables from clients, net -
non current
portion
|
1,662,300 | 1,662,300 | 720,298 | 720,298 | ||||||||||||
|
Financial
liabilities
|
||||||||||||||||
|
Loans and financing
|
608,118 | 608,118 | 1,018,208 | 1,010,278 | ||||||||||||
|
Debentures
|
1,327,861 | 1,327,861 | 506,930 | 506,930 | ||||||||||||
|
Trade accounts payable
|
194,302 | 194,302 | 103,592 | 103,592 | ||||||||||||
|
Derivatives
|
7,296 | 7,296 | 86,752 | 86,752 | ||||||||||||
|
(d)
|
US
GAAP condensed consolidated
|
financial
information
The financial information under US
GAAP reflects the retrospective adoption of SFAS No,
160, "Noncontrolling Interests in
Consolidated Financial
Statements, an Amendment of
ARB No. 51" as of December
31, 2008.
Based on the
reconciling items and discussion above, the Gafisa S.A. consolidated balance
sheet, statement of income, and statement of changes in shareholders' equity
under US GAAP have been recast in condensed format as follows:
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais,
unless otherwise stated
|
(i)
|
Condensed
consolidated balance
|
sheets
under US GAAP
|
September
30, 2009
|
December
31, 2008
|
|||||||
|
Assets
|
||||||||
|
Current assets
|
||||||||
|
Cash and cash
equivalents
|
924,638 | 510,504 | ||||||
|
Restricted cash
|
151,337 | 76,928 | ||||||
|
Receivables from
clients
|
1,214,903 | 1,060,845 | ||||||
|
Properties for sale
|
1,795,580 | 2,058,721 | ||||||
|
Other accounts
receivable
|
133,709 | 127,150 | ||||||
|
Dividends receivable
|
1,071 | - | ||||||
|
Prepaid expenses
|
12,528 | 27,732 | ||||||
|
Investments
|
67,780 | 49,135 | ||||||
|
Property and equipment
|
57,624 | 50,852 | ||||||
|
Intangibles
|
216,708 | 219,615 | ||||||
|
Other assets
|
||||||||
|
Receivables from
clients
|
1,513,584 | 720,298 | ||||||
|
Properties for sale
|
396,992 | 149,403 | ||||||
|
Deferred taxes
|
- | 35,067 | ||||||
|
Other
|
67,462 | 93,153 | ||||||
|
Total
assets
|
6,553,916 | 5,179,403 | ||||||
|
Liabilities
and shareholders' equity
|
||||||||
|
Current liabilities
|
||||||||
|
Short-term debt, including current
portion of long-term debt
|
578,235 | 430,853 | ||||||
|
Debentures
|
80,781 | 64,930 | ||||||
|
Obligations for purchase of
land
|
296,505 | 278,745 | ||||||
|
Materials and services
suppliers
|
185,366 | 103,592 | ||||||
|
Taxes and labor
contributions
|
135,831 | 112,729 | ||||||
|
Advances from clients - real estate and
services
|
313,330 | 176,958 | ||||||
|
Credit assignments
|
133,782 | 46,844 | ||||||
|
Acquisition of
investments
|
26,976 | 25,296 | ||||||
|
Dividends payable
|
21,106 | 26,106 | ||||||
|
Others
|
111,041 | 85,445 | ||||||
|
Long-term liabilities
|
||||||||
|
Loans
|
590,431 | 587,355 | ||||||
|
Debentures
|
1,244,000 | 442,000 | ||||||
|
Deferred income tax
|
37,220 | - | ||||||
|
Obligations for purchase of
land
|
149,979 | 225,639 | ||||||
|
Others
|
450,428 | 398,474 | ||||||
|
Shareholders'
equity
|
||||||||
|
Total Gafisa shareholders’
equity
|
1,673,528 | 1,723,095 | ||||||
|
Noncontrolling
interests
|
525,377 | 451,342 | ||||||
|
Total shareholders’
equity
|
2,198,905 | 2,174,437 | ||||||
|
Total
liabilities and shareholders' equity
|
6,553,916 | 5,179,403 | ||||||
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais,
unless otherwise stated
|
(ii)
|
Condensed
consolidated statements of
|
income
under US GAAP
|
September
30, 2009
|
September
30, 2008
|
|||||||
|
Gross
operating revenue
|
||||||||
|
Real estate development and
sales
|
1,709,705 | 1,173,676 | ||||||
|
Construction and services
rendered
|
30,687 | 13,356 | ||||||
|
Taxes on services and
revenues
|
(65,740 | ) | (38,094 | ) | ||||
|
Net operating
revenue
|
1,674,652 | 1,148,938 | ||||||
|
Operating
costs (sales and services)
|
(1,198,047 | ) | (799,519 | ) | ||||
|
Gross
profit
|
476,605 | 349,419 | ||||||
|
Operating
expenses
|
||||||||
|
Selling, general and
administrative
|
(288,947 | ) | (154,133 | ) | ||||
|
Other
|
(142,332 | ) | (43,017 | ) | ||||
|
Operating
income (loss)
|
45,326 | 152,269 | ||||||
|
Non-operating
income (expenses)
|
||||||||
|
Financial income
|
103,607 | 62,067 | ||||||
|
Financial expenses
|
(158,801 | ) | (23,078 | ) | ||||
|
Income (loss)
before income tax, equity in results and noncontrolling
interests
|
(9,868 | ) | 191,258 | |||||
|
Taxes on
income
|
||||||||
|
Current
|
(23,643 | ) | (32,598 | ) | ||||
|
Deferred
|
(13,607 | ) | (11,650 | ) | ||||
|
Income tax and social contribution
expense
|
(37,250 | ) | (44,248 | ) | ||||
|
Income before
equity in results and noncontrolling interests
|
(47,118 | ) | 147,010 | |||||
|
Equity in results
|
11,063 | 27,688 | ||||||
|
Net income
(loss)
|
(36,055 | ) | 174,698 | |||||
|
Less: Net income attributable to the
noncontrolling interests
|
(17,892 | ) | (32,205 | ) | ||||
|
Net income
(loss) attributable to Gafisa
|
(53,947 | ) | 142,493 | |||||
|
Reconciliation
from US GAAP net income (loss) to US GAAP net income (loss) available
to Common
shareholders
|
||||||||
|
US GAAP net income
(loss)
|
(53,947 | ) | 142,493 | |||||
|
US GAAP net
income (loss) available to common shareholders (Basic
earnings)
|
(53,947 | ) | 142,493 | |||||
|
Reconciliation
from US GAAP net income (loss) to US GAAP net income (loss) available
to Common
shareholders
|
||||||||
|
US GAAP net income
(loss)
|
(53,947 | ) | 142,493 | |||||
|
US GAAP net
income (loss) available to Common shareholders (Diluted
earnings)
|
(53,947 | ) | 142,493 | |||||
Gafisa S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial
Statements
As
of September 30, 2009 and for the nine-month periods ended September 30, 2009
and 2008
All
information with respect to September 30, 2009 and 2008 is
unaudited
In
thousands of Brazilian reais,
unless otherwise stated
|
(iii)
|
Additional
information - taxes
|
Change in the
valuation allowance for net operating losses was as follows:
|
September
30, 2009
|
December
31, 2008
|
|||||||
|
At January
1
|
(10,830 | ) | (16,407 | ) | ||||
|
Valuation allowance - relates to
jointly-controlled subsidiaries
subject to the taxable profit regime
|
(4,452 | ) | 5,577 | |||||
|
At the end of
nine-month period or year
|
(15,282 | ) | (10,830 | ) | ||||
The Company adopted
the provisions of FASB Interpretation 48, "Accounting for Uncertainty in Income
Taxes" ("FIN 48"), on January 1, 2007 which requires it to record the financial
statement effects of an income tax position when it is more likely than not,
based on the technical merits, that it will be sustained upon examination. A tax
position that meets the more-likely-than-not recognition threshold is measured
and recorded as the largest amount of tax benefit that is greater than 50
percent likely of being realized upon ultimate settlement with a taxing
authority.
The adoption of FIN
48 did not have any impact in the Company's statement of income and financial
position and did not result in a cumulative adjustment to retained earnings at
adoption. As of September 30, 2009 and December 31, 2008, the Company has no
amount recorded for any uncertainty in income taxes.
The Gafisa S.A. and
its subsidiaries file income tax returns in Brazil and other foreign federal and
state jurisdictions. Brazilian income tax returns are normally open to audit for
five years.
|
(iv)
|
Statement
of comprehensive income
|
Under Brazilian
GAAP, the concept of comprehensive income is not
recognized. US GAAP requires the disclosure of comprehensive
income. Comprehensive income is comprised of net income and other comprehensive
income that include charges or credits directly to equity which are not the
result of transactions with owners. In the case of the Company, comprehensive
income is the same as net income.
* * *
Index
to Consolidated Unaudited Interim Financial Statements as of September 30, 2009
and
for
the nine month periods ended September 30, 2009 and 2008 of Construtora Tenda
S.A.
Page
|
Condensed
Consolidated Balance Sheets as of September 30, 2009 (unaudited) and
December 31, 2008
|
F-79
|
|
Condensed
Consolidated Unaudited Interim Statements of Operations for the nine
months ended September 30, 2009 and 2008
|
F-80
|
|
Condensed
Consolidated Unaudited Statements of Changes in Shareholders’ Equity for
the nine months ended September 30, 2009
|
F-81
|
|
Condensed
Consolidated Unaudited Interim Statements of Cash Flows for the nine
months ended September 2009 and 2008
|
F-82
|
|
Notes to the
Consolidated Condensed Unaudited Interim Financial Statements as of
September 30, 2009 and December 31, 2008 and for the nine-month periods
ended September 30, 2009 and 2008 of Construtora Tenda
S.A.
|
F-83
|
Construtora
Tenda S.A.
Condensed
Consolidated Balance Sheets at September 30, 2009 and December 31,
2008
(In thousands of
reais)
A S S E T S
|
Notes
|
09.30.2009
|
12.31.2008
|
||||||||||
|
(unaudited)
|
||||||||||||
|
Current
assets
|
||||||||||||
|
Cash and cash
equivalents
|
3
|
492,233 | 181,661 | |||||||||
|
Restricted
credits
|
4
|
82,330 | 20,226 | |||||||||
|
Receivables from
clients
|
5
|
521,839 | 142,689 | |||||||||
|
Properties for
sale
|
6
|
357,130 | 401,852 | |||||||||
|
Advances
|
7
|
44,892 | 33,842 | |||||||||
|
Recoverable
taxes
|
13,054 | 6,940 | ||||||||||
|
Deferred
taxes
|
19
|
2,879 | 2,879 | |||||||||
|
Deferred selling
expenses
|
4,784 | 8,011 | ||||||||||
|
Others
|
2,194 | 607 | ||||||||||
|
Total current
assets
|
1,521,335 | 798,707 | ||||||||||
|
Non-current
assets
|
||||||||||||
|
Receivables from
clients
|
5
|
537,291 | 422,887 | |||||||||
|
Properties for
sale
|
6
|
105,403 | 148,137 | |||||||||
|
Deferred
taxes
|
19
|
117,624 | 95,167 | |||||||||
|
Escrow
deposits
|
8
|
8,250 | 7,977 | |||||||||
|
Deferred selling
expenses
|
7,384 | 1,719 | ||||||||||
|
Related
parties
|
9
|
46,419 | 47,469 | |||||||||
|
Others
|
12,744 | 1,470 | ||||||||||
| 835,115 | 724,826 | |||||||||||
|
Property and
equipment, net
|
11
|
21,755 | 17,276 | |||||||||
|
Intangible
assets
|
12
|
5,467 | 3,221 | |||||||||
| 27,222 | 20,497 | |||||||||||
|
Total non-current
assets
|
862,337 | 745,323 | ||||||||||
|
Total
assets
|
2,383,672 | 1,544,030 | ||||||||||
The accompanying notes are an
integral part of these financial statements.
Construtora
Tenda S.A.
Condensed
Consolidated Balance Sheets at September 30, 2009 and December 31,
2008
(In thousands of
reais)
L I A B I L I T I E S and S
H A R E H O L D E R S' E Q U I T Y
|
Notes
|
09.30.2009
|
12.31.2008
|
||||||||||
|
(unaudited)
|
||||||||||||
|
Current
liabilities
|
||||||||||||
|
Loans and
financing
|
13
|
71,585 | 52,584 | |||||||||
|
Debentures
|
14
|
19,861 | - | |||||||||
|
Suppliers
|
66,536 | 31,857 | ||||||||||
|
Labor and tax
obligations
|
24,978 | 17,805 | ||||||||||
|
Taxes
payable
|
15
|
2,779 | 2,698 | |||||||||
|
Advances from
clients
|
16
|
46,764 | 52,063 | |||||||||
|
Rescision
reimbursement payable and provision
|
17
|
27,410 | 28,191 | |||||||||
|
Obligations for
purchase of land
|
18
|
45,043 | 53,336 | |||||||||
|
Deferred
taxes
|
19
|
52,375 | 24,224 | |||||||||
|
Related
parties
|
9
|
4,097 | 1,334 | |||||||||
|
Others
|
20,458 | 2,500 | ||||||||||
|
Total current
liabilities
|
381,886 | 266,592 | ||||||||||
|
Non-current
liabilities
|
||||||||||||
|
Loans and
financing
|
13
|
55,584 | 73,866 | |||||||||
|
Debentures
|
14
|
600,000 | - | |||||||||
|
Obligations for
purchase of land
|
18
|
12,633 | 15,312 | |||||||||
|
Provision for
contingencies
|
20
|
25,829 | 26,840 | |||||||||
|
Taxes
payable
|
15
|
12,882 | 14,272 | |||||||||
|
Deferred
taxes
|
19
|
116,343 | 83,703 | |||||||||
|
Related
parties
|
9
|
44,637 | - | |||||||||
|
Others
|
12,505 | 1,210 | ||||||||||
|
Total non-current
liabilities
|
880,413 | 215,203 | ||||||||||
|
Non-controlling
interests
|
- | 21 | ||||||||||
|
Shareholders'
equity:
|
||||||||||||
|
Capital
Stock
|
21.1 | 755,236 | 755,236 | |||||||||
|
Capital
reserves
|
21.2 | 376,470 | 374,591 | |||||||||
|
Retained
deficit
|
(10,333 | ) | (67,613 | ) | ||||||||
| 1,121,373 | 1,062,214 | |||||||||||
|
Total liabilities and
shareholders' equity
|
2,383,672 | 1,544,030 | ||||||||||
|
The accompanying notes are
an integral part of these financial
statements.
|
Construtora
Tenda S.A.
Condensed
Consolidated Interim Statements of Operations
for
the nine months ended September 30, 2009 and 2008
(In thousands of
reais)
|
09.30.2009
|
09.30.2008
|
|||||||
|
(unaudited)
|
(unaudited)
|
|||||||
|
Gross operating
revenue
|
||||||||
|
( + ) Real estate development and
sales
|
751,080 | 332,782 | ||||||
|
( - ) Taxes on services and
revenues
|
(27,943 | ) | (15,027 | ) | ||||
|
( = ) Net operating
revenue
|
723,137 | 317,755 | ||||||
|
Operating
costs
|
||||||||
|
( - ) Real estate
development costs
|
(493,401 | ) | (213,437 | ) | ||||
|
( = ) Gross
profit
|
229,736 | 104,318 | ||||||
|
(+/-) Income
(expenses)
|
||||||||
|
Administrative
expenses
|
(80,336 | ) | (69,300 | ) | ||||
|
Selling
expenses
|
(78,897 | ) | (59,175 | ) | ||||
|
Financial
income
|
1,387 | 7,456 | ||||||
|
Other
operating (expenses) income
|
109 | (29,149 | ) | |||||
| (157,737 | ) | (150,168 | ) | |||||
|
( = ) Income before provision for
taxes
|
71,999 | (45,850 | ) | |||||
|
(-) Provision for
taxes and social contributions - current and
deferred
|
(16,288 | ) | (11,164 | ) | ||||
|
( = ) Net profit
(loss)
|
55,711 | (57,014 | ) | |||||
The accompanying notes are an integral
part of these financial statements.
Construtora
Tenda S.A.
Condensed
Consolidated Statement of Changes in Shareholders' Equity
for
the nine months ended September 30, 2009
(In
thousands of reais)
(Unaudited)
|
Capital
Reserves
|
||||||||||||||||||||||||||||
|
Capital
Stock
|
Special
Goodwill
|
FIT
Incorporation
|
Awarding
Options
|
Total
|
Retained
Deficit
|
Total
|
||||||||||||||||||||||
|
At
December 31, 2008
|
755,236 | 20,381 | 348,705 | 5,505 | 374,591 | (67,613 | ) | 1,062,214 | ||||||||||||||||||||
|
Legal reserves
constitution - Awarding options recognized
|
3,448 | 3,448 | - | 3,448 | ||||||||||||||||||||||||
|
Capital
reserves reversion - Awarding Options canceled
|
(1,569 | ) | (1,569 | ) | 1,569 | - | ||||||||||||||||||||||
|
Current
profits
|
- | 55,711 | 55,711 | |||||||||||||||||||||||||
| - | ||||||||||||||||||||||||||||
|
At
September 30, 2009
|
755,236 | 20,381 | 348,705 | 7,384 | 376,470 | (10,333 | ) | 1,121,373 | ||||||||||||||||||||
The
accompanying notes are an integral part of these financial
statements.
Construtora
Tenda S.A.
Condensed
Consolidated Interim Statements of Cash Flows for the
nine
months ended September 2009 and 2008
(In thousands of
reais)
|
2009
|
2008
|
|||||||
|
(unaudited)
|
(unaudited)
|
|||||||
|
Cash flows from operating
activities
|
||||||||
|
Profit
(Loss):
|
55,711 | (57,014 | ) | |||||
|
Expenses (income) not affecting
cash and cash equivalents
|
||||||||
|
Depreciation
|
7,170 | 1,838 | ||||||
|
Amortization
|
713 | - | ||||||
|
Decrease of non current assets -
Property and equipment
|
50 | 129 | ||||||
|
Provision for
contingencies
|
(1,011 | ) | 15,474 | |||||
|
Provision for Bad
Debit
|
- | 10,974 | ||||||
|
Interests of Federal Tax
Installments
|
2,148 | 763 | ||||||
|
Deferred
Tax
|
38,334 | 6,481 | ||||||
|
Awarding Options
recognized
|
3,448 | 3,082 | ||||||
|
Interests of loans and
financing
|
34,158 | 4,663 | ||||||
|
Assets and Liabilities
changes
|
||||||||
|
Receivables from
clients
|
(493,554 | ) | (324,568 | ) | ||||
|
Properties for
sale
|
87,456 | (88,059 | ) | |||||
|
Other
credits
|
(11,050 | ) | (19,536 | ) | ||||
|
Deferred
selling expenses
|
(2,438 | ) | (5,478 | ) | ||||
|
Recoverable
taxes
|
(6,114 | ) | (3,587 | ) | ||||
|
Restricted
credits
|
(62,104 | ) | - | |||||
|
Other
assets
|
(13,134 | ) | 2,631 | |||||
|
Suppliers
|
34,679 | 21,929 | ||||||
|
Labor
and tax obligations
|
7,173 | 3,797 | ||||||
|
Advances
from clients
|
(5,299 | ) | (29,041 | ) | ||||
|
Accounts
payable
|
73,088 | 44,166 | ||||||
|
Obligations
for purchase of land
|
(10,972 | ) | 9,555 | |||||
|
PIS/COFINS/IRPJ/CSLL - federal
installments
|
(3,457 | ) | (1,882 | ) | ||||
|
Related Parties - Tenda
Engenharia
|
3,813 | - | ||||||
|
Effect of changes to Law 11.638
and Law 11.941/09
|
- | 22,401 | ||||||
|
Net cash used in operating
activities
|
(261,192 | ) | (381,281 | ) | ||||
|
From investing
activities
|
||||||||
|
Property and equipment
increase
|
(11,699 | ) | (950 | ) | ||||
|
Intangible
increase
|
(2,959 | ) | (1,389 | ) | ||||
|
Net cash used in investing
activities
|
(14,658 | ) | (2,339 | ) | ||||
|
From financing
activities
|
||||||||
|
Loan and Financing, net of
amortization
|
(13,578 | ) | 76,103 | |||||
|
Debentures
|
600,000 | - | ||||||
|
Net cash provided by financing
activities
|
586,422 | 76,103 | ||||||
|
Increase (decrease) in cash and
equivalents
|
310,572 | (307,517 | ) | |||||
|
Cash and cash
equivalents
|
||||||||
|
At the beginning of the
period
|
181,661 | 400,512 | ||||||
|
At the end of the
period
|
492,233 | 92,995 | ||||||
The accompanying notes are an
integral part of these financial statements.
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise stated)
(All information with respect to
September 30,
2009 and 2008 is
unaudited)
1.
Operations
The operations of Construtora Tenda S.A.
(the “Company”) and its subsidiaries comprise (a) the carrying out of
civil construction works, (b) the development of real estate ventures, (c) the
purchase and sale of real estate properties, and provision of civil construction
management services, (d) the negotiation of consortium quotas, (e) and
investment in other Brazilian or foreign companies.
On September 1, 2008, the Company and Gafisa S.A. (“Gafisa”), established the corporate merger of
Tenda and FIT Residencial Empreendimentos Imobiliários Ltda. (“FIT”) operations, and on October 21, 2008, the merger of FIT into the Company was
approved at the Extraordinary General Meeting (“EGM”). In view of the merger, 240,391,470 new nominative
book-entry common shares were issued, without par value, fully subscribed and
paid-in by the shareholders of FIT, on behalf of and for the account of the only
shareholder of the merged company, Gafisa. The merged net assets and capital of Tenda increased by R$
62,536 to R$ 755,236, represented by 400,652,450 common shares.
On June 29, 2009, the Company entered into a transaction
with the parent company Gafisa S.A. for purchase of the shares of
Cotia1 Empreendimento
Imobiliário
Ltda., for R$ 41,832. The project comprises five phases, which
represent 2,338 units with PSV (Potential Sales Value) of R$ 191 million (unaudited).
2.
Presentation of financial statements and
significant accounting practices
2.1. Basis of
presentation
The condensed consolidated interim financial
statements at September 30, 2009, and for the nine-month periods ended
September 30,
2009 and 2008 are unaudited. These condensed financial
statements
include all adjustments
consisting of normal recurring adjustments which,
in the opinion of our
management, are necessary for a fair
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise stated)
presentation of our condensed
consolidated financial position, results of operations and cash flows for the
interim periods presented.
The condensed consolidated interim financial
statements
should be read in
conjunction with our financial statements prepared for the year ended
December 31,
2008. The results for the
nine-month periods ended September 30, 2009 are not necessarily indicative of the
results to be reported for the entire year ending December 31, 2009, or for any future periods. The accounting policies adopted
in preparing
these unaudited interim
financial
statements are consistent with those used in the
preparation of these audited financial statements for the
year ended December 31,
2008.
The condensed consolidated balance sheet at December 31, 2008 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by accounting practices adopted in Brazil for presentation of complete annual financial
statements. The financial
statements presented herein
do not include the parent company´s stand alone financial statements and
are not intended to be used for statutory purposes. The
Summary of Principal Differences between Brazilian GAAP and US GAAP (Note 28) is
not required by Corporate Law and is presented only for purposes of these
financial statements.
Certain amounts in the condensed consolidated balance sheet as of December 31, 2008 and the notes thereto have been
reclassified to be
consistent with the current presentation.
The financial statements of Construtora
Tenda S.A, which include the consolidated
financial statements of its subsidiaries (listed in Note 10), were prepared in accordance with the
accounting practices
adopted in Brazil, as determined by the Brazilian Corporate Law (Law No.
6,404/76), amended by Law No. 11,638/07 and
Provisional Measure No. 449/08, made into Law No. 11,941/09 on
May 27, 2009, the regulations and resolutions of the
“Comissão de Valores Mobiliários” (the Brazilian Securities Commission
– (“CVM”)), and the Pronouncements, Guidelines and
Interpretations issued by the “Comitê de Pronunciamentos Contábeis” (the Brazilian Accounting
Pronouncements Committee - (“CPC”)).
The quarterly information (ITR) for the
period ended September 30,
2008 was adjusted for
conforming it to the new accounting practices, thus allowing comparison between
periods.
2.1.1. Summary of the modified accounting
practices and statement of effects on income and shareholders’
equity
The changes introduced by Law No. 11.638 and 11.941/09 had
significant effects on the interim information [ITR] for the periods ended September 30, 2008.
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise
stated)
Law No. 11.638/07 enacted on
December 28,
2007 introduced changes to
the Corporate Law to be applied as from financial statements
presented for the year ended December 31, 2008. To assure consistency of presentation,
the Company and its subsidiaries have retroactively applied changes to Brazilian
GAAP introduced by the newly formed CPC and the provisions of Law No. 11.638/07 from
January 1, 2006. The effects of changes to Brazilian
GAAP on the results of operations for the nine-month period ended September 30, 2008 are as follows:
|
Loss for the nine months ended
September 30,
2008
|
|
|
Balances before the changes
introduced by Law No. 11,638/07 and Law No.
11,941/09
|
(36,498)
|
|
Adjustments to present value
introduced by CPC 12
|
(3,517)
|
|
Effect on revenue of recognition
of barter transactions at fair value introduced by
OCPC01
|
12,244
|
|
Effect on cost of recognition of
barter transactions at fair value introduced by
OCPC01
|
(22,107)
|
|
Stock Option plan recognition
according to CPC 10
|
(3,082)
|
|
Analysis of recovery of amounts
recorded in assets - Impairment introduced by CPC
01
|
(3,010)
|
|
Deferred taxes on the above
adjustments and equalization of criterion
|
(1,044)
|
|
Net effects arising from the full
application of Law No. 11,638/07 and Law No.
11,941/09
|
(20,516)
|
|
Balances with the full application
of Law No. 11,638/07 and Law No. 11,941/09
|
(57,014)
|
F-86
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise
stated)
2.1.1. New accounting pronouncements approved
in 2009
The following accounting pronouncements
were issued by the “Comitê de Pronunciamentos Contábeis” (the Brazilian
Accounting Pronouncements Committee - (“CPC”) in 2009 and shall be applied for
periods beginning on or after 2010.
|
CPC
|
Resolution
|
Objective
|
|
CPC 15 – Business
combinations
|
CVM Resolution
580
|
Prescribes the accounting
treatment, in business combinations, for recognizing and measuring assets
acquired and liabilities assumed, goodwill based on expected future
earnings, and the minimum information to be disclosed by the Company in
these operations.
|
|
CPC 20 – Borrowing
Costs
|
CVM Resolution
576
|
Establishes the treatment for
accounting for borrowing costs and the possibility of including them in
the cost of the asset when attributable to the acquisition, construction
or production of an asset.
|
|
CPC 21 – Interim Financial
Reporting
|
CVM Resolution
581
|
Establishes the minimum components
of an interim financial report and the recognition and measurement
principles for complete or condensed interim financial
reports.
|
|
CPC 22 – Segment
Reporting
|
CVM Resolution
582
|
Specifies forms for disclosing
information on operating segments in the annual financial statements in
order to enable users of financial statements to evaluate the nature and
financial effects of the business activities in which they are involved
and the economic environment where they operate.
|
|
CPC 23 – Accounting
Policies, Changes in Accounting Estimates and
Errors
|
CVM Resolution
592
|
Defines the criteria for selecting
and applying accounting policies, and the accounting treatment and
disclosure of changes in accounting policies, changes in accounting
estimates and errors.
|
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise
stated)
|
CPC 24 – Subsequent
Events
|
CVM Resolution
593
|
Establishes when the entity must
adjust its financial statements and the information to be disclosed on
events after the reporting period.
|
|
CPC 25 – Provisions, Contingent
Liabilities and Contingent Assets
|
CVM Resolution
594
|
Establishes the application of
appropriate recognition criteria and measurement bases to
provisions, contingent liabilities and contingent assets, as well as the
disclosure of sufficient information in the notes to enable users to
understand their nature, timing and amount.
|
|
CPC 26 – Presentation of Financial
Statements
|
CVM Resolution
595
|
Sets overall requirements for the
presentation of financial statements, guidelines for their structure, and
minimum requirements for their content.
|
|
CPC 27 – Property, Plant and
Equipment
|
CVM Resolution
583
|
Prescribes the accounting
treatment for property, plant and equipment, including as to recognition,
measurement, depreciation and impairment losses.
|
|
CPC 28 – Investment
Property
|
CVM Resolution
584
|
Prescribes the accounting
treatment for investment properties and the related disclosure
requirements.
|
|
CPC 31 – Noncurrent Assets Held
for Sale and Discontinued
Operations
|
CVM Resolution
598
|
Establishes the accounting for
noncurrent assets held for sale (put up for sale) and the presentation and
disclosure of discontinued operations.
|
|
CPC 32 – Income
Taxes
|
CVM Resolution
599
|
Prescribes the accounting
treatment for accounting for the current and future tax consequences of
income taxes.
|
|
CPC 33 – Employee
Benefits
|
CVM Resolution
600
|
Prescribes the accounting and
disclosure of employee
benefits.
|
In addition to the approved
pronouncements described above, the “Comissão de Valores Mobiliários” (the
Brazilian Securities Commission – (“CVM”) submitted to a joint public hearing
the draft of Technical Interpretation ICPC 02, applicable to recognition of
revenues and related costs of entities that undertake real estate development
and construction directly or through subcontractors. This ICPC, if
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise stated)
approved in the terms of its public
hearing, may significantly impact our financial position in view of certain
concepts established therein to determine the timing and circumstances for
revenue recognition.
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise
stated)
|
2.2.
|
Significant accounting
practices
|
2.2.1. Real estate development and sales
revenue
Real estate sales results are
calculated, considering the contractual revenues plus monetary variations less
the following costs: expenditures on purchase and regularization of land, and
direct and indirect costs related to construction.
Real estate sales results are recognized
considering the following:
(i) For completed units: result is
recognized when the sale is made, regardless of the receipt of the contractual
amount;
(ii) For uncompleted units, the result is
recognized according to the criteria established by the CFC (Federal Accounting
Council) Resolution No. 963/03 as follows:
1. Sales revenue and land and construction
costs inherent to the respective developments are recognized in income based on
the percentage-of-completion method of each venture, this percentage being
measured based on the incurred cost corresponding to the total
estimated cost of respective ventures, including costs of land;
2. The sales revenue recognized according
to item (i), including interest and inflation-indexation charges, net of
installments received, are recorded in receivables from clients. Any amount received
that exceeds the amount of revenues recognized is recorded as advances from
clients.
Fixed interest rates are recognized in
income on an accrual basis, regardless of their receipt.
2.2.2. Use of estimates --
The preparation of
financial statements requires management to make assumptions about recognition
of estimates for recording certain assets and liabilities and other
transactions, such as: provisions for contingencies, allowance for doubtful
accounts, provision for rescission, useful lives of property and equipment
items, percentage of completion of construction work, real estate development
and sale revenue, and current and deferred taxes on income, classification into
short and long term, among others.
The results to be measured at the time
of the realization of facts which resulted in the recognition of those estimates
may differ from the amounts recognized in the current financial statements.
Management monitors and reviews periodically and timely these estimates and
assumptions.
2.2.3. Cash and cash
equivalents -- Includes
cash, positive balance of checking account, financial investments with immediate
liquidity and insignificant risk of change
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise stated)
in market value. Most of the financial
investments included in cash equivalents is classified into the category
“financial assets at fair value through profit or loss”. The breakdown of these
investments per category is shown in Note 3.
2.2.4. Receivables from
clients -- These are stated
at present and realization values, recognized according to the criterion
described in Note 2.2.1. Allowances are provided in an amount considered
sufficient by management for credits which recovery is considered
doubtful.
2.2.5. Properties for sale
-- These are stated at
construction or acquisition cost, or market value, whichever is lower. Property
cost is composed of expenditures for the following: purchase of land (cash or
barter stated at fair value), materials, labor and development expenses, as well
as financial charges during construction.
2.2.6. Investments --
Investments in subsidiaries
are accounted for under the equity method.
2.2.7. Property and
equipment -- These are
stated at acquisition, formation or construction cost. Depreciation is
calculated on the straight-line basis at the rates mentioned in Note 11.
Leasehold improvements are amortized over the life of the
agreements.
2.2.8. Intangible assets --
Intangible assets purchased
separately are measured at the initial recognition of cost of purchase, and
further deducted from accumulated amortization and loss on recoverable value,
when applicable.
2.2.9. Assessment of
impairment of assets (impairment test) -- Management annually reviews the net book
value of assets with the purpose of evaluating events or changes in economic,
operating or technological circumstances that may indicate impairment or
impairment loss.
When such evidences are found, and the
net book value exceeds the recoverable value, a provision for impairment is
recognized, adjusting the net book value to the recoverable
value.
2.2.10
Other assets
and liabilities (current and non current) -- An asset is recognized in the balance
sheet when its future economic benefits will probably be generated for the
Company, and its cost or value can be measured with reliability. A liability is
recognized in the balance sheet when the Company has an obligation that is legal
or from a past event, taking into consideration that an economic resource may be
required to settle it. These are added, when applicable, by the corresponding
indexation charges and foreign exchange gains and losses. Provisions are
recorded based on the best estimates on the involved risk. Assets and
liabilities are classified into current when their realization or settlement
will probably occur in the next twelve months; otherwise they are classified
into noncurrent.
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise stated)
2.2.11
Stock option
plan -- Expenses
represented by stock option benefits granted to executive officers, management
members or employees, stated at fair value, incurred between the granting date
and the date when options can be exercised on accrual basis, are recorded as
contra-entry to shareholders’ equity, as described in Note
25.
2.2.12
Adjustment to
present value of assets and liabilities -- Monetary assets and liabilities are
adjusted to present value in the initial recognition of the transaction, taking
into consideration the contractual cash flows, the interest rate established,
and those that are implicit in certain cases, of the respective assets and
liabilities, and rates used in the market for similar transactions. These
interests will be subsequently reallocated to financial income and expenses in
income for the year by the effective interest rate method in relation to
contractual cash flows.
2.2.13 Selling expenses --
Selling expenses include
expenditures on own stores, participation in real estate trade fairs,
advertising and publicity, recorded on an accrual basis. Sales commission is
recorded in income as described in Note 2.2.1.
2.2.14 Taxes on
income - As permitted by
tax legislation, gross operating revenue is taxed on a cash basis and not
according to the criterion that was previously described for recognizing this
revenue. Taxes on income in Brazil comprise a federal statutory rate at
15% plus income tax at 10% and social contribution at 9%. The effects of income
tax and social contributions are recorded considering the temporary differences
from recognition of revenues and expenses for accounting and tax purposes, as
described in Note 19.
2.2.15 Earnings / loss per
share -- Earnings or loss
per share is calculated based on the number of shares outstanding at the end of
each year.
2.2.16 Contingent assets
and liabilities and legal obligations -- The accounting practices for recording
and disclosing contingent assets and liabilities and legal obligations are as
follows:
Contingent
assets are recognized only when there are
collaterals or favorable final and unappealable court decisions. Contingent assets which chances of
success is considered probable are only disclosed in the proper
note;
Contingent
liabilities are provisioned
when losses are considered probable and the involved amounts can be measured
with reliability. These are
also added to the provisions for losses considered possible in the cases in
which the Company intends to settle the claim before it is judged at all
levels.
Legal obligations
are recorded as
liabilities, regardless of the chances of success, in proceedings in which the
Company challenged the unconstitutionality of taxes.
2.2.17 Consolidation of
financial statements -- The
consolidated financial statements of the Company are prepared in conformity with
the applicable consolidation practices and legal provisions. Accordingly,
intercompany investments and transactions are
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise stated)
eliminated upon consolidation, including
accounts, income and expenses and unrealized results. Jointly-controlled
investees are consolidated based on the proportion of equity interest held by
the Company.
3.
Cash and cash
equivalents
These are composed of the
following:
|
September 30,
2009
|
December 31,
2008
|
|
|
Cash and
banks
|
48,767
|
26,690
|
|
Resale/repurchase
commitments
|
49,708
|
-
|
|
Bank certificates of deposit -
CDBs
|
29,831
|
-
|
|
Investment funds
(a)
|
86,495
|
154,971
|
|
Receivables from debentures
(b)
|
261,330
|
-
|
|
Other
|
16,102
|
-
|
|
Total
|
492,233
|
181,661
|
|
(a)
|
Investments in investment funds
refer to investments made through fixed-income funds, which quotes are
valued through the application of resources exclusively in government
securities, indexed to fixed rates, floating rates and/or price
indexes.
|
|
(b)
|
Receivables from debentures refer
to amounts released in restricted accounts and assigned to the
debentureholder, which will be free for use as new floating guarantees are
allocated. Amounts are released as additional guarantees are confirmed by
the fiduciary agent engaged for the
transaction.
|
4.
Restricted
credits
These are represented by receivables in
connection with associate credits (“créditos associativos”), a government real
estate finance aid, which are in phase of release by the financial
institution:
|
September 30,
2009
|
December 31,
2008
|
|
|
Restricted
credits
|
82,330
|
20,226
|
|
Total
|
82,330
|
20,226
|
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise
stated)
5.
Receivables from
clients
These are composed of the
following:
|
September 30,
2009
|
December 31,
2008
|
|
|
Receivables from clients
(a)
|
1,110,759
|
609,476
|
|
Allowance for doubtful accounts
(b)
|
(18,815)
|
(18,815)
|
|
Provision for rescission
(c)
|
(19,121)
|
(11,197)
|
|
Postdated
checks
|
733
|
536
|
|
Adjustment to present
value
(d)
|
(14,426)
|
(14,424)
|
|
Total
|
1,059,130
|
565,576
|
|
Current
|
521,839
|
142,689
|
|
Noncurrent
|
537,291
|
422,887
|
|
(a)
|
As mentioned in Note 2.2.4, total
receivables from clients related to real estate units sold and not yet
completed is not reflected in the financial statements, once its recording
is limited to the portion of revenue recognized in the books, net of the
portion already received;
|
|
(b)
|
Allowance set up to cover
occasional losses in connection with
clients.
|
|
(c)
|
Provision set up to cover
occasional losses in connection with clients with installments in arrears;
its calculation took into consideration the recovery of the respective
real estate from defaulting clients and presented the following
movements:
|
|
Units
|
R$
|
|
|
Balance at 12/31/08
|
223
|
(11,197)
|
|
(-) Rescission
made
|
(373)
|
6,771
|
|
(+) New
provisions
|
976
|
(14,695)
|
|
(=) Balance at 09/30/09
|
826
|
(19,121)
|
|
(d)
|
Adjustment to present value
calculated based on uncompleted units, according to CPC 12 and OCPC
01.
|
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise stated)
6.
Properties for
sale
These are represented by costs of real
estate units completed and under construction, and land for future developments,
as shown below:
|
September 30,
2009
|
December 31,
2008
|
|
|
Land for future
development
|
181,682
|
197,058
|
|
Properties under
construction
|
249,790
|
344,196
|
|
Units
completed
|
32,988
|
11,141
|
|
Provision for impairment of assets
– land
|
(1,927)
|
(1,927)
|
|
Adjustment to present value of
accounts payable of land
|
-
|
(479)
|
|
Total
|
462,533
|
549,989
|
|
Current
|
357,130
|
401,852
|
|
Noncurrent
|
105,403
|
148,137
|
7. Advances
Composed of the
following:
|
September 30,
2009
|
December 31,
2008
|
|
|
Suppliers
(a)
|
15,973
|
13,503
|
|
Land (b)
|
19,522
|
18,975
|
|
Construction companies /
Franchisees (c)
|
767
|
5,058
|
|
Other
receivables
|
12,928
|
604
|
|
Provision for impairment of assets
(d)
|
(4,298)
|
(4,298)
|
|
Total
|
44,892
|
33,842
|
(a)
These are substantially represented by
amounts granted for supply and advances for purchase of materials, to be
transferred to the cost incurred when construction work is
completed;
(b) Amounts related to advances related to
purchase option, studies, and sundry expenditures for future purchase of land,
which will be transferred to properties for sale after the actual
purchases;
(c) Advances granted to construction
companies for covering the cost of works, which accounts will be rendered in
subsequent periods;
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise
stated)
(d) Substantially represented by accrual of
expenditures on studies for purchase of land that may not be
made.
8.
Escrow
deposits
These are composed of the
following:
|
September 30,
2009
|
December 31,
2008
|
|
|
Tax (a)
|
8,250
|
7,977
|
|
Total
|
8,250
|
7,977
|
(a) Escrow deposits made from March
2000 to January 2004, related to the tax which collection requirement is
suspended – COFINS (Contribution for Social Security Financing), as mentioned in
Note 15, item b.
9.
Related
parties
The Company participates in
jointly-controlled ventures with other partners to develop real estate
properties. The management frameworks of these ventures, including cash
management, are centralized in the lead partner, which supervises the
construction, and budgets. Thus, the lead partner assures that the
investments of the necessary funds are made and allocated as planned. At
September 30,
2009 the current account
balance with other partners is as follows:
|
September 30,
2009
|
December 31,
2008
|
|
|
Asset
|
||
|
Current account with
partners
|
46,419
|
47,469
|
|
Liability
|
||
|
Current account with
partners
|
4,097
|
1,334
|
|
Accounts payable –
equity interest (a)
|
44,637
|
-
|
(a) Accounts payable related to the
acquisition of the subsidiary of Cotia1 Empreendimento Imobiliário Ltda, as
mentioned in note 1.
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise stated)
|
10.
|
Investments
|
The main ownership interests and
investment composition at September 30, 2009 are as follows:
|
Entity
|
Sharing - %
|
Investments
|
Equity
|
Income
Statement
|
Income Statement
Sharing
|
|
FIT Roland
Garros
|
99,99%
|
4.810
|
(4.811)
|
61
|
61
|
|
FIT Citta
Imbuí
|
50,00%
|
3.793
|
(7.587)
|
3.051
|
1.526
|
|
FIT Coqueiro
I
|
80,00%
|
6.419
|
(8.022)
|
2.064
|
1.650
|
|
FIT
Guarapiranga
|
55,00%
|
1.597
|
(2.904)
|
(31)
|
(17)
|
|
FIT Maria
Inês
|
60,00%
|
3.539
|
(5.899)
|
3.289
|
1.973
|
|
FIT Jd.
Botânico
|
55,00%
|
8.566
|
(15.574)
|
6.018
|
3.310
|
|
Klabin Segall Fit 1
SPE
|
50,00%
|
2.549
|
(5.098)
|
(0)
|
(0)
|
|
FIT Planeta
Zôo/Ipitanga
|
50,00%
|
1.281
|
(2.562)
|
(96)
|
(48)
|
|
Parque dos
Pássaros
|
50,00%
|
(416)
|
833
|
216
|
108
|
|
FIT Campos
Velho
|
80,00%
|
1.228
|
(1.535)
|
840
|
672
|
|
FIT Ciane
|
99,00%
|
524
|
(529)
|
(143)
|
(142)
|
|
FIT Mirante do
Sol
|
99,99%
|
1.562
|
(1.563)
|
539
|
539
|
|
FIT
Barcelona
|
60,00%
|
(2.472)
|
4.120
|
(658)
|
(395)
|
|
FIT Campos dos
Goytacazes
|
90,00%
|
2.580
|
(2.866)
|
1.092
|
982
|
|
FIT 08 SPE
|
70,00%
|
(10)
|
14
|
(12)
|
(8)
|
|
FIT 09 SPE
|
75,00%
|
832
|
(1.109)
|
(94)
|
(72)
|
|
FIT 10 SPE
|
60,00%
|
(930)
|
1.551
|
349
|
210
|
|
FIT 11 SPE
|
70,00%
|
719
|
(1.028)
|
(26)
|
(18)
|
|
FIT 12 SPE
|
99,99%
|
(489)
|
489
|
(407)
|
(406)
|
|
FIT 13 SPE
|
99,99%
|
7.486
|
(7.486)
|
183
|
183
|
|
FIT 14 SPE
|
80,00%
|
5.119
|
(6.399)
|
(726)
|
(581)
|
|
FIT 15 SPE - Wenceslau
Braz
|
70,00%
|
144
|
(206)
|
807
|
565
|
|
FIT 06 SPE
|
99,99%
|
(1)
|
1
|
(2)
|
(2)
|
|
FIT 07 SPE
|
50,00%
|
(415)
|
830
|
(373)
|
(186)
|
|
FIT 18 SPE
|
99,99%
|
(71)
|
71
|
(1)
|
(1)
|
|
FIT 19 SPE
|
55,00%
|
(1.221)
|
2.219
|
(365)
|
(201)
|
|
FIT 21 SPE
|
90,00%
|
1.148
|
(1.276)
|
(116)
|
(104)
|
|
FIT 22 SPE
|
99,99%
|
(148)
|
148
|
(69)
|
(69)
|
|
FIT 23 SPE
|
99,99%
|
(2)
|
2
|
(2)
|
(2)
|
|
FIT 24 SPE
|
90,00%
|
(2.366)
|
2.629
|
(320)
|
(288)
|
|
FIT 25 SPE
|
80,00%
|
43
|
(53)
|
54
|
43
|
|
FIT 16 SPE
|
70,00%
|
(2.325)
|
3.321
|
(2.406)
|
(1.684)
|
|
FIT 17 SPE
|
99,99%
|
(2)
|
2
|
(0)
|
(0)
|
|
FIT 28 SPE
|
99,99%
|
(28)
|
28
|
(1)
|
(1)
|
|
FIT 29 SPE
|
99,99%
|
(80)
|
80
|
(36)
|
(36)
|
|
FIT 30 SPE
|
99,99%
|
(1)
|
1
|
-
|
-
|
|
FIT 31 SPE
|
70,00%
|
(669)
|
955
|
(869)
|
(608)
|
|
FIT 32 SPE
|
99,99%
|
691
|
(691)
|
(7)
|
(7)
|
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise
stated)
|
FIT 33 SPE
|
99,99%
|
(527)
|
527
|
(417)
|
(417)
|
|
FIT 34 SPE
|
70,00%
|
(52)
|
74
|
(28)
|
(20)
|
|
FIT 35 SPE
|
99,99%
|
4.526
|
(4.526)
|
40
|
40
|
|
FIT 36 SPE
|
99,99%
|
1.750
|
(1.750)
|
(484)
|
(484)
|
|
FIT 37 SPE
|
99,99%
|
4.057
|
(4.057)
|
1.681
|
1.681
|
|
FIT 38 SPE
|
99,99%
|
1.137
|
(1.138)
|
(49)
|
(49)
|
|
FIT 39 SPE
|
99,99%
|
1.829
|
(1.829)
|
(118)
|
(118)
|
|
FIT 40 SPE
|
99,99%
|
3.817
|
(3.817)
|
(1)
|
(1)
|
|
FIT 41 SPE
|
99,99%
|
(62)
|
62
|
(1)
|
(1)
|
|
FIT 42 SPE
|
99,99%
|
939
|
(939)
|
(23)
|
(23)
|
|
FGM Incorporações
S.A
|
51,00%
|
1.395
|
(2.795)
|
(136)
|
(69)
|
|
Cipesa Projeto
02
|
50,00%
|
(329)
|
658
|
134
|
67
|
|
FIT 43 SPE
|
99,99%
|
(1)
|
1
|
-
|
-
|
|
FIT 26 SPE
|
99,99%
|
(9)
|
9
|
(8)
|
(8)
|
|
FIT 27 SPE
|
99,99%
|
(1)
|
1
|
(0)
|
(0)
|
|
FIT João de
Alencar
|
99,99%
|
(9)
|
9
|
(9)
|
(9)
|
|
FIT 20 SPE
|
99,99%
|
(3)
|
3
|
(0)
|
(0)
|
|
Cittá
Itapoan
|
50,00%
|
(582)
|
1.164
|
412
|
206
|
|
Bairro Novo
|
99,99%
|
49.045
|
(49.050)
|
4.059
|
4.058
|
|
Spe Guapura
|
50,00%
|
280
|
(561)
|
-
|
-
|
|
Spe Villa
Park
|
99,99%
|
13.392
|
(13.393)
|
4.357
|
4.357
|
|
Spe
Itaquera
|
99,99%
|
3.490
|
(3.490)
|
2.440
|
2.440
|
|
Spe Osasco
|
99,99%
|
12.909
|
(12.911)
|
6.469
|
6.468
|
|
Spe
Valência
|
99,99%
|
1.506
|
(1.507)
|
693
|
693
|
|
Spe Salvador
Dali
|
99,99%
|
5.517
|
(5.518)
|
1.539
|
1.539
|
|
Spe
Guaianazes
|
99,99%
|
950
|
(950)
|
20
|
20
|
|
Spe Jardim São
Luiz
|
99,99%
|
7.070
|
(7.070)
|
4.280
|
4.280
|
|
TNI
|
99,99%
|
1
|
(1)
|
(0)
|
(0)
|
|
Cittá Ville
|
50,00%
|
3.269
|
(6.537)
|
1.396
|
698
|
|
Total
|
158.288
|
(179.175)
|
38.049
|
32.294
|
|
|
Provision for shareholders’
deficit
|
14.169
|
||||
|
Total
|
172.457
|
|
11.
|
Property and equipment,
net
|
These are composed of the
following:
|
Annual depreciation rate
(%)
|
September 30,
2009
|
December 31,
2008
|
|
|
Machinery and
equipment
|
10
|
2,285
|
-
|
|
Furniture and
fixtures
|
10
|
3,557
|
13,560
|
|
Vehicles
|
20
|
988
|
988
|
|
IT
equipment
|
20
|
4,350
|
4,218
|
|
Leasehold
improvements
|
9,136
|
6,257
|
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise
stated)
|
Other
|
11,110
|
178
|
|
|
Total property and
equipment
|
31,426
|
25,201
|
|
|
( - ) Accumulated
depreciation
|
(9,671)
|
(7,925)
|
|
|
Total property and equipment,
net
|
21,755
|
17,276
|
|
12.
|
Intangible
assets
|
These
are composed of the following:
|
September 30,
2009
|
December 31,
2008
|
|
|
Software
|
6,904
|
3,990
|
|
Other
|
9
|
8
|
|
( - ) Accumulated
amortization
|
(1,446)
|
(777)
|
|
Total
|
5,467
|
3,221
|
|
13.
|
Loans and
financing
|
These are composed of the
following:
|
Annual interest
rates
|
September 30,
2009
|
December 31,
2008
|
|
| Working capital (a) | 100% to 105% of CDI or CETIP + 3% to 4% p.a.. |
64,947
|
62,840
|
|
Real estate financing
(b)
|
10% to 11.4% p.a. or TR + 8.33%
p.a.
|
62,222
|
57,432
|
|
Others
|
-
|
6,178
|
|
|
Total
|
127,169
|
126,450
|
|
|
(-) Current
|
71,585
|
52,584
|
|
|
Noncurrent
|
55.584
|
73,866
|
|
|
|
(a)
|
Loans are guaranteed by promissory
notes or own receivables;
|
|
|
(b)
|
Financings are guaranteed by
mortgage on the land.
|
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise stated)
|
14.
|
Debentures
|
|
September 30,
2009
|
December 31,
2008
|
|
|
Debentures
|
619,861
|
-
|
|
Total
|
619,861
|
-
|
|
(-) Current
|
19,861
|
-
|
|
Noncurrent
|
600,000
|
-
|
In April 2009, the Company obtained
approval for its First Debenture Distribution Program, which allowed it to offer
simple subordinated and/or secured debentures, not convertible into shares,
limited to the amount of R$ 600,000, with semiannual maturities between
10/01/2012 and 04/01/2014. Proceeds from the issuance of
debentures will be used solely in the financing of real estate ventures focused
exclusively on the popular segment and that meet the eligibility
criteria.
There is no adjustment for inflation and
the debenture will yield interest corresponding to the accumulated variation of
the TR (a managed prime rate), calculated on a pro rata basis by business days,
capitalized semiannually, and a spread or initial surcharge of nominal 8.1% per
year with semiannual payments between 10/01/2009 and 04/01/2014.
Guarantees comprise Assignments of
Receivables and Bank Accounts. Additionally, the Company is subject to covenants
that restrict its ability to take certain actions, such as the issuance of debt
and power to require the acceleration of maturity or refinancing of loans if the
Company does not comply with these covenants.
|
15.
|
Taxes
payable
|
|
September 30,
2009
|
December 31,
2008
|
|
|
Federal tax
installments
(a)
|
7,411
|
8,993
|
|
COFINS (b)
|
8,250
|
7,977
|
|
Total
|
15,661
|
16,970
|
|
Current
|
2,779
|
2,698
|
|
Noncurrent
|
12,882
|
14,272
|
|
|
(a)
|
Taxes are being paid in 60 monthly
installments, adjusted by the Selic (Central Bank overnight
rate);
|
|
|
(b)
|
The Company is challenging the
constitutionality of federal taxes related to the Contribution for Social
Security Financing (COFINS), particularly
|
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise
stated)
|
|
|
regarding the rate increase, in
relation to which the Company chose to make escrow deposit at
the original amounts owed from March 2000 to January 2004, as mentioned in
Note 8.
|
|
16.
|
Advances from
clients
|
These are composed of the
following:
|
September 30,
2009
|
December 31,
2008
|
|
|
Receipts in excess of the
appropriated revenue ( 2.2.1)
|
15,388
|
5,572
|
|
Land swap transactions stated at
fair value
|
31,376
|
46,491
|
|
Total
|
46,764
|
52,063
|
|
17.
|
Rescission reimbursement payable
and provisions
|
These are composed of the
following:
|
September 30,
2009
|
December 31,
2008
|
|
|
Rescission reimbursement payable
(a)
|
20,756
|
24,620
|
|
Provision for rescission and
annulments of sales contract (b)
|
6,654
|
3,571
|
|
Total
|
27,410
|
28,191
|
|
(a)
|
Accounts
payable, which have specific settlement conditions for each case, the
average term being 5 months for payment.
|
|
(b)
|
The set up of
the provision takes into consideration the prospect of returning the
amount received to clients according to contractual clauses.
|
|
18.
|
Obligations for purchase of
land
|
These are commitments assumed upon
purchase of land for real estate development:
|
September 30,
2009
|
December 31,
2008
|
|
|
Land
payable
|
57,676
|
68,648
|
|
Total
|
57,676
|
68,648
|
|
Current
|
45,043
|
53,336
|
|
Noncurrent
|
12,633
|
15,312
|
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise
stated)
At September 30, 2009 maturities were as
follows:
|
2009
|
|
|
2010
|
6,912
|
|
2011
|
5,721
|
|
TOTAL
|
12,633
|
Balances are subject to significant
monetary adjustments by the National Civil Construction Index (INCC) variation
until the closing date of financial statements. These accounts payable are
guaranteed by an instrument for acknowledgement of debt, promissory notes or
letter of guarantee.
|
19.
|
Deferred
taxes
|
Deferred income tax, social
contribution, Social Integration Program (PIS) and Contribution Social Security
Financing (COFINS) are recorded to reflect the tax effects arising from
temporary differences between tax basis (SRF Regulatory Instruction No. 84/79)
and the effective appropriation of real estate profit (Note 2.2.1), in
conformity with CFC Resolution No. 963/03, deferred taxes are also recognized in
view of temporary differences and tax losses, according to CVM Instruction
371/02.
Balances are represented by the
following:
ASSETS
|
September 30,
2009
|
December 31,
2008
|
|
|
Tax loss
carryforwards
|
86,886
|
65,956
|
|
Credit – Merger EDSP92 (a)
|
11,549
|
14,607
|
|
Temporary
provisions:
|
||
|
Contingencies
|
15,670
|
11,085
|
|
Provision for
losses
|
6,398
|
6,398
|
|
Total
|
120,503
|
98,046
|
|
Current
|
2,879
|
2,879
|
|
Noncurrent
|
117,624
|
95,167
|
|
|
(a)
|
Tax credit arising from goodwill
on merger of EDSP92, calculated by a book value appraisal report,
amounting to R$20,381, which was used to set up a special goodwill
reserve. The goodwill originally recorded by EDSP92 arising from the
purchase of interest by the Company on June 30, 2007, justified based on expectation
of future profitability, according to the discounted cash flow modeling
and a discount rate at 12.4% p.a., is being amortized monthly over 5
years.
|
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise stated)
As required by CVM Instruction No.
371/02, the Company’s management prepared a study with the projection of taxable
income for the next five years. The expectation for the use of tax benefit is as
follows:
|
IRPJ /
CSLL
|
|
|
2009
|
2.879
|
|
2010
|
104.378
|
|
2011
|
13.246
|
|
TOTAL
|
120.503
|
LIABILITIES
|
September 30,
2009
|
December 31,
2008
|
|
|
Criteria difference for
appropriation of result – taxable income
|
||
|
PIS and
COFINS
|
35,196
|
24,123
|
|
IRPJ and
CSLL
|
116,485
|
80,466
|
|
Criteria difference for
appropriation of result – presumed profit
|
17,037
|
3,338
|
|
Total
|
168,718
|
107,927
|
|
Current
|
52,375
|
24,224
|
|
Noncurrent
|
116,343
|
83,703
|
|
20.
|
Contingencies
|
The Company and its subsidiaries are
parties to lawsuits and administrative proceedings before different courts and
government agencies, arising from the ordinary course of business, involving
tax, labor, civil and other matters. Management, based on information from its
legal counsel, analyzes pending lawsuits and proceedings and, in connection with
labor lawsuits, based on prior experience related to claimed amounts, set up a
provision in an amount considered sufficient to cover estimated losses on
ongoing cases.
|
September 30,
2009
|
December 31,
2008
|
|
|
Civil
|
10,979
|
12,433
|
|
Labor
|
6,517
|
5,317
|
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise stated)
|
Tax and social
security
|
8,333
|
8,730
|
|
Others
|
-
|
360
|
|
Total
|
25,829
|
26,840
|
Changes in the provision are summarized
as follows:
|
September 30,
2009
|
|
|
Beginning
balance
|
26,840
|
|
Provision
(write-off)
|
(1,011)
|
|
Ending
balance
|
25,829
|
|
21.
|
Shareholders’
equity
|
21.1. Capital
On October 21, 2008, capital was increased by R$ 62,536, from R$ 692,700 to R$ 755,236, arising
from the merger of FIT, through the issuance of 240,391,470 new nominative
book-entry shares, without par value, fully subscribed and paid-up, moving from
160,260,980 to a total of 400,652,450 shares.
21.2. Capital reserves
Special goodwill
reserve -- The Company
received net assets of “EDSP92”, estimated by a book value appraisal report,
amounting to R$20,381, which was used for setting up a special goodwill reserve.
As it was originated from a tax benefit, it will only be realized when such tax
benefit is realized/used, when it can be used to increase capital or offset
losses.
Merger FIT --
In view of the merger of
FIT on October 21,
2008, a capital reserve was set up at R$
348,705, as mentioned in Note 1.
Stock option plan --
According to CPC No.10, the
Company recognized an expense represented by benefits of options granted in 2008
and 2009 in the aggregate amount of R$
7,384.
21.3. Allocation of net
income
Pursuant to the Company’s bylaws, the
net income for the year will be appropriated as follows:
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise stated)
· 5% to the legal reserve, up to 20% of
paid-up capital;
· A portion, upon proposal by management
bodies, can be used to set up a provision for contingencies, as provided for by
Article 195 of Law No. 6404/76;
· In each year, shareholders are entitled
to a mandatory dividend at 25% of net income for the year, adjusted as
follows:
(a) the net income for the year will be
decreased or added by the following values: (i) amount for setting up the legal
reserve; and (ii) amount for setting up a provision for contingencies and
reversal of this reserve recognized in prior years;
(b) the payment of dividends can be limited
to the amount of net income for the year that is realized, provided that the
difference is recorded as unrealized profit reserve; and
(c) profits recorded in unrealized profit
reserve, when realized and provided that they are not absorbed by losses for
subsequent years, are added to the first dividend declared after
realization.
· Dividend will not be mandatory in the
year when the Board of Directors informs to the Annual General Meeting that it
is not compatible with the Company’s financial condition; the Fiscal Council, if
formed, shall express an opinion on this information and the Company management
shall forward to the CVM within five days from such General Meeting the
justification for the information transmitted to the
Meeting;
· Profits that are not distributed will be
recorded as special reserve, and if they are not absorbed by losses in
subsequent years, shall be paid as dividend as soon as the Company’s financial
condition allows;
· A portion, upon proposal from management
bodies, can be used to set up a reserve for investments at up to 71.25% of
adjusted net income for each year, as provided by Article 196 of Law No.
6404/76;
· Upon proposal from management bodies, it
can at any time distribute dividends charging to Investment Reserve or use its
whole or a portion of its balance to increase capital, including through stock
bonus;
· Upon proposal from management bodies,
the Company can also declare interim dividends charging to Retained Earnings or
Profit Reserves of the last annual or six-month period balance
sheet.
· The Board of Directors can pay or credit
in each year interest on shareholders’ equity, as provided for by the income tax
legislation, and these can be imputed to mandatory dividend;
· Dividends not received or claimed shall
lapse in three years, counted from the date on which they were granted to the
shareholder, and be reversed on behalf of the Company;
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise stated)
· The general meeting can grant to the
Company’s management members profit sharing, within the legal
limit;
· Profit sharing can only be conferred in
the year shareholders receive mandatory dividend.
|
22.
|
Insurance
|
The Company adopts the policy of taking
up insurance coverage for assets and works subject to risks at amounts
considered by its management sufficient to cover occasional claims, considering
the nature of its operations. The policies are in effect and premiums were duly
paid.
We believe that we have a program on
risk management aimed at assessing risks, searching in the market coverage
compatible with our size and operations, our insurance coverage being consistent
with other companies of similar size operating in the
sector.
The risk assumptions adopted, given
their nature, are not part of the scope of the audit of financial statements;
accordingly, they were not audited by our independent
auditors.
|
23.
|
Benefits to
employees
|
The Company does not maintain private
pension plans to its employees. The benefit policy has the objective of
guaranteeing the welfare of employees and itsdependents, therefore, the Company
provides medical care, life insurance, meal voucher, food allowance, program for
internal training, transportation voucher, fuel allowance and parking
space.
|
24.
|
Financial
instruments
|
As required by CVM Resolution No. 566 of
December 17,
2008, which approved the
CPC Technical Pronouncement No. 14, and the CVM Instruction No. 475, of
December 17,
2008, the Company and its
subsidiaries made an evaluation of its financial instruments, described
below:
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise stated)
Risk management --
The Company and its
subsidiaries have transactions involving financial instruments, which are used
to meet operational needs, as well as reducing the exposure to financial risks.
The management of these risks is made by devising strategies, establishing a
control system and setting an operational limit. The Company does not make
transactions involving financial instruments for speculative
purposes.
Credit and
realization risks -- These
risks are managed by specific credit analysis rules and the setting of exposure
limits by client. Additionally, it has specific analysis and rules for
investments in financial institutions and investment types offered in the
financial market.
Market value of
financial instruments -- The market value of cash and cash
equivalents (cash, banks and financial investments), receivables from clients
and current liabilities are financial instruments that match with the recorded
balance and are held to maturity, according to the management intent. The
balance of receivables from clients is adjusted by contractual indices used in
the market.
The Company calculated the present value
of receivables for uncompleted real estate units and recorded the proportional
amount adopting the criterion described in Note 2.2.1, using for September 30, 2009 a discount rate of 5.92% p.a. (7,5% for
2008)
Our financing are on the current market
average and are being adjusted as agreed in the signed
contracts.
The debt balance at September 30, 2009 corresponds to the effective settlement
values.
The Company has not made investments for
speculative purposes in derivatives or any other risky
assets.
At September 30, 2009, there were no derivative instruments
to be recognized at fair value in the financial statements.
|
25.
|
Stock option
plan
|
The subsidiary Tenda has, in total,
three stock option plans, the first two approved in June 2008 and the other plan
approved in April 2009.
These plans, limited to a maximum of 5%
of the total shares and approved by the Board of Directors, stipulate general
terms, among which the following:
(i) define the length of service required
for employees to be eligible to the plan benefits;
(ii) selection of employees that will be
entitled to join the plans; and
(iii)
establish the
prices of call options for preferred shares to be exercised in compliance with
the plans.
In the option granted in 2008, upon the
exercise of the option the basic price will be adjusted according to the market
value of the shares, based on the average value calculated in the last 20
trading sessions prior to the beginning of each period of the
year.
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise stated)
The exercise price is adjusted according
to a predefined table of values, according to the market share value at the time
of the two exercise periods of each annual lot.
The grant price is adjusted by the IGP-M
(general market price index) variation, plus interest of 3%.
The share call option must be exercised
by the beneficiaries with the partial use of annual bonus, as they are made
available, within 10 years after the beginning of the period of the service
established in each of the plans; shares are generally available to employees in
a period of 2 to 5 years after purchase.
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise stated)
Changes in share call options were as
follows:
|
Number of
options
|
Weighted average
of exercise price
|
|
|
Oustanding options at
12.31.08
|
2,070,000
|
7.20
|
|
Options
granted
|
5,979,718
|
1.27
|
|
Options
exercised
|
(151,917)
|
2.63
|
|
Options
cancelled
|
(1,760,583)
|
5.16
|
|
Outstanding options at
09.30.09
|
6,137,218
|
1.52
|
The market price of Tenda shares at
September 30,
2009 was R$ 5.35.
Beginning in the quarter ended September 30, 2009, the fair value of each share granted
was estimated on the granting date using the Binominal and Monte Carlo option
pricing models in replacement of the Black-Scholes model. In the period ended
September 30,
2009, Tenda recorded
expenses on the stock option plan in the amount of R$ 3,448.
Options are recorded as a credit to the
account “Recognized Options Granted”, in the group “Capital Reserves”, recorded
as a contra entry to an operating expense account, as required by CPC
10.
|
26.
|
Compensation of management and
board members
|
The compensation limit payable to the
Company’s management and board members for 2009 was set at R$ 6,039, as
established in the minutes of the Board of Directors meeting held on
April 27, 2009.
Until September 30, 2009, compensation to the management of the
Company and its subsidiaries amounted to R$ 1,309, of which Statutory Directors
R$ 670, Board of Directors 606 and Fiscal Council R$ 33.
|
27.
|
Subsequent
Events
|
In October 2009, the management of the
parent company GAFISA S.A., in compliance with paragraph 4 of article 157 of Law
No. 6,404/76 and with CVM’s Instruction No. 358/02, announced its
intention to present to its shareholders, by the end of the current year, a
proposal for the merger of all of the shares of the Company currently
outstanding that are not already owned by Gafisa S.A. (“Merger”). The conditions
of the Merger must still be negotiated with an Independent Committee to be
selected by the Company’s Board of Directors, as recommended by CVM’s Parecer de
Orientação 35. Consummation of the transaction depends on each of the
Independent Committee as well as the management of Gafisa reaching an agreement
on the Merger conditions.
On October 2, 2009, the Extraordinary General Meeting
approved the amendments to the Company’s articles of incorporation. The
amendments do have any impacts on the accompanying financial statements and
related notes as of September 30, 2009.
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise
stated)
|
28.
|
Supplemental Information - Summary
of Principal Differences between Brazilian GAAP and US
GAAP
|
a. Description
of the GAAP differences
The Company's accounting policies comply
with, and its consolidated financial statements are prepared in accordance with
Brazilian GAAP. The Company has retroactively applied the changes in Brazilian
GAAP introduced by the newly formed CPC and the provisions of Law 11638/2007 as
from January 1,
2006. As a result of the
changes to Brazilian GAAP introduced in 2008 which were applied retroactively to
January 1, 2006 a number of differences between Brazilian
GAAP and USGAAP, as originally reported, were eliminated.
A summary of the Company's principal
accounting policies that differ significantly from US GAAP is set forth below.
See (b) for a reconciliation of these significant
differences.
(i) Principles
of consolidation
Under Brazilian GAAP, the consolidated
financial statements include the accounts of the Company and those of all its
subsidiaries, with separate disclosure of the participation of minority
shareholders. The proportional consolidation method is used for investments in
jointly-controlled investees, which are all governed by shareholders'
agreements; as a consequence, the assets, liabilities, revenues and costs are
consolidated based on the proportion of the equity interest held in the capital
of the corresponding investee.
Under US GAAP, while certain investments
in subsidiaries meet the criteria for consolidation as defined by the Financial
Accounting Standard Board ("FASB") Statement of Financial Accounting
Standard ("SFAS") 94, Consolidation of All Majority-Owned Subsidiaries,
because such investments provide substantive participating rights granted to the
noncontrolling shareholder they preclude the Company from consolidating the
entities. Accordingly, for purposes of US GAAP certain of these investments are
treated on the equity basis of accounting.
Under US GAAP, proportional
consolidation is permitted only in limited circumstances. Accordingly, for
purposes of US GAAP certain subsidiaries were fully consolidated and
the equity interests that are not owned by the Company were assigned
to noncontrolling shareholders’ interest. Although these
differences in GAAP do not affect the Company's net income or shareholders'
equity, the line items in the consolidated balance sheet and statement of income
are affected.
(ii) Revenue
recognition
Under Brazilian GAAP, real estate
development revenues, costs and related expenses are recognized using the
percentage-of-completion method of accounting by measuring progress
towards completion in terms
of actual costs incurred versus total budgeted expenditures for each stage of a
development. Land is treated as a portion of budgeted construction costs and is
appropriated proportionally to development. Under the
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise stated)
percentage-of-completion method of accounting, revenues for
work completed are recognized prior to receipt of actual cash proceeds or
vice-versa. Revenues and costs are recognized under the percentage-of-completion
method when certain tests are met.
Under US GAAP, SFAS 66, Accounting for Sales of Real Estate, the
basis for the measurement to determine if construction is beyond a preliminary
stage is different from Brazilian GAAP. US GAAP requires construction to be
beyond a preliminary stage and substantial sales to have been incurred to ensure the project will
not be discontinued before revenue can be recognized. Construction is not beyond a preliminary
stage if engineering and design work, execution of construction contracts, site
clearance and preparation, excavation, and completion of the building foundation
are incomplete.
Additionally, the percentage-of-completion method of
accounting should be applied to a sale that meets all of
the following
criteria: (a) the buyer is committed to the extent of
being unable to require a
refund except for nondelivery of the unit or interest; (b) sufficient units have already been sold
to assure that the entire property will not revert
to rental property;
(c) sales prices are collectible; (d) aggregate sales proceeds and costs can be
reasonably estimated.
(iii) Stock option
plan
Under Brazilian GAAP, the rights to
acquire shares granted to employees and executive officers under the stock
options plan were recorded
as an expense as from the
transition date for the adoption of Law 11,638/2007. Previously, under Brazilian
GAAP, the stock option plans did not result in any expense being recorded. The
purchase of the stock by the employees is recorded as an increase in
capital stock for the amount of the purchase
price. Under Law 11,638/2007 and the accounting guidance provided
by CPC 10, the stock option plans are treated
as equity awards and measured at fair value at the grant date, no further
adjustments are made at the balance sheet dates to reflect changes in fair
values.
Under US GAAP, the Company adopted SFAS 123R,
"Share-based Payment". As the awards are indexed to the IGP-M (inflation rate), the employee share options have been
accounted for as liability awards under the terms of SFAS 123R. The liability-classified awards are
remeasured at fair value
through the statement of income at each reporting period until settlement. The
fair value of employee share options and similar instruments was estimated using
the Black-Scholes option-pricing model through June 30, 2009 and thereafter using the Binomial and Monte Carlo
models.
(iv) Earnings per
share
Under Brazilian GAAP, net income per
share is calculated based on the number of shares outstanding at the balance
sheet date. Information is disclosed per lot of one thousand shares, because,
generally, this is the minimum number of shares that can be traded on the
BOVESPA BM&F.
Under US GAAP, because the Preferred and
Common shareholders have different voting, dividends and liquidation rights,
Basic and Diluted earnings per share have been
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise stated)
calculated using the "two-class" method,
pursuant to SFAS 128, "Earnings per Share", which provides computation,
presentation and disclosure requirements for earnings per share. Under US GAAP, potentially
dilutive securities are not considered in periods where there is a net loss as
the impact would be antidilutive.
The Company has issued employee stock options, the dilutive effects of which are
reflected in diluted earnings per share by application of the "treasury stock
method". Under the treasury stock method, earnings per share are
calculated as if options were exercised at the beginning of the period, or at
time of issuance, if later, and as if the funds received were used to purchase
the Company's own stock. When the stock options' exercise price was greater than the average market
price of shares, diluted earnings per share are not affected by the stock
options.
The table below presents the
determination of net loss
allocated to Common
shareholders and weighted average Common shares outstanding used to calculate basic and diluted
loss per share as of September 30, 2009:
|
Nine-month period ended
September 30,
2009
|
|
|
Basic
numerator
|
Common
|
|
Dividends
proposed
|
-
|
|
US GAAP allocated
losses
|
(10,742)
|
|
US GAAP allocated losses for
common shareholders
|
(10,742)
|
|
Basic denominator (in thousand of
shares)
|
|
|
Weighted-average number of
shares
|
400,652
|
|
Basic loss per thousand shares -
US GAAP - R$
|
(0.027)
|
|
Diluted
numerator
|
|
|
Dividends
proposed
|
-
|
|
US GAAP allocated
losses
|
(10,742)
|
|
US GAAP allocated losses for
common shareholders
|
(10,742)
|
|
Diluted denominator (in thousand
of shares)
|
|
|
Weighted average number of
shares
|
400,652
|
|
Stock
options
|
-
|
|
Diluted weighted-average number of
shares
|
400,652
|
|
Diluted loss per thousand shares -
US GAAP - R$
|
(0.027)
|
(v) Business
Combinations
Under Brazilian GAAP, goodwill arises
from the difference between
the amount paid and the Brazilian GAAP book value (normally
also the tax basis) of the net assets acquired. This goodwill is normally
attributed to the
difference between the book value and the market value of assets acquired or
justified based on expectation of future profitability and is amortized over the
remaining useful lives of the assets or up to ten years. Negative goodwill
arises under Brazilian GAAP when the book value of
assets acquired
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise stated)
exceeds the purchase consideration;
negative goodwill is not generally amortized but is realized upon disposal of
the investment. For US GAAP purpose, when a business combination process
generates a negative goodwill, this amount is allocated
first to non-current assets acquired and any remaining amount is recognized as
an extraordinary gain. Additionally, investments in affiliates, including the
corresponding goodwill on the acquisition of such affiliates are tested, at least, annually for
impairment.
Under US GAAP, pursuant to SFAS 141 -
Business combinations, fair values are assigned to acquired assets and
liabilities in business combinations, including identifiable assets. Any
residual amount is allocated to goodwill. Under US GAAP, SFAS 142
- Goodwill and other intangible assets, goodwill is not amortized but, instead,
is assigned to an entity's reporting unit and tested for impairment at least
annually. The differences in relation to Brazilian GAAP arise principally from the measurement of
the consideration paid under US GAAP using the fair value of shares, and the
effects of amortization which are no longer recorded for US GAAP
purposes.
In October 21, 2008 Gafisa and Construtora Tenda signed an
agreement in which Gafisa
will combine its wholly-owned subsidiary, Fit Residencial Empreendimentos
Imobiliários Ltda. with
Tenda in an all-stock transaction. After the transaction, Gafisa holds 60% of
the total capital and voting shares of Tenda which will continue to trade on the Novo Mercado of
the São Paulo Stock
Exchange as an independent company. For purpose of determining the purchase
consideration, the fair value of these shares was based on the average BOVESPA
BM&F quoted stock price over a thirty day
period prior to the date
the agreement was signed.
The total cost of the acquisition has
been allocated to the assets acquired and the liabilities assumed based on their
respective fair values in accordance with SFAS 141 - Business combinations,
which is mainly related to
registered trademarks and existing contracts of units
sold.
(vi) Classification
of balance sheet line items
Under Brazilian GAAP, the classification
of certain balance sheet items is presented differently from US GAAP.
The reclassifications
are summarized as
follows:
1) Under US GAAP, the proportional
consolidation of investees and subsidiaries is eliminated and in its place the
associated companies are presented using the equity method of
accounting and controlled subsidiaries are fully consolidated presenting their
respective non-controlling interests.
2) For purposes of US GAAP, the sale of
receivables is not considered a true sale, if the entities do not meet the
pre-requisites of a qualifying special purpose entity, as defined by SFAS 140,
"Accounting for Transfer and Servicing of Financial Assets and Extinguishment of
Liabilities - a replacement of SFAS 125", which was amended by SFAS 156,
"Accounting for Servicing of Financial Assets". These receivables from
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise stated)
clients continue to be reported as
receivable balances. The cash proceeds received from the transfer of the
receivables are presented as a
liability.
3) Under Brazilian GAAP certain
court-mandated escrow deposits made into court are netted against the
corresponding contingency provisions. For purposes of US GAAP, as these do not
meet the right of offset criteria, such deposits are presented as assets and not
netted against liabilities.
4) Under Brazilian GAAP, debt issuance
costs are netted against the loan balance, whereas under US GAAP such costs are
presented as deferred expenses in current and non-current
assets.
5) Under Brazilian GAAP, deferred income
taxes are not netted and assets are shown separately from liabilities. For
US GAAP purposes, deferred tax assets and liabilities are netted and classified as current or
non-current based on the classification of the underlying temporary difference.
Similarly, certain judicial escrow deposits are netted against contingency
provisions and debt issuance costs netted against the liabilities under
Brazilian GAAP.
(vii) Classification of
statement of income line items
Under Brazilian GAAP, in addition to the
issues noted above, the classification of certain income and expense
items is presented differently from US GAAP.
The Company has recast its
statement of income under the Brazilian GAAP to present a condensed consolidated
statement of income in accordance with US GAAP. The reclassifications
are summarized as
follows:
1) Brazilian listed companies are required to present the
investment in
jointly-controlled associated companies on the proportional consolidation
method. For purposes of US GAAP, the Company has eliminated the
effects of the proportional consolidation and reflected its interest in the
results of investees on a single line item (Equity in results) in the recast
consolidated statement of income under US GAAP.
2) Under Brazilian GAAP, revenue from
construction services rendered are recorded net of respective costs
incurred to deliver such services, as Construction and services rendered, net as the Company
considers it acts as an agent in providing construction services to clients. For
purposes of US GAAP, construction service costs are classified in Operating costs as the
Company is considered the primary obligor and principal in the arrangement.
3) Interest income and interest expense,
together with other financial charges, are displayed within operating income in
the statement of income presented in accordance with Brazilian GAAP. Such
amounts have been reclassified to non-operating income and expenses in
the condensed consolidated statement of income in accordance with US
GAAP.
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise stated)
|
|
b.
|
Reconciliation of significant
differences between Brazilian GAAP and US
GAAP
|
|
|
(i)
|
Net
income
|
|
Note
|
Nine-month
period ended September 30, 2009
|
|
|
Net income under Brazilian
GAAP
|
-
|
55,711
|
|
Revenue recognition - net
operating revenue
|
28(a) (ii)
|
(347,617)
|
|
Revenue recognition - operating
costs
|
28(a) (ii)
|
237,222
|
|
Liability-classified stock
options
|
28(a) (iii)
|
5,127
|
|
Business
combination
|
28(a) (v)
|
(1,442)
|
|
Deferred income tax on adjustments
above
|
-
|
36,405
|
|
Net loss under US
GAAP
|
-
|
(14,594)
|
|
Net loss attributable to non
controlling interests
|
28(a) (i)
|
3,852
|
|
Net loss attributable to Tenda
under US
GAAP
|
-
|
(10,742)
|
|
Weighted-average number of common
shares outstanding in the year (in thousands)
|
-
|
400,652
|
|
Loss per
share
|
||
|
Common
|
||
|
Basic
|
(0.027)
|
|
|
Diluted
|
(0.027)
|
|
|
Reconciliation from US GAAP net
loss to US GAAP net loss allocated to common
shareholders
|
||
|
US GAAP net
loss
|
(10,742)
|
|
|
US GAAP net loss
allocated to common shareholders (basic earnings)
|
(10,742)
|
|
|
Reconciliation from US GAAP net
loss to US GAAP net loss allocated to common
shareholders
|
||
|
US GAAP net loss
allocated to common shareholders (diluted earnings)
|
(10,742)
|
|
|
|
A reconciliation of net loss from
Brazilian GAAP to US
GAAP for the nine-month period ended September 30, 2008 is not
available.
|
|
|
(ii)
|
Shareholders'
equity
|
|
Note
|
09/30/09
|
12/31/08
|
|
|
Shareholders'
equity under Brazilian GAAP
|
-
|
1,121,373
|
1,062,214
|
|
Revenue
recognition - net operating
|
28(a)
(ii)
|
(575,514)
|
(227,897)
|
|
Revenue
recognition - operating costs
|
28(a)
(ii)
|
377,114
|
139,892
|
|
Liability-classified
stock options
|
28(a)
(iii)
|
4,856
|
(272)
|
|
Business
combination
|
28(a)
(v)
|
25,905
|
27,347
|
|
Deferred
income tax on adjustments above
|
-
|
72,349
|
35,944
|
|
Total
Tenda shareholders' equity under US GAAP
|
-
|
1,026,083
|
1,037,228
|
|
Non
controlling interest
|
-
|
666
|
262
|
|
Shareholders'
equity under US GAAP
|
-
|
1,026,748
|
1,037,490
|
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise
stated)
|
|
c.
|
US
GAAP supplemental information
|
|
|
(i)
|
Recent
US GAAP accounting pronouncements
|
The Financial
Accounting Standards Board (“FASB”) recently issued a number of Statements of
Financial Accounting Standards and interpretations; the standards and
interpretations described below have not had or are not expected to have a
material impact on the financial position and results of operations of the
Company.
|
|
(i.i)
|
Accounting
pronouncements adopted
|
In December 2007,
the FASB issued a new standard on accounting for business combinations which
replaced a prior standard, “Business Combination”, which replaces a prior
standard. This statement retains the fundamental requirements of the prior
standard that the acquisition method of accounting (which was called the
purchase method) be used for all business combinations and for an acquirer to be
identified for each business combination. This statement defines the acquirer as
the entity that obtains control of one or more businesses in the business
combination and establishes the acquisition date as the date that the acquirer
achieves control. The prior standard did not define the acquirer, although it
included guidance on identifying the acquirer, as does this Statement. This
statement’s scope is broader than that of the prior standard, which applied only
to business combinations in which control was obtained by transferring
consideration.
The result of
applying this statements guidance on recognizing and measuring assets and
liabilities in a step acquisition was to measure them at a blend of historical
costs and fair values, a practice that provided less relevant,
representationally faithful, and comparable information than will result from
applying this statement. In addition, this statement’s requirement to measure
the noncontrolling interest in the acquiree at fair value will result in
recognizing the goodwill attributable to the noncontrolling interest in addition
to that attributable to the acquirer, which improves the completeness of the
resulting information and makes it more comparable across entities. By applying
the same method of accounting, the acquisition method, to all transactions and
other events in which one entity obtains control over one or more other
businesses, this statement improves the comparability of the information about
business combinations provided in financial reports. This statement applies
prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after
December 15, 2008. The Company has applied this pronouncement on a
prospective basis for each new business combination effective January 1,
2009 pursuant to the aforementioned application timetable.
In December 2007,
the FASB issued a new standard on accounting for non controlling interests,
which clarifies that a noncontrolling interest in a subsidiary is an ownership
interest in the consolidated entity that should be
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise stated)
reported as equity
in the consolidated financial statements. This statement is effective for fiscal
years, and interim periods within those fiscal years, beginning on or after
December 15, 2008 (that is, January 1, 2009, for entities with
calendar year-ends). Earlier adoption is prohibited. The effective date of this
Statement is the same as that of the related new standard on business
combinations. The Company has applied this Statement prospectively as of
January 1, 2009, except for the presentation and disclosure requirements.
The presentation and disclosure requirements have been applied retrospectively
for all periods presented, and the impact was immaterial to US GAAP
shareholder’s equity as of December 31, 2008.
In March 2008, the
FASB issued a new standard on disclosures about derivative instruments and
hedging activities. The new standard is intended to improve financial reporting
about derivative instruments and hedging activities by requiring enhanced
disclosures to enable investors to better understand their effects on an
entity’s financial position, financial performance, and cash flows. It is
effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008, with early application encouraged. The
Company adopted this statement effective January 1, 2009.
In May 2009, the
FASB issued a new standard on Subsequent Events. The objective of this Statement
is to establish principles and requirements for subsequent events. In
particular, this Statement sets forth: (i) the period after the balance
sheet date during which management of a reporting entity shall evaluate events
or transactions that may occur for potential recognition or disclosure in the
financial statements (ii) the circumstances under which an entity shall
recognize events or transactions occurring after the balance sheet date in its
financial statements and (iii) the disclosures that an entity shall make
about events or transactions that occurred after the balance sheet date. This
statement is effective for interim or annual financial periods ending after June
15, 2009. The Company adopted this statement effective June 30, 2009. The
Company has evaluated subsequent events through the date of November 13,
2009.
|
|
(i.ii)
|
Accounting
pronouncements not yet adopted
|
In
June 2009, the FASB issued a new standard on Accounting for Transfers of
Financial Assets. The objective of this statement is to improve the relevance,
representational faithfulness, and comparability of the information that a
reporting entity provides in its financial reports about a transfer of financial
assets; the effects of a transfer on its financial position, financial
performance, and cash flows; and a transferor’s continuing involvement in
transferred financial assets. This statement amends a prior standard on
Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities. This statement must be applied as of the beginning of each
reporting entity’s first annual reporting period that begins after
November 15, 2009, for interim periods within that first annual reporting
period and for interim and annual reporting periods
thereafter.
Construtora
Tenda S.A.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements as of
September
30, 2009 and
for the nine-month periods ended September
30, 2009 and
2008
(In
thousands of Brazilian Reais, unless otherwise stated)
Earlier application
is prohibited. This statement must be applied to transfers occurring on or after
the effective date. The Company is currently assessing the impact of this
statement on its consolidated financial statements.
In June 2009, the
FASB issued a new standard amending a prior standard related to variable
interest entities. The objective of this statement is to amend certain
requirements of a prior standard on the Consolidation of Variable Interest
Entities, to improve financial reporting by enterprises involved with variable
interest entities and to provide more relevant and reliable information to users
of financial statements. This statement shall be effective as of the beginning
of each reporting entity’s first annual reporting period that begins after
November 15, 2009, for interim periods within that first annual reporting
period, and for interim and annual reporting periods thereafter. Earlier
application is prohibited. The Company is currently assessing the impact of this
statement on its consolidated financial statements.
The FASB issued ASU
2009-01, Amendments based on Statement of Financial Accounting Standards No. 168
– The FASB Accounting Standards Codification and the Hierarchy of Generally
Accepted Accounting Principles, FASB Statement 168, The FASB Accounting Standard
Codification and the Hierarchy of Generally Accepted Accounting Principles,
which was issued to establish the codification as the sole source of
authoritative USGAAP recognized by FASB, excluding SEC guidance, to be applied
by nongovernmental entities. The Company adopted the provisions of ASM 2009-01
in these consolidated financial statements, and there was no significant
impact.
Index
to Consolidated Financial Statements as of December 31, 2008 and 2007, and for
the years ended December 31, 2008, 2007 and 2006 of Construtora Tenda
S.A.
Page
|
Report of
Independent Registered Public Accounting
Firm
|
F-120
|
|
Consolidated
Balance Sheets at December 31, 2008 and
2007
|
F-122
|
|
Consolidated
Statements of Operations for the years ended December 31, 2008, 2007 and
2006
|
F-125
|
|
Consolidated
Statements of Changes in Shareholders' Equity for the years ended December
31, 2008, 2007
and 2006
|
F-124
|
|
Consolidated
Statements of Cash Flows for the years ended
December of 2008, 2007 and 2006
|
F-126
|
|
Consolidated
Statements of Value Added for the years ended
December 31, 2008, 2007 and 2006
|
F-127
|
|
Notes to the
Consolidated Financial Statements as of and for the years ended December
31, 2008, 2007 and 2006
|
F-128
|
Report
of Independent
Registered
Public Accounting Firm
To the
Shareholders’ and the Board of Directors of Construtora Tenda S.A.:
|
|
1.
|
We have
audited the accompanying consolidated
balance sheets of Construtora Tenda S.A. and subsidiaries (the “Company”)
as of December 31, 2008 and 2007, and the related consolidated statements
of operations, changes in shareholders’ equity and cash flows for
each of the three years ended December 31, 2008, all expressed in
Brazilian reais. These consolidated financial statements are the
responsibility of the Company’s Management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
|
|
|
2.
|
We conducted
our audits in accordance with auditing standards generally accepted in the
United States of America as established by the American Institute of
Certified Public Accountants, and in Brazil. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The Company is
not required to have, nor were we engaged to perform an audit of its
internal control over financial reporting. Our audits included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effctiveness of the
Company’s internal control over financial reporting. Accordingly, we
express no such opinion. An audit also includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by Management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
|
|
|
3.
|
In our
opinion, the consolidated financial statements referred to above fairly
present, in all material respects, the consolidated financial position of
Construtora Tenda S.A. as of December 31,
2008 and 2007, and the results of its operations, changes in its
shareholders’ equity and its cash flows for each of the three years
ended December 31, 2008 in conformity with Brazilian accounting
practices.
|
|
|
4.
|
As mentioned
in Note 2.2., in connection with the changes in the accounting practices
adopted in Brazil in 2008, the consolidated balance sheet as of December
31, 2007, and the related consolidated statements of operations, changes
in shareholders’ equity and cash flows for each of the two years
ended December 31, 2007; presented for comparison purposes, were adjusted
and have been restated pursuant to Accounting Standards and Procedures NPC
12 - "Accounting Practices, Changes in Accounting Estimates and Correction
of Errors", approved by CVM Resolution No.
506/06.
|
|
|
5.
|
Accounting
practices adopted in Brazil vary in certain significant respects from
accounting principles generally accepted in the United States of America.
The information relating to the nature of such differences is presented in
Note 27 to the consolidated financial
statements.
|
/s/ Terco Grant
Thornton
Auditores Independentes, São
Paulo, April 27,2009 (except for respect to our opinion on the consolidated
financial statements insofar as it relates to the retrospective adoption of the
changes in the accounting practices adopted in Brazil in 2008, as to which the
date is November 4, 2009 and notes 26 b), c) and d), as to which the dates are
June 29, October 21 and October 2, 2009, respectively)
Construtora Tenda S.A.
Consolidated
Balance Sheets at December 31, 2008 and 2007
(In
thousands of reais)
A
S S E T S
|
Notes
|
12.31.2008 | 12.31.2007 | |||||||||
|
Current
assets
|
|
||||||||||
|
Cash and cas
equivalents
|
3
|
181,661 | 400,512 | ||||||||
|
Restricted
credits
|
4
|
20,226 | - | ||||||||
|
Receivables from
clients
|
5
|
142,689 | 73,085 | ||||||||
|
Properties for
sale
|
6
|
401,852 | 128,742 | ||||||||
|
Advances
|
7
|
33,842 | 25,895 | ||||||||
|
Recoverable
taxes
|
|
6,940 | 1,559 | ||||||||
|
Deferred
taxes
|
18
|
2,879 | - | ||||||||
|
Deferred selling
expenses
|
|
8,011 | 1,825 | ||||||||
|
Others
|
|
607 | 5,740 | ||||||||
|
Total current
assets
|
|
798,707 | 637,358 | ||||||||
|
|
|||||||||||
|
|
|||||||||||
|
|
|||||||||||
|
Non current
assets
|
|
||||||||||
|
Receivables from
clients
|
5
|
422,887 | 174,393 | ||||||||
|
Properties for
sale
|
6
|
148,137 | 47,092 | ||||||||
|
Deferred
taxes
|
18
|
95,167 | 52,123 | ||||||||
|
Escrow
deposits
|
8
|
7,977 | 3,919 | ||||||||
|
Deferred selling
expenses
|
|
1,719 | 408 | ||||||||
|
Related
parties
|
9
|
47,469 | - | ||||||||
|
Others
|
|
1,470 | 1,757 | ||||||||
|
|
724,826 | 279,692 | |||||||||
|
|
|||||||||||
|
|
|||||||||||
|
|
|||||||||||
|
Investments
|
10
|
- | 1,981 | ||||||||
|
Property and
equipment, net
|
11
|
17,276 | 7,218 | ||||||||
|
Intangible
assets
|
12
|
3,221 | 937 | ||||||||
|
|
|||||||||||
|
|
20,497 | 10,136 | |||||||||
|
|
|||||||||||
|
Total non current
assets
|
745,323 | 289,828 | |||||||||
|
Total
assets
|
1,544,030 | 927,186 |
The
accompanying notes are an integral part of these financial
statements.
Construtora
Tenda S.A.
Consolidated
Balance Sheets at December 31, 2008 and 2007
(In
thousands of reais)
L I
A B I L I T I E S and S H A R E H O L D E R S' E Q U I T
Y
|
Notes
|
12.31.2008 | 12.31.2007 | |||||||||
|
Current
liabilities
|
|||||||||||
|
Loans and
financing
|
13
|
52,584 | 23,304 | ||||||||
|
Suppliers
|
31,857 | 18,530 | |||||||||
|
Labor and tax
obligations
|
17,805 | 8,407 | |||||||||
|
Taxes
payable
|
14
|
2,698 | 2,426 | ||||||||
|
Advances from
clients
|
15
|
52,063 | 28,282 | ||||||||
|
Rescission
reimbursement payble and provisions
|
16
|
28,191 | 7,754 | ||||||||
|
Obligations for
purchase of land
|
17
|
53,336 | 51,345 | ||||||||
|
Deferred
taxes
|
18
|
24,224 | 19,403 | ||||||||
|
Related
parties
|
9
|
1,334 | - | ||||||||
|
Other
|
2,500 | 4,409 | |||||||||
|
Total current
liabilities
|
266,592 | 163,860 | |||||||||
|
Non current
liabilities
|
|
||||||||||
|
Loans and
financing
|
13
|
73,866 | 794 | ||||||||
|
Obligations for
purchase of land
|
17
|
|
15,312 | 16,030 | |||||||
|
Provision for
contingencies
|
19
|
|
26,840 | 3,008 | |||||||
|
Taxes
payable
|
14
|
|
14,272 | 11,933 | |||||||
|
Deferred
taxes
|
18
|
83,703 | 46,302 | ||||||||
|
Other
|
1,210 | 1,582 | |||||||||
|
Total non current
liabilities
|
|
215,203 | 79,649 | ||||||||
|
|
|||||||||||
|
Non-controlling
interest
|
|
21 | - | ||||||||
|
|
|||||||||||
|
Shareholders'
equity
|
|
||||||||||
|
Capital
Stock
|
20.1
|
755,236 | 692,700 | ||||||||
|
IPO
expenses
|
(38,474 | ) | (38,474 | ) | |||||||
|
Capital
reserves
|
20.2
|
374,591 | 20,381 | ||||||||
|
Income
reserves
|
|
9,070 | 9,070 | ||||||||
|
Retained
deficit
|
|
(38,209 | ) | - | |||||||
|
|
1,062,214 | 683,677 | |||||||||
|
|
|||||||||||
|
Total liabilities and
shareholders' equity
|
1,544,030 | 927,186 | |||||||||
The
accompanying notes are an integral part of these financial
statements.
Construtora
Tenda S.A.
Consolidated
Statements of Operations for the years ended December 31, 2008, 2007 and
2006
(In
thousands of reais)
| 12.31.2008 | 12.31.2007 | 12.31.2006 | ||||||||||
|
Gross
real estate operating revenue
|
504,502 | 277,514 | 81,213 | |||||||||
|
(
- ) Taxes on services and revenues
|
(19,254 | ) | (11,657 | ) | (3,898 | ) | ||||||
|
(
= ) Net operating revenue
|
485,248 | 265,857 | 77,315 | |||||||||
|
(
- ) Operating costs
|
(317,852 | ) | (181,942 | ) | (52,303 | ) | ||||||
|
(
= ) Gross profit
|
167,396 | 83,915 | 25,012 | |||||||||
|
(+/-)
Income (expenses)
|
||||||||||||
|
Administrative
expenses
|
(125,217 | ) | (32,709 | ) | (10,116 | ) | ||||||
|
Selling
expenses
|
(87,603 | ) | (29,776 | ) | (1,616 | ) | ||||||
|
Financial
income
|
9,646 | 920 | (2,368 | ) | ||||||||
|
Other
operating (expenses) income
|
(22,163 | ) | 1,039 | (2,379 | ) | |||||||
| (225,338 | ) | (60,526 | ) | (16,479 | ) | |||||||
|
(
= ) Income before provision for taxes
|
(57,942 | ) | 23,389 | 8,533 | ||||||||
|
(+) Provision
for taxes and social contributions - current and deferred
|
19,733 | (4,657 | ) | (5,657 | ) | |||||||
|
(
= ) Net income (loss)
|
(38,209 | ) | 18,732 | 2,876 |
The
accompanying notes are an integral part of these financial
statements.
F-124
Construtora
Tenda S.A.
Consolidated Statements of Changes
in Shareholders' Equity
for the years ended December 31,
2008, 2007 and 2006
(In
thousands of reais)
|
Capital
Reserves
|
Income Reserves
|
|||||||||||||||||||||||||||||||||||||||||||||||
|
Capital
Stock
|
IPO
Expenses
|
Special
Goodwill
|
FIT
Incorporation
|
Awarding
Options
|
Total
|
Revaluation
Reserve
|
Legal
Reserve
|
Revenues
Reserve
|
Total
|
Retained
Earnings (Deficit)
|
Total
|
|||||||||||||||||||||||||||||||||||||
|
Balances
at December 31, 2005 - as previously reported
|
2,280 | - | 485 | 359 | 844 | 11,321 | 14,445 | |||||||||||||||||||||||||||||||||||||||||
|
Retrospective
adjustments required by Law 11.638/07
|
- | 2,313 | 2,313 | (11,321 | ) | (9,008 | ) | |||||||||||||||||||||||||||||||||||||||||
|
Balances
at December 31, 2005 - Adjusted
|
2,280 | - | - | - | - | - | 485 | 359 | 2,313 | 3,157 | - | 5,437 | ||||||||||||||||||||||||||||||||||||
|
Realization of
Revaluation Reserve
|
- | (14 | ) | (14 | ) | 14 | - | |||||||||||||||||||||||||||||||||||||||||
|
Allocation of
income
|
200 | 2,631 | 2,831 | (2,831 | ) | - | ||||||||||||||||||||||||||||||||||||||||||
|
Dividends
|
- | - | (59 | ) | (59 | ) | ||||||||||||||||||||||||||||||||||||||||||
|
Net
income
|
- | - | 2,876 | 2,876 | ||||||||||||||||||||||||||||||||||||||||||||
|
'Balances
at December 31, 2006
|
2,280 | - | - | - | - | - | 471 | 559 | 4,944 | 5,974 | - | 8,254 | ||||||||||||||||||||||||||||||||||||
|
Capital
increase - Reserves
|
14,353 | - | (559 | ) | (13,794 | ) | (14,353 | ) | - | |||||||||||||||||||||||||||||||||||||||
|
Capital
increase - New stockholders credits
|
73,067 | - | - | 73,067 | ||||||||||||||||||||||||||||||||||||||||||||
|
Capital
increase - IPO
|
603,000 | - | - | 603,000 | ||||||||||||||||||||||||||||||||||||||||||||
|
IPO
expenses
|
(38,474 | ) | - | - | (38,474 | ) | ||||||||||||||||||||||||||||||||||||||||||
|
Special
goodwill reserves-EDSP92
|
20,381 | 20,381 | - | 20,381 | ||||||||||||||||||||||||||||||||||||||||||||
|
Realization of
Revaluation Reserve
|
- | (471 | ) | (471 | ) | 471 | - | |||||||||||||||||||||||||||||||||||||||||
|
Dividends
|
- | (1,283 | ) | (1,283 | ) | (1,283 | ) | |||||||||||||||||||||||||||||||||||||||||
|
Net
income
|
- | - | 18,732 | 18,732 | ||||||||||||||||||||||||||||||||||||||||||||
|
Allocation of
income
|
19,203 | 19,203 | (19,203 | ) | - | |||||||||||||||||||||||||||||||||||||||||||
|
'Balances
at December 31, 2007
|
692,700 | (38,474 | ) | 20,381 | - | - | 20,381 | - | - | 9,070 | 9,070 | - | 683,677 | |||||||||||||||||||||||||||||||||||
|
FIT
Residencial Incorporation
|
62,536 | 348,705 | 348,705 | - | 411,241 | |||||||||||||||||||||||||||||||||||||||||||
|
Awarding
options
|
5,505 | 5,505 | - | 5,505 | ||||||||||||||||||||||||||||||||||||||||||||
|
Net
Loss
|
- | - | (38,209 | ) | (38,209 | ) | ||||||||||||||||||||||||||||||||||||||||||
| - | ||||||||||||||||||||||||||||||||||||||||||||||||
|
'Balances
at December 31, 2008
|
755,236 | (38,474 | ) | 20,381 | 348,705 | 5,505 | 374,591 | - | - | 9,070 | 9,070 | (38,209 | ) | 1,062,214 | ||||||||||||||||||||||||||||||||||
The
accompanying notes are an integral part of these financial
statements.
F-125
Construtora
Tenda S.A.
Consolidated
Statements of Cash Flows for the
years
ended December of 2008, 2007 and 2006
(In
thousands of reais)
| 12.31.2008 | 12.31.2007 | 12.31.2006 | ||||||||||
|
Cash
flows from operating activities
|
||||||||||||
|
Net Income
(Loss):
|
(38,209 | ) | 18,732 | 2,876 | ||||||||
|
Expenses (income) not affecting
cash and cash equivalents
|
||||||||||||
|
Depreciation
|
3,684 | 753 | 519 | |||||||||
|
Amortization
|
4,628 | 1,802 | - | |||||||||
|
Decrease
of non current assets - investments
|
1,981 | 101 | - | |||||||||
|
Decrease
of non current assets - Property and equipment
|
- | 1,048 | - | |||||||||
|
Provision
for contingencies
|
23,832 | (10,828 | ) | 1,447 | ||||||||
|
Provision
for Bad Debit
|
10,359 | (3,319 | ) | 3,842 | ||||||||
|
Interests
of Federal Tax Installments
|
1,241 | 950 | 1,274 | |||||||||
|
Deferredt
Tax
|
(7,776 | ) | 13,116 | 7,142 | ||||||||
|
Awarding
Options
|
5,505 | - | - | |||||||||
|
Interests
of loans and financing
|
8,873 | 3,921 | 234 | |||||||||
|
Assets and Liabilities
changes
|
||||||||||||
|
Receivables
from clients
|
(288,054 | ) | (196,788 | ) | (39,829 | ) | ||||||
|
Properties
for sale
|
(429,877 | ) | (126,970 | ) | 5,912 | |||||||
|
Other
credits
|
(7,947 | ) | (24,584 | ) | 3,191 | |||||||
|
Deferred
selling expenses
|
(7,497 | ) | (2,233 | ) | - | |||||||
|
Recoverable
taxes
|
(5,381 | ) | 374 | (292 | ) | |||||||
|
Advanced
expenses
|
- | (2,163 | ) | - | ||||||||
|
Escrow
deposits
|
72 | 18 | (74 | ) | ||||||||
|
Restricted
credits
|
(19,371 | ) | (1,449 | ) | - | |||||||
|
Other
assets
|
988 | (255 | ) | 8 | ||||||||
|
Suppliers
|
13,327 | 17,974 | 298 | |||||||||
|
Labor
and tax obligations
|
9,398 | 8,190 | 53 | |||||||||
|
Tax
Provision
|
- | (74 | ) | 74 | ||||||||
|
Advances
from clients
|
39,204 | 7,127 | 10,257 | |||||||||
|
Accounts
payable
|
21,649 | 9,062 | (1,048 | ) | ||||||||
|
Obligations
for purchase of land
|
1,273 | 53,075 | 3,763 | |||||||||
|
Tax
Obligations - PAES / PAEX
|
- | (1,630 | ) | 790 | ||||||||
|
PIS/COFINS/IRPJ/CSLL
- federal installments
|
(2,760 | ) | (1,419 | ) | 1,792 | |||||||
|
Related
Parties - Tenda Engenharia
|
(46,135 | ) | (5,095 | ) | 1,059 | |||||||
|
Other
Liabilities
|
- | - | 2,218 | |||||||||
|
Effect
of changes to Law 11.638 and Law 11.941/09
|
- | - | (9,008 | ) | ||||||||
|
Net cash used in operating
activities
|
(706,993 | ) | (240,564 | ) | (3,502 | ) | ||||||
|
From investing
activities
|
||||||||||||
|
Property
and equipment increase
|
(13,742 | ) | (7,652 | ) | (279 | ) | ||||||
|
Goodwill
Investment aquisition increase
|
- | (2,085 | ) | - | ||||||||
|
Deferred
increase - Microsiga implementation
|
- | (664 | ) | - | ||||||||
|
Intangible
increase
|
(2,836 | ) | - | - | ||||||||
|
Net cash used in investing
activities
|
(16,578 | ) | (10,401 | ) | (279 | ) | ||||||
|
From financing
activities
|
||||||||||||
|
Capital
integralization in cash
|
- | 73,067 | - | |||||||||
|
Capital
integralization - IPO
|
- | 603,000 | - | |||||||||
|
IPO
expenses
|
- | (38,474 | ) | - | ||||||||
|
Financing,
net of amortization
|
36,791 | (1,121 | ) | 2,099 | ||||||||
|
Loan,
net of amortization
|
56,688 | 15,779 | 1,366 | |||||||||
|
Dividends
|
- | (1,283 | ) | (59 | ) | |||||||
|
FIT
incorporation
|
411,241 | - | - | |||||||||
|
Net cash provided by financing
activities
|
504,720 | 650,968 | 3,406 | |||||||||
|
Increase (decrease) in cash and
equivalents
|
(218,851 | ) | 400,003 | (375 | ) | |||||||
|
Cash and cash
equivalents
|
||||||||||||
|
At
the beginning of the year
|
400,512 | 509 | 884 | |||||||||
|
At
the end of the year
|
181,661 | 400,512 | 509 |
The
accompanying notes are an integral part of these financial
statements.
F-126
Construtora
Tenda S.A.
Consolidated Statements of Value
Added for the
Years ended December 31, 2008, 2007
and 2006
|
2008
|
2007
|
2006
|
|||||||||||||
|
1.
|
Revenues
|
||||||||||||||
|
|
|
||||||||||||||
|
Real
estate development sales
|
504,502
|
277,514
|
81,213
|
||||||||||||
|
Allowance
for doubtful accounts
|
(10,359
|
) |
3,319
|
(3,842
|
) | ||||||||||
|
Others
|
1,718
|
-
|
-
|
||||||||||||
|
495,861
|
280,833
|
77,371
|
|||||||||||||
|
|
|
|
|||||||||||||
|
2.
|
Purchases
from third parties
|
|
|
|
|||||||||||
|
Real
estate costs
|
317,852
|
181,942
|
52,303
|
||||||||||||
|
Material,
electric energy, third parties services and others
|
129,754
|
34,308
|
7,963
|
||||||||||||
|
Assets
losses
|
9,632
|
-
|
-
|
||||||||||||
|
457,238
|
216,250
|
60,266
|
|||||||||||||
|
|
|
|
|||||||||||||
|
3.
|
Value
Added - Gross
|
38,623
|
64,583
|
17,105
|
|||||||||||
|
|
|
|
|||||||||||||
|
|
|
|
|||||||||||||
|
4.
|
Depreciation
and Amortization
|
8,312
|
2,555
|
519
|
|||||||||||
|
|
|
||||||||||||||
|
|
|
|
|||||||||||||
|
5.
|
Value
Added - Net
|
30,311
|
62,028
|
16,586
|
|||||||||||
|
|
|
|
|||||||||||||
|
|
|
|
|||||||||||||
|
6.
|
Value
added received through transfer
|
|
|
|
|||||||||||
|
|
|
|
|||||||||||||
|
Finance
income
|
9,646
|
920
|
(2,368
|
) | |||||||||||
|
9,646
|
920
|
(2,368
|
) | ||||||||||||
|
|
|
|
|||||||||||||
|
7.
|
Value
added to be distributed
|
39,957
|
62,948
|
14,218
|
|||||||||||
|
|
|
||||||||||||||
|
8.
|
Value
added distribution
|
|
|
|
|||||||||||
|
|
|
|
|||||||||||||
|
Direct
compensation
|
46,392
|
24,069
|
1,461
|
||||||||||||
|
|
|
|
|||||||||||||
|
Tax
and contributions
|
31,492
|
20,147
|
9,747
|
||||||||||||
|
|
|
|
|||||||||||||
|
Interest
ans rents
|
282
|
-
|
134
|
||||||||||||
|
|
|
|
|||||||||||||
|
Income
(Losses) retained in the period
|
(38,209
|
) |
18,732
|
2,876
|
|||||||||||
|
39,957
|
62,948
|
14,218
|
|||||||||||||
The
accompanying notes are an integral part of these financial
statements.
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
|
1.
|
Operations
|
The operations of
Construtora Tenda S.A. (the “Company”) and its subsidiaries comprise
(a) the carrying out of civil construction works, (b) the development of real
estate ventures, (c) the purchase and sale of real estate properties, and
provision of civil construction management services, (d) the negotiation of
consortium quotas, (e) and investment in other Brazilian or foreign
companies.
On October 21,
2008, the merger of Residencial Empreendimentos Imobiliários Ltda. (“FIT”), a
wholly owned subsidiary of Gafisa S.A. (“Gafisa”), into the Company was approved
at the Extraordinary General Meeting (“AGE”), which counted on the attendance of
shareholders representing over 75% of the Company’s capital; the shareholders
representing 74% of total capital or 98% of present ones having voted in favor
of it. As a result of the merger, Gafisa now holds 60% of the total capital and
voting shares of the Company, which continues to trade as a separate Company at
the Novo Mercado of São Paulo Stock Exchange (“Bovespa”).
In view of the
merger, 240,391,470 new nominative common shares were issued, according to Note
19.1, without par value, fully subscribed and paid-in by the shareholders of
FIT, on behalf of and for the account of the only shareholder of the merged
company, Gafisa. The merged net assets on October 21, 2008 are stated as
follows:
|
(i) Summary balance
sheet
|
|
|
Current
assets
|
390,468
|
|
Non current
assets
|
114,101
|
|
Total
assets
|
504,569
|
|
Current
liabilities
|
(80,691)
|
|
Non current
liabilities
|
(12,637)
|
|
Total
liabilities
|
(93,328)
|
|
Merged net
assets
|
411,241
|
|
(ii) Capital increase recorded
in:
|
|
|
Capital
|
62,536
|
|
Recognition of capital
reserve
|
348,705
|
|
Merged net
assets
|
411,241
|
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
Thus Tenda’s capital increased by R$ 62,536 to R$
755,236, represented by 400,652,450 common shares.
Tenda’s shareholders also elected a
new Board of Directors,
composed of five members appointed by Gafisa: Wilson Amaral de Oliveira, Alceu
Duilio Calciolari, Rodrigo Osmo, Fernando Cesar Calamita, and Maurício Luchetti (the last one being an
independent member); and of two members appointed by HPJO Participações S.A, former controlling shareholder
of Tenda: José Olavo
Mourão Alves Pinto and
Henrique de Freitas Alves Pinto.
As part of the merger of the Company and
FIT operations, the Company’s management was changed as mentioned
above, which, in view of
the current market conditions, reviewed the policies on the renegotiation with
defaulting clients (Note 5) and provisions for contingencies (Note
19).
|
2.
|
Presentation
of financial statements and significant accounting
practices
|
2.1.
Basis
of presentation
The financial statements of Construtora
Tenda S.A, which include the consolidated
financial statements of its subsidiaries listed in Note 10, for the years ended December 31 2008, 2007 and 2006, were prepared in accordance with the
accounting practices adopted in Brazil, as determined by the Brazilian Corporate
Law (Law No. 6,404/76, amended by Law 11,638/07 and Provisional Measure No.
449/08), the regulations and resolutions of the “Comissão de Valores
Mobiliários” (the Brazilian Securities Commission – (“CVM”)), and the Pronouncements, Guidelines and
Interpretations issued by the “Comitê de Pronunciamentos Contábeis” (the
Brazilian Accounting Pronouncements Committee - (“CPC”)).
The changes introduced by Law No. 11,638
had significant effects on the financial statements for the year ended
December 31, 2008, 2007 and 2006, as described in
Note
2.2.
2.2. Summary
of the modified accounting practices and statement of effects on shareholders’
equity
The main changes in the accounting
practices introduced by Law No. 11,638 and Articles 36 and 37 of Provisional
Measure No. 449,
in the regulations
established by CVM, in the Pronouncements, Guidelines and Interpretations issued
by the CPC applicable to the Company, adopted for the preparation of the
financial statements for the years ended December 31 2008, 2007 and 2006, were as follows:
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
a) Substitution of the statement of
financial position for the statement of cash flows, prepared according to CPC 03
– Statement of Cash Flows.
b) Inclusion of statement of added
value, which shows the composition of source and use of such amounts according
to CPC 09 – Statement of Added Value.
c) Creation of a new
subgroup of accounts, intangible assets, which includes goodwill, for purposes
of disclosure in the balance sheet. This
account records the rights which objects are intangible assets used in the
Company’s maintenance or exercised for this purpose. According to CPC 04, this group
received the reclassification of software, which was recorded in the property
and equipment, including the financial statements for the year ended December 31, 2007, as stated in Note 11. The balance of goodwill arising from
the merger of EDSP92, as it
refers solely to the tax benefit from merger, was reclassified, including for 2007 (see Note 17 – tax credits).
d) Requirement of periodic analysis of
the recoverability of amounts recorded in assets (impairment test), according to
CPC 01 – Reduction to the Recoverable Value of Assets. This analysis produced
effect on the balance sheet as of December 31, 2008, as disposals have been recorded in
property for sale, advances to suppliers and goodwill on investment in
subsidiaries.
e) Requirement of recording in property
and equipment of rights which object are tangible assets of the Company’s
activities, including those arising from lease transactions, classified as
leasing, according to CPC 06 - Lease.
f) Requirement of recording of
investments in financial instruments as follows: (i) at their market or
equivalent values, when they refer to trading or available-for-sale
securities; (ii) at cost of purchase or issuance, adjusted according to
legal or contractual provisions, adjusted at the probable realization value, if
the latter is lower, when they refer to
held-to-maturity securities; and (iii) at amortized cost when they refer to
loans and financing and receivables from clients, according to CPC 14 –
Financial Investments: Recognition, Measurement and Evidence. This change did
not produce effects to be recorded in the financial statements for the
years ended December 31 2008, 2007 and 2006 as a result of the characteristics and
intents of the Company in relation to these instruments.
g) Elimination of the disclosure of the
heading “Non-operating Result” in the statement of income, as provided for by
Provisional Measure No. 449/08.
h) Adjustment to present value of
transactions in long-term assets and liabilities and significant ones in short
term, as provided for by CPC 12 – Adjustment to Present Value. The Company
adjusted to present value the receivable from clients for the sale of properties
and accounts payable for the purchase of land.
i) On December 17, 2008 the CPC issued the guideline OCPC01,
approved by CVM Resolution No. 561, with the purpose of clarifying the matters
that aroused doubts about the accounting practices adopted by real estate
development companies. The main ones are as
follows:
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
Exchange transactions
recorded at fair value:
exchanges in the purchase of land for units to be
built were recorded at estimated cost (Tenda) or diluted in other units (FIT)
started to be recorded at fair value, valued at the sales price of exchanged units, as contra-entry to advances from
clients, and recognition of gross operating value, according to recognition
criterion for revenues described in Note 2.2.1. The exchange transaction started to give rise to a
gain or loss to the Company.
Deferred selling
expenses (sales commission): shall be recorded in assets and
recognized in expense for the year adopting the same
recognition criterion for revenues described in Note 2.2.1. This criterion was
already adopted by the Company.
Advertising,
marketing and promotion expenses: shall be recognized in expense for the year as selling expenses when
effectively incurred. This criterion was already adopted by the
Company.
Expenses for sales
stand and mock-up apartment: shall be recorded in property and
equipment and depreciated over the useful life when it is over 12 months.
Expenses were reclassified into property and equipment.
Capitalization of
interest cost: the interest incurred with loans and
financing linked to the construction of real estate ventures shall be recorded
in assets and recognized as real estate sales cost proportionally to the ideal
fraction sold. This criterion was already adopted by the
Company.
Warranty
provision: shall be a
component of real estate sales cost. The Company hires third parties to build
its real estate ventures. These provide warranty after construction. Therefore
this provision was not set up.
Classification in
income of monetary adjustment and interest on receivables from
clients: these were
classified into gross operating revenue as stated in Note
2.3.1.
Adjustment to present
value: in the installment
sales of unfinished units, receivables from clients shall be stated at present
value, considering the term and the difference between market interest rates and
interest rates implicit in contracts for purchase and sale of real estate units
on the signature date. The Company calculated at present value the receivables
from clients related to unfinished units and recorded the proportional amount
according to the criterion described in Note 2.2.1.
To assure consistency of presentation,
the Company and its subsidiaries have retroactively applied changes to Brazilian
GAAP introduced by the newly formed CPC and the provisions of Law No. 11.638/07
from January 1,
2006 and have elected for
tax purposes to adopt Provisional Measure No. 449/08 ("MP No. 449/08"). By
opting to apply the provisions of MP No. 449/08, the effects of the accounting
changes to Brazilian GAAP introduced by Law No.11.638/07 and the new CPC
standards do not generate tax effects for two years. The chart below shows the
effects on prior years, classified in retained earnings (accumulated losses) in
shareholders’ equity, in the Company and consolidated:
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
|
Income
|
Shareholders’
equity
|
|||
|
Period
ended December 31, of:
|
Year
Ended:
|
|||
|
2008
|
2007
|
2006
|
2005
|
|
|
Balances
before the changes introduced by Law No. 11,638/07 and MP No.
449/08
|
(32,528)
|
(7,474)
|
4,001
|
14,445
|
|
Adjustments
to present value introduced by CPC 12
|
(5,037)
|
(4,084)
|
(1,860)
|
(1,253)
|
|
Effect on
revenue of recognition of barter transactions at fair value introduced by
OCPC01
|
26,308
|
33,584
|
7,637
|
6,379
|
|
Effect on
cost of recognition of barter transactions at fair value introduced by
OCPC01
|
(18,903)
|
(30,088)
|
(4,248)
|
(11,916)
|
|
Effect on
selling expenses due to sales stand and mock-up apartment criterion
change
|
(615)
|
-
|
-
|
-
|
|
Analysis of
recovery of amounts recorded in assets - Impairment introduced by CPC
01
|
(9,632)
|
-
|
-
|
-
|
|
Effect on
stock options value introduced by CPC 10
|
(5,505)
|
-
|
-
|
-
|
|
Deferred
taxes on the above adjustments and equalization of
criterion
|
7,703
|
(11,677)
|
(2,654)
|
(2,218)
|
|
Others
(IPO)
|
-
|
38,471
|
-
|
-
|
|
Net effects
arising from the full application of Law No. 11,638/07 and MP No.
449/08
|
(5,681)
|
26,206
|
(1,125)
|
(9,008)
|
|
Balances
with the full application of Law No. 11,638/07 and MP No.
449/08
|
(38,209)
|
18,732
|
2,876
|
5,437
|
2.3.
Significant
accounting practices
2.3.1.
Real
estate development and sales revenue
Real estate sales
result is calculated, considering the contractual revenues plus monetary
variations less the following costs: expenditures on purchase and regularization
of land, and direct and indirect costs related to construction.
Real estate sales
revenues are recognized considering the following:
(i)
For completed units: result is
recognized when the sale is made, regardless of the receipt of the contractual
amount;
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
(ii)
For uncompleted units, the result is
recognized according to the criteria established by the CFC (Federal Accounting Council)
Resolution No. 963/03 as
follows:
1.
Sales revenue and
land and construction costs inherent to the respective developments are
recognized in income based on the percentage-of-completion method of each
venture, this percentage being measured based on the incurred cost corresponding
to the total estimated cost of respective ventures, including costs of
land;
2.
The sales revenue
recognized according to item (i), including interest and inflation-indexation
charges, net of installments received, are recorded in receivables from clients.
Any amount received that exceeds the amount of revenues recognized is recorded
as advances from clients.
Fixed interest
rates are recognized in income on an accrual basis, regardless of their
receipt.
2.3.2.
Use of estimates -- The
preparation of financial statements requires management to make assumptions
about recognition of estimates for recording certain assets and liabilities and
other transactions, such as: provisions for contingencies, allowance for
doubtful accounts, provision for rescission, useful lives of property and
equipment items, percentage of completion of construction work, real estate
development and sale revenue, and current and deferred taxes on income,
classification into short and long term, among others.
The result to be
measured at the time of the realization of facts which resulted in the
recognition of those estimates, may differ from the amounts recognized in the
current financial statements.
2.3.3. Cash and cash equivalents --
These include cash, positive balance of checking account, financial
investments with immediate liquidity and insignificant risk of change in market
value. Most of the financial investments included in cash equivalents is
classified into the category “financial assets at fair value through profit or
loss”. The breakdown of these investments per category is shown in Note
3.
2.3.4. Receivables from clients --
These are stated at present and realization values, recognized according
to the criterion described in Note 2.2.1. Allowances are provided in an amount
considered sufficient by management for credits which recovery is considered
doubtful.
2.3.5. Properties for sale -- These
are stated at cost of construction or purchase, or market value, whichever is
lower. Property cost is composed of expenditures for the following: purchase of
land (cash or barter stated at fair value), materials, labor and development
expenses, as well as financial charges during construction.
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
2.3.6. Investments -- Investments in
subsidiaries are accounted for under the equity method.
2.3.7. Property and equipment --
These are stated at acquisition, formation or construction. Depreciation
is calculated on the straight-line basis at the rates mentioned in Note 11.
Leasehold improvements are amortized over the life of the
agreements.
2.3.8. Intangible assets --
Intangible assets purchased separately are measured at the initial
recognition of cost of purchase, and further deducted from accumulated
amortization and loss on recoverable value, when applicable.
2.3.9. Assessment of impairment of assets
(impairment test) -- Management annually reviews the net book value of
assets with the purpose of evaluating events or changes in economic, operating
or technological circumstances that may indicate impairment or impairment
loss.
When such evidences
are found, and the net book value exceeds the recoverable value, a provision for
impairment is recognized, adjusting the net book value to the recoverable
value.
2.3.10. Other assets and liabilities
(current and non current) -- An asset is recognized in the balance sheet
when its future economic benefits will probably be generated for the Company,
and its cost or value can be measured with reliability. A liability is
recognized in the balance sheet when the Company has an obligation that is legal
or from a past event, taking into consideration that an economic resource may be
required to settle it. These are added, when applicable, by the corresponding
indexation charges and foreign exchange gains and losses. Provisions are
recorded based on the best estimates on the involved risk. Assets and
liabilities are classified into current when their realization or settlement
will probably occur in the next twelve months; otherwise they are classified
into noncurrent.
2.3.11. Stock option plan --
Expenses represented by stock option benefits granted to executive
officers, management members or employees, stated at fair value, incurred
between the granting date and the date when options can be exercised on accrual
basis, are recorded as contra-entry to shareholders’ equity, as described in
Note 25.
2.3.12. Adjustment to present value
of assets and liabilities -- Monetary assets and liabilities are adjusted
to present value in the initial recognition of the transaction, taking into
consideration the contractual cash flows, the interest rate established, and
those that are implicit in certain cases, of the respective assets and
liabilities, and rates used in the market for similar transactions.
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
2.3.13 Selling expenses --
Selling expenses include expenditures on own stores, participation in
real estate trade fairs, advertising and publicity, recorded on an accrual
basis. Sales commission is recorded in income as described in Note
2.2.1.
2.3.14 Taxes on income - As
permitted by tax legislation, gross operating revenue is taxed on a cash basis
and not according to the criterion that was previously described for recognizing
this revenue. Taxes on income in Brazil comprise a federal statutory rate at 15%
plus income tax at 10% and social contribution at 9%. The effects of income tax
and social contributions are recorded considering the temporary differences from
recognition of revenues and expenses for accounting and tax purposes, as
described in Note 19.
2.3.15 Earnings / loss per share --
Earnings or loss per share is calculated based on the number of shares
outstanding at the end of each year.
2.3.16 Contingent assets and
liabilities and legal obligations -- The accounting practices for
recording and disclosing contingent assets and liabilities and legal obligations
are as follows:
Contingent assets are
recognized only when there are collaterals or favorable final and unappealable
court decisions. Contingent assets which chances of success is considered
probable are only disclosed in the proper note;
Contingent liabilities are
provisioned when losses are considered probable and the involved amounts can be
measured with reliability. These are also added to the provisions for losses
considered possible in the cases in which the Company intends to settle the
claim before it is judged at all levels.
Legal obligations are recorded
as liabilities, regardless of the chances of success, in proceedings in which
the Company challenged the unconstitutionality of taxes.
2.3.17 Consolidation of financial
statements -- The consolidated financial statements of the Company are
prepared in conformity with the applicable consolidation practices and legal
provisions. Accordingly, intercompany investments and transactions are
eliminated upon consolidation, including accounts, income and expenses and
unrealized results. Jointly-controlled investees are consolidated based on the
proportion of equity interest held by the Company.
|
3.
|
Cash
and cash equivalents
|
These are composed
of the following:
|
December
31, 2008
|
December
31, 2007
|
|
|
Cash and
banks
|
26,690
|
22,737
|
|
Investment
funds (a)
|
154,971
|
377,775
|
|
Total
|
181,661
|
400,512
|
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
(a)
Investments in
investment funds refer to investments made through fixed-income funds, which
quotes are valued through the application of resources, exclusively in
government securities, indexed to fixed rates, floating rates and/or price
indexes.
|
4.
|
Restricted
credits
|
These are
represented by receivables in connection with associate credits (“créditos
associativos”), a government real estate finance aid, which are in phase of
release by the financial institution:
|
December
31, 2008
|
December
31, 2007
|
|
|
Restricted
credits
|
20,226
|
-
|
|
5.
|
Receivables
from clients
|
These are composed
of the following:
|
December
31, 2008
|
December
31, 2007
|
|
|
Receivables
from clients (a)
|
609,476
|
255,694
|
|
Allowance
for doubtful accounts (b)
|
(18,815)
|
(8,456)
|
|
Provision
for rescission (c)
|
(11,197)
|
-
|
|
Postdated
checks
|
536
|
240
|
|
Adjustment
to present value
(d)
|
(14,424)
|
-
|
|
Total
|
565,
576
|
247,478
|
|
(-)
Current
|
142,689
|
73,085
|
|
Noncurrent
|
422,887
|
174,393
|
(a)
As mentioned
in Note 2.3.4, total receivables from clients related to real estate units sold
and not yet completed is not reflected in the financial statements, once its
recording is limited to the portion of revenue recognized in the books, net of
the portion already received;
(b)
Allowance set
up to cover occasional losses in connection with clients. The refereed provision
presented the following movement:
|
Description
|
2008
|
2007
|
|
Beginning
balance
|
(8,456)
|
(11,775)
|
|
(-)
Rescussion made
|
(1,994)
|
3,319
|
|
(+)
New provisions
|
(8,365)
|
-
|
|
(+)
Change in estimates
|
-
|
-
|
|
(=)
Ending balance
|
(18,815)
|
(8.456)
|
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
(c)
Provision set up to
cover occasional losses in connection with clients with installments in arrears;
its calculation took into consideration the recovery of the respective real
estate from defaulting clients.
|
Description
|
Units
|
R$
|
|
Provision
recorded (i)
|
5,109
|
(54.576)
|
|
(-)
Rescission made
|
(3,983)
|
31,460
|
|
(-)
Provision reversion (ii)
|
(909)
|
11,938
|
|
(+)
New provision
|
6
|
(19)
|
|
(=)
Current balance – 12.31.08
|
223
|
(11,197)
|
(i) On
September 30, 2008, the Company revised the renegotiation policy for clients in
default, and given the current market conditions, the provision is constituted
for clients with three or more installments in arrears. The provision
calculation considered the recovery of the related properties, and also the
effect of possible rescissions of ventures to be cancelled, with low economic
viability, mainly due to low sales (below 30%), since its construction is not
justifiable.
(ii)
The provision related to ventures cancelled was reversed in December 31, 2008
due to the management review decision.
(d)
Adjustment to
present value calculated based on uncompleted units, according to CPC 12 and
OCPC 01.
|
6.
|
Properties
for sale
|
These are
represented by costs of real estate units completed and under construction, and
land for future developments, as shown below:
|
December
31, 2008
|
December
31, 2007
|
|
|
Land
for future development
|
197,058
|
93,986
|
|
Properties
under construction
|
344,196
|
78,232
|
|
Units
completed
|
11,141
|
3,616
|
|
Provision
for impairment of assets – land
|
(1,927)
|
-
|
|
Adjustment
to present value of accounts payable of land
|
(479)
|
-
|
|
Total
|
549,989
|
175,834
|
|
(-)
Current
|
401,852
|
128,742
|
|
Noncurrent
|
148,137
|
47,092
|
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
|
7.
|
Advances
|
These are composed
of the following:
|
December
31, 2008
|
December
31, 2007
|
|
|
Suppliers
(a)
|
13,503
|
1,009
|
|
Land
(b)
|
18,975
|
14,795
|
|
Construction
companies / Franchisees (c)
|
5,058
|
9,707
|
|
Other
receivables
|
604
|
384
|
|
Provision
for impairment of assets (d)
|
(4,298)
|
-
|
|
Total
|
33,842
|
25,895
|
(a)
These are substantially represented by amounts granted for supply
and advances for purchase of materials, to be transferred to the cost incurred
when construction work is completed;
(b)
Amounts related to
advances related to purchase option, studies, and sundry expenditures for future
purchase of land, which will be transferred to properties for sale after the
actual purchases;
(c)
Advances granted to
construction companies for covering the cost of works, which accounts will be
rendered in subsequent periods;
(d)
Substantially
represented by accrual of expenditures on studies for purchase of land that may
not be made.
|
8.
|
Escrow
deposits
|
These are composed
of the following:
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
|
December
31, 2008
|
December
31, 2007
|
|
|
Cofins
(a)
|
7,977
|
3,847
|
|
Other
|
-
|
72
|
|
Total
|
7,977
|
3,919
|
(a) Escrow deposits made from March 2000 to
January 2004, related to the tax which collection requirement is suspended –
COFINS (Contribution for Social Security Financing), as mentioned in Note
14, item b.
|
9.
|
Related
parties
|
The Company
participates in jointly-controlled ventures with other partners to develop real
estate properties. The management frameworks of these ventures, including cash
management, are centralized in the lead partner, which supervises the
construction, and budgets. Thus, the lead partner assures that the investments
of the necessary funds are made and allocated as planned. As of December 31,
2008 and 2007 the current account balance with other partners was as
follows:
|
December
31, 2008
|
December
31, 2007
|
|
|
Assets
|
||
|
Current
account with partners
|
47,469
|
-
|
|
Liabilities
|
-
|
-
|
|
Current
account with partners
|
1,334
|
-
|
|
10.
|
Investments
|
|
|
a.
Goodwill on purchase of
Investments
|
The purchase of
interest in the company Guapurá Empreendimentos Imobiliários Ltda. gave rise to
a goodwill based on the property’s market value. The Company analyzed the
recoverable value of the asset according to CPC 01, recording a provision. As of
December 31, 2008 and 2007, the corresponding goodwill was zero and R$1,981,
respectively.
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
b.
Information on investees
|
Investees
|
Participation
|
Equity
|
Net Income (loss) for the
period
|
Equity
Equivalence
|
Income
Equivalence
|
|
Fit Roland
Garros
|
100%
|
4,749
|
390
|
4,749
|
390
|
|
Mário Covas
SPE
|
80%
|
5,997
|
(280)
|
4,798
|
(224)
|
|
Imbuí I SPE
|
50%
|
4,545
|
616
|
2,273
|
308
|
|
Acedio SPE
|
55%
|
2,935
|
(15)
|
1,614
|
(8)
|
|
Maria Inês
SPE
|
60%
|
2,615
|
157
|
1,569
|
94
|
|
Fit 04 SPE
|
75%
|
672
|
(84)
|
504
|
(63)
|
|
Fit 01 SPE
|
100%
|
100
|
(231)
|
100
|
(231)
|
|
Fit 02 SPE
|
60%
|
(3,461)
|
(4,118)
|
(2,077)
|
(2,472)
|
|
Fit 03 SPE
|
80%
|
494
|
(30)
|
395
|
(24)
|
|
Cittá Ipitanga
SPE
|
50%
|
2,658
|
(349)
|
1,329
|
(174)
|
|
Fit Jardim Botânico
SPE
|
55%
|
9,562
|
28
|
5,259
|
16
|
|
Fit 05 SPE
|
90%
|
1,774
|
(517)
|
1,597
|
(465)
|
|
FIT 08 SPE
|
70%
|
(2)
|
(3)
|
(2)
|
(2)
|
|
FIT 09 SPE
|
75%
|
(202)
|
(353)
|
(152)
|
(265)
|
|
Fit 10 SPE
|
60%
|
(1,897)
|
(713)
|
(1,138)
|
(428)
|
|
Fit 11 SPE
|
70%
|
1,054
|
(2)
|
738
|
(1)
|
|
Fit 12 SPE
|
75%
|
(83)
|
(38)
|
(62)
|
(29)
|
|
Fit 13 SPE
|
100%
|
7,278
|
45
|
7,278
|
45
|
|
Fit 14 SPE
|
60%
|
(460)
|
(332)
|
(276)
|
(199)
|
|
Fit Palladium
SPE
|
70%
|
(601)
|
(174)
|
(421)
|
(122)
|
|
Fit 06 SPE
|
100%
|
1
|
-
|
1
|
-
|
|
Fit 07 SPE
|
50%
|
(458)
|
(59)
|
(229)
|
(30)
|
|
Fit 19 SPE
|
55%
|
(1,858)
|
(1,591)
|
(1,022)
|
(875)
|
|
Fit 21 SPE
|
90%
|
1,391
|
(1,481)
|
1,252
|
(1,333)
|
|
Fit 23 SPE
|
100%
|
-
|
-
|
-
|
-
|
|
Fit - Bricks
SPE
|
90%
|
(2,309)
|
(2,232)
|
(2,078)
|
(2,009)
|
|
Fit 17 SPE
|
75%
|
(2)
|
-
|
(1)
|
-
|
|
FGM Incorporações
S/A
|
51%
|
427
|
(419)
|
218
|
(214)
|
|
Cipesa Projeto
02
|
50%
|
(792)
|
(265)
|
(396)
|
(132)
|
|
Fit 18 SPE
|
75%
|
(70)
|
(30)
|
(53)
|
(22)
|
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
|
Fit 16 SPE
|
70%
|
(912)
|
(1,173)
|
(638)
|
(821)
|
|
Fit 22 SPE
|
100%
|
(79)
|
(74)
|
(79)
|
(74)
|
|
Fit 25 SPE
|
75%
|
(1)
|
-
|
(1)
|
-
|
|
Fit 28 SPE
|
75%
|
(27)
|
-
|
(20)
|
-
|
|
Fit 29 SPE
|
50%
|
(43)
|
(38)
|
(22)
|
(19)
|
|
Fit 30 SPE
|
75%
|
(1)
|
-
|
(1)
|
-
|
|
Fit 31 SPE
|
70%
|
(86)
|
(43)
|
(60)
|
(30)
|
|
Fit 32 SPE
|
100%
|
698
|
(4)
|
698
|
(4)
|
|
Fit 33 SPE
|
70%
|
(110)
|
(93)
|
(77)
|
(65)
|
|
Fit 34 SPE
|
70%
|
(46)
|
(44)
|
(32)
|
(31)
|
|
Fit 35 SPE
|
100%
|
4,486
|
(1)
|
4,486
|
(1)
|
|
Fit 36 SPE
|
100%
|
(330)
|
(805)
|
(330)
|
(805)
|
|
Fit 37 SPE
|
100%
|
2,376
|
(75)
|
2,376
|
(75)
|
|
Fit 38 SPE
|
100%
|
1,187
|
(3)
|
1,187
|
(3)
|
|
Fit 39 SPE
|
100%
|
1,947
|
-
|
1,947
|
-
|
|
Fit 40 SPE
|
100%
|
3,819
|
-
|
3,819
|
-
|
|
Fit 41 SPE
|
100%
|
(61)
|
-
|
(61)
|
-
|
|
Fit 42 SPE
|
100%
|
962
|
-
|
962
|
-
|
|
Fit 26 SPE
|
75%
|
(1)
|
-
|
(1)
|
-
|
|
Fit 27 SPE
|
100%
|
(1)
|
-
|
(1)
|
-
|
|
Fit 43 SPE
|
100%
|
(1)
|
-
|
(1)
|
-
|
|
Fit 20 SPE
|
100%
|
(1)
|
-
|
(1)
|
-
|
|
Fit João de Alencar
SPE
|
75%
|
(1)
|
(1)
|
(1)
|
(1)
|
|
Osasco Life
|
100%
|
6,420
|
1,709
|
6,420
|
1,707
|
|
Vila Park
|
100%
|
9,040
|
(457)
|
9,040
|
(456)
|
|
Itaquera
Life
|
100%
|
1,049
|
43
|
1,049
|
43
|
|
Guaianazes
|
100%
|
930
|
(207)
|
930
|
(207)
|
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
|
Jd, São
Luiz
|
100%
|
2,790
|
(11)
|
2,790
|
(11)
|
|
Salvador
Dali
|
100%
|
3,979
|
(265)
|
3,979
|
(265)
|
|
Valência
|
100%
|
814
|
(30)
|
814
|
(30)
|
|
Guapurá
|
50%
|
568
|
-
|
284
|
-
|
|
Klabin Segall Fit 1 SPE
Ltda,
|
50%
|
5,716
|
-
|
2,858
|
-
|
|
Vila Alegro
|
50%
|
4,662
|
-
|
2,332
|
-
|
|
Parque dos
Pássaros
|
50%
|
(898)
|
(38)
|
(449)
|
(19)
|
|
Total
|
82,901
|
(13,690)
|
69,963
|
(9,636)
|
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
|
11.
|
Property
and equipment, net
|
These are composed
of the following:
|
%
- Depreciation rate/year
|
December
31, 2008
|
December
31, 2007
|
|
|
Machinery and
equipment
|
10
|
13,560
|
1,730
|
|
Vehicles
|
20
|
988
|
634
|
|
IT
equipment
|
20
|
4,218
|
2,264
|
|
Leasehold
improvements
|
6,257
|
3,767
|
|
|
Other
|
178
|
258
|
|
|
Total
property and equipment
|
25,201
|
8,653
|
|
|
( - ) Accumulated
depreciation
|
(7,925)
|
(1,435)
|
|
|
Total
property and equipment, net
|
17,276
|
7,218
|
|
12.
|
Intangible
assets
|
These are composed
of the following:
|
December
31, 2008
|
December
31, 2007
|
|
|
Softwares
|
3,990
|
499
|
|
Other
|
8
|
664
|
|
(-) Accumulated
amortization
|
(777)
|
(226)
|
|
Total
|
3,221
|
937
|
|
13.
|
Loans
and financing
|
These are composed
of the following:
|
Annual
interest rate
|
December
31, 2008
|
December
31, 2007
|
|
| Working capital (a) | 100% to 105% of CDI or CETIP + 3% to 4% p.a . |
62,840
|
21,715
|
|
National Housing System – SFH
(b)
|
10
to 11.4% p.a. or TR + 8.33% p.a.
|
57,432
|
2,383
|
|
Other
|
6,178
|
-
|
|
|
Total
|
126,450
|
24,098
|
|
|
(-)
Current
|
52,584
|
23,304
|
|
|
Noncurrent
|
73,866
|
794
|
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
|
(a)
|
Loans are
guaranteed by promissory notes or own
receivables;
|
|
(b)
|
Financing are
guaranteed by mortgages on the
land.
|
Future payments on
financings are required as follows:
|
Year
|
2008
|
|
2010
|
39,847
|
|
2011
|
28,834
|
|
2012
|
3,275
|
|
2013
|
1,910
|
|
TOTAL
|
73,866
|
|
14.
|
Taxes
payable
|
These are composed
of the following:
|
December
31, 2008
|
December
31, 2007
|
|
|
Federal
tax installments (a)
|
8,993
|
10,512
|
|
Cofins
(b)
|
7,977
|
3,847
|
|
Total
|
16,970
|
14,359
|
|
Current
|
2,698
|
2,426
|
|
Noncurrent
|
14,272
|
11,933
|
(a)
Taxes are being
paid in 60 monthly installments, adjusted by the Selic (Central Bank overnight
rate);
(b)
The Company is
challenging the constitutionality of federal taxes related to the Contribution
for Social Security Financing (COFINS), particularly regarding the rate
increase, in relation to which the Company chose to make
escrow deposit at the original amounts owed from March 2000 to
January 2004, as mentioned in Note 8.
|
15.
|
Advances
from clients
|
These are composed
of the following:
|
December
31, 2008
|
December
31, 2007
|
|
|
Receipts
in excess of the appropriated revenue (note
2.2.1)
|
5,572
|
28,282
|
|
Land
swap transactions stated at fair value
|
46,491
|
-
|
|
Total
|
52,063
|
28,282
|
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
|
16.
|
Rescission
reimbursement payable and
provisions
|
These are composed
of the following:
|
December
31, 2008
|
December
31, 2007
|
|
|
Rescission
reimbursement payable
(a)
|
24,620
|
7,754
|
|
Provision
for rescission and annulments of sales contract (b)
|
3,571
|
-
|
|
Total
|
28,191
|
7,754
|
(a)
Accounts payable,
which have specific settlement conditions for each case, the average term being
5 months for payment.
(b)
The set up of the
provision takes into consideration the prospect of returning the amount received
to clients according to contractual clauses.
|
17.
|
Obligations
for purchase of land
|
These are
commitments assumed upon purchase of land for real estate
development:
|
December
31, 2008
|
December
31, 2007
|
|
|
Land
payable
|
69,127
|
67,375
|
|
Adjustment
present value Ajuste a valor presente
|
(479)
|
-
|
|
Total
|
68,648
|
67,375
|
|
Current
|
53,336
|
51,345
|
|
Noncurrent
|
15,312
|
16,030
|
Balances incur
significantly monetary adjustments by the National Civil Construction Index
(INCC) variation until the closing date of financial statements. These accounts
payable are guaranteed by an instrument for acknowledgement of debt, promissory
notes or letter of guarantee.
At December 31, 2008 maturities were as
follows:
|
December
31, 2008
|
|
|
2010
|
14,972
|
|
2011
|
332
|
|
2012
and thereafter
|
8
|
|
TOTAL
|
15,312
|
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
|
18.
|
Deferred
taxes
|
Deferred income tax, social
contribution, Social Integration Program (PIS) and COFINS are recorded to
reflect the tax effects arising from temporary differences between tax basis
(SRF Regulatory Instruction No. 84/79) and the effective appropriation of real
estate profit (Note 2.2.1), in conformity with CFC Resolution No. 963/03,
deferred taxes are also recognized in view of temporary differences and tax
losses, according to CVM Instruction 371/02.
Balances are represented by the
following:
|
Assets
|
December
31, 2008
|
December
31, 2007
|
|
Tax
loss carryforwards
|
65,956
|
28,234
|
|
Credit
– Merger EDSP92 (a)
|
14,607
|
18,683
|
|
Temporary
provisions:
|
||
|
Contingencies
|
11,085
|
2,332
|
|
Provision
for losses
|
6,398
|
2,874
|
|
Total
|
98,046
|
52,123
|
|
Current
|
2,879
|
-
|
|
Noncurrent
|
95,167
|
52,123
|
(a)
Tax credit arising
from goodwill on merger of EDSP92, calculated by a book value appraisal report,
amounting to R$20,381, which was used to set up a special goodwill reserve. The
goodwill originally recorded by EDSP92 arising from the purchase of interest by
the Company on June 30, 2007, justified based on expectation of future
profitability, according to the discounted cash flow modeling and a discount
rate at 12.4% p.a., is being amortized monthly over 5
years.
|
December
31, 2008
|
December
31, 2007
|
|
|
Criteria
difference for appropriation of result – taxable income
|
||
|
PIS
and COFINS
|
24,123
|
14,749
|
|
IRPJ
and CSLL
|
80,466
|
50,956
|
|
Criteria
difference for appropriation of result – presumed profit
|
3,338
|
-
|
|
Total
|
107,927
|
65,705
|
|
Current
|
24,224
|
19,403
|
|
Noncurrent
|
83,703
|
46,302
|
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
As required by CVM Instruction No.
371/02, the Company’s management prepared a study with the projection of taxable
income for the next five years. As of December 31, 2008, the expectation for the use of tax
benefit is as follows:
|
2009
|
2,879
|
|
2010
|
30,419
|
|
2011
|
32,658
|
|
TOTAL
|
65,956
|
|
19.
|
Contingencies
|
The Company and its
subsidiaries are parties to lawsuits and administrative proceedings before
different courts and government agencies, arising from the ordinary course of
business, involving tax, labor, civil and other matters. Management, based on
information from its legal counsel, analyzes pending lawsuits and proceedings
and, in connection with labor lawsuits, based on prior experience related to
claimed amounts, set up a provision in an amount considered sufficient to cover
estimated losses on ongoing cases.
|
December
31, 2008
|
December
31, 2007
|
|
|
Civil (a)
|
12,433
|
3,008
|
|
Labor (b)
|
5,317
|
-
|
|
Tax
and social security (c)
|
8,730
|
-
|
|
Other
|
360
|
-
|
|
Total
|
26,840
|
3,008
|
(a) Provision for risks related to civil
claims in connection with clients (contract rescission, late delivery of
works);
(b) Provision for risks related to labor
claims filed by former employees from the Company and third parties
(franchise);
(c)
Provision for risks related to social
security joint liability in civil construction and payroll
charges.
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
Provision movements:
|
Description
|
|
|
Outstanding
balance as of 12/31/2007
|
3,008
|
|
(+)
New provisions
|
8,567
|
|
(+)
Estimate review
|
15,265
|
|
Outstanding
balance as of 12/31/2008
|
26,840
|
|
20.
|
Shareholders’
equity
|
20.1. Capital
On October 21,
2008, capital was increased by R$ 62,536, from R$ 692,700 to R$ 755,236, arising
from the merger of FIT, through the issuance of 240,391,470 new nominative
book-entry shares, without par value, fully subscribed and paid-up, moving from
160,260,980 to a total of 400,652,450 shares.
As of December 31,
2008, the Company's capital totaled R$ 755,236 (R$ 692,700 in 2007), represented
by 400,652,450 nominative Common shares without par value.
20.2. Capital
reserves
Special goodwill reserve --
The Company received net assets of “EDSP92”, estimated by a book value
appraisal report, amounting to R$20,381, which was used for setting up a special
goodwill reserve. As it was originated from a tax benefit, it will only be
realized when such tax benefit is realized/used, when it can be used to increase
capital or offset losses.
Merger FIT -- In view of the
merger of FIT on October 21, 2008, a capital reserve was set up at R$ 348,705,
as mentioned in Note 1.
Stock option plan -- According
to CPC No.10, the Company recognized an expense represented by benefits of
options granted in 2008 in the aggregate amount of R$ 5,505.
20.3. Allocation
of net income
Pursuant to the
Company’s bylaws, the net income for the year will be appropriated as
follows:
|
·
|
5% to the
legal reserve, up to 20% of paid-up
capital;
|
|
·
|
A portion,
upon proposal by management bodies, can be used to set up a provision for
contingencies, as provided for by Article 195 of Law No.
6404/76;
|
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
|
·
|
In each year,
shareholders are entitled to a mandatory dividend at 25% of net income for
the year, adjusted as follows:
|
|
a.
|
the net
income for the year will be decreased or added by the following values:
(i) amount for setting up the legal reserve; and (ii) amount for setting
up a provision for contingencies and reversal of this reserve recognized
in prior years;
|
|
b.
|
the payment
of dividends can be limited to the amount of net income for the year that
is realized, provided that the difference is recorded as unrealized profit
reserve; and
|
|
c.
|
profits
recorded in unrealized profit reserve, when realized and provided that
they are not absorbed by losses for subsequent years, are added to the
first dividend declared after
realization.
|
|
·
|
Dividend will
not be mandatory in the year when the Board of Directors informs to the
Annual General Meeting that it is not compatible with the Company’s
financial condition; the Fiscal Council, if formed, shall express an
opinion on this information and the Company management shall forward to
the CVM within five days from such General Meeting the justification for
the information transmitted to the
Meeting;
|
|
·
|
Profits that
are not distributed will be recorded as special reserve, and if they are
not absorbed by losses in subsequent years, shall be paid as dividend as
soon as the Company’s financial condition
allows;
|
|
·
|
A portion,
upon proposal from management bodies, can be used to set up a reserve for
investments at up to 71.25% of adjusted net income for each year, as
provided by Article 196 of Law No.
6404/76;
|
|
·
|
Upon proposal
from management bodies, it can at any time distribute dividends charging
to Investment Reserve or use its whole or a portion of its balance to
increase capital, including through stock
bonus;
|
|
·
|
Upon proposal
from management bodies, the Company can also declare interim dividends
charging to Retained Earnings or Profit Reserves of the last annual or
six-month period balance sheet.
|
|
·
|
The Board of
Directors can pay or credit in each year interest on shareholders’ equity,
as provided for by the income tax legislation, and these can be imputed to
mandatory dividend;
|
|
·
|
Dividends not
received or claimed shall lapse in three years, counted from the date on
which they were granted to the shareholder, and be reversed on behalf of
the Company;
|
|
·
|
The general
meeting can grant to the Company’s management members profit sharing,
within the legal limit;
|
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
|
·
|
Profit
sharing can only be conferred in the year shareholders receive mandatory
dividend.
|
|
21.
|
Insurance
|
The Company adopts
the policy of taking up insurance coverage for assets and works subject to risks
at amounts considered by its management sufficient to cover occasional claims,
considering the nature of its operations. The policies are in effect and
premiums were duly paid.
We believe that we
have a program on risk management aimed at assessing risks, searching in the
market coverage compatible with our size and operations, our insurance coverage
being consistent with other companies of similar size operating in the
sector.
The risk
assumptions adopted, given their nature, are not part of the scope of the audit
of financial statements; accordingly, they were not audited by our independent
auditors.
|
22.
|
Benefits
to employees
|
The Company does
not maintain private pension plans to its employees. The benefit policy has the
objective of guaranteeing the welfare of employees and itsdependents, therefore,
the Company provides medical care, life insurance, meal voucher, food allowance,
program for internal training, transportation voucher, fuel allowance and
parking space.
|
23.
|
Financial
instruments
|
As required by CVM Resolution No. 566 of
December 17,
2008, which approved the
CPC Technical Pronouncement No. 14, and the CVM Instruction No. 475, of
December 17,
2008, the Company and its
subsidiaries made an evaluation of its financial instruments, described
below:
Risk
management -- The Company and its subsidiaries have
transactions involving financial instruments, which are used to meet operational
needs, as well as reducing the exposure to financial risks. The management of
these risks is made by devising strategies, establishing a control system and
setting an operational limit. The Company does not make transactions involving
financial instruments for speculative purposes.
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
Credit and
realization risks -- These risks are managed by specific
credit analysis rules and the setting of exposure limits by client.
Additionally, it has specific analysis and rules for investments in financial
institutions and investment types offered in the financial
market.
Market value of
financial instruments -- The market value of cash and cash
equivalents (cash, banks and financial investments), receivables from clients
and current liabilities are financial instruments that match with the recorded balance and are held
to maturity, according to the management intent. The balance of receivables from
clients is adjusted by contractual indices used in the
market.
The Company calculated the present value
of receivables for uncompleted real estate units and recorded the proportional
amount adopting the criterion described in Note 2.2.1, using a discount rate at
7.5% p.a.
Our financing are
on the current market average and are being adjusted as agreed in the signed
contracts.
The debt balances
as of December 31, 2008 and 2007 correspond to the
effective settlement values.
The Company has not made investments for
speculative purposes in derivatives or any other risky
assets.
As of December 31, 2008 and 2007, there were no derivative instruments
to be recognized at fair value in the financial statements.
|
24.
|
Stock
option plan
|
At the Extraordinary General Meeting
held on June 3,
2008, the stock option plan
was approved in which the Board of Directors can establish issuance programs
until the maximum aggregate limit of 5% of total capital shares, taking into
consideration in this total the dilution effect from the exercise of all granted
options. The volume involved in the granting of stock options is limited to
3,000,000 shares.
At the Board of Directors’ meeting held
on June 5, 2008, a Stock Option Program was established
with the following characteristics:
The stock option program provides that
the granted options may be exercised in three annual lots, counted from one year
from the granting date and respective Agreement on Adherence (first option in
May 2009), each lot being equivalent to 33.33% of total granted option in two
exercise periods for each year (May and
November). The base exercise price of granted options will be equivalent to R$
7.20 (value extraordinarily denominated in
reais) per share, resulting from a discount at 38.25% to the average share price
in the last 20 trading sessions of Bovespa prior to June 5, 2008. When exercising the option in the
three annual lots, the base price will be adjusted according to the market value
of shares - the average price in trading sessions over the last 30 consecutive
days – considering that there is, for setting the exercise price, an
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
adjustment procedure according to a
fixed table of values, according to the share value in the market, at the time
of the two exercise periods for each annual lot.
Options will be recorded to the caption Recognized Granted Option, in Capital
Reserves, as a contra-entry to operating expenses,
according to CPC No. 10.
During the period of two months ended
December 31, 2008, the Company recorded operating expenses amounting
to R$ 5,505.
Changes in share
call options were as follows:
|
Options (quantity of
shares)
|
||
|
December
31, 2008
|
December
31, 2007
|
|
|
Beginning
balance – options not exercised
|
-
|
-
|
|
Options
granted
|
2,640,000
|
-
|
|
Options
cancelled
|
(570,000)
|
-
|
|
Outstanding
options at end of period
|
2,070,000
|
-
|
|
25.
|
Compensation
of management and board
members
|
The
compensation limit payable to the Company’s management and board members for
2008 was set at R$ 4,100 and R$ 4,000
in 2007,
as established in the minutes of the Board of Directors meeting held on
April
25, 2008 and
June
28, 2007,
respectively.
Until
December
31, 2008 and
2007, compensation to the management of the Company and its subsidiaries
amounted to R$ 1,642 and R$ 1,456, respectively.
|
26.
|
Subsequent
Events -
unaudited
|
(a)
Debentures
In April 2009, the
Company obtained approval for its First Debenture Distribution Program, which
allowed it to offer simple subordinated and/or secured debentures, not
convertible into shares, limited to the amount of R$ 600,000, with semiannual
maturities between January 2012 and 2014.
Proceeds from the
issuance of debentures will be used solely in the financing of real estate
ventures focused exclusively on the popular segment and that meet the
eligibility criteria.
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
There is no
adjustment for inflation and the debenture will yield interest corresponding to
the accumulated variation of the TR (a managed prime rate), calculated on a pro
rata basis by business days, capitalized semiannually, and a spread or initial
surcharge of nominal 8.1% per year with semiannual payments between October 2009
and April 2014.
Guarantees comprise
Assignments of Receivables and Bank Accounts. Additionally, the Company is
subject to covenants that restrict its ability to take certain actions, such as
the issuance of debt and power to require the acceleration of maturity or
refinancing of loans if the Company does not comply with these
covenants.
(b) Investee
Acquisition
On
June 29, 2009, the Company entered into a transaction with the parent company
Gafisa S.A. for purchase of the shares of Cotia1 Empreendimento Imobiliário
Ltda., for R$ 41,832. The project comprises five phases, which represent 2,338
units with PSV (Potential Sales Value) of R$ 191 million
(unaudited).
(c) Proposal
for merger of all shares with the parent company Gafisa
On October 21, 2009, the management of the
parent company GAFISA S.A., in compliance with paragraph 4 of
article 157 of Law No. 6,404/76 and with CVM’s Instruction No.
358/02, announced its intention to present to its shareholders, by the end of
the current year, a proposal for the merger of all of the shares of the Company
currently outstanding that
are not already owned by Gafisa S.A. (“Merger”).
(d) Changes
to Company’s articles of incorporation
On October 2, 2009, the Extraordinary General Meeting
approved the amendments to the Company’s articles of incorporation. The
amendments do not have any impacts on the accompanying financial statements and related
notes.
|
27.
|
Supplemental
Information - Summary of Principal Differences between Brazilian GAAP and
US GAAP
|
|
a.
|
Description
of the GAAP differences
|
The Company's accounting policies comply
with, and its consolidated financial statements are prepared in accordance with
Brazilian GAAP. The Company
has retroactively applied the changes in Brazilian GAAP introduced by the newly
formed CPC and the provisions of Law 11638/2007 as
from January 1,
2006. As a result of the
changes to Brazilian GAAP introduced in 2008 which were applied retroactively to
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
January 1, 2006 a number of differences between Brazilian
GAAP and USGAAP, as originally reported, were eliminated.
A summary of the Company's principal
accounting policies that differ significantly from US GAAP is set forth
below. A reconciliation of
shareholder’s equity as of December 31, 2007 and results of operations for all other
periods presented herein from Brazilian GAAP to US GAAP is not
available.
|
(i)
|
Principles
of consolidation
|
Under Brazilian GAAP, the consolidated
financial statements include the accounts of the Company and those of all its
subsidiaries, with separate disclosure of the participation of minority
shareholders. The proportional consolidation method is used for investments in
jointly-controlled investees, which are all governed by shareholders'
agreements; as a consequence, the assets, liabilities, revenues and costs are
consolidated based on the proportion of the equity interest held in the capital
of the corresponding investee.
Under US GAAP, while certain investments
in subsidiaries meet the criteria for consolidation as defined by the Financial
Accounting Standard Board ("FASB") Statement of Financial Accounting
Standard ("SFAS") 94,
Consolidation of All Majority-Owned Subsidiaries, because such investments
provide substantive participating rights granted to the noncontrolling shareholder they preclude the Company
from consolidating the entities. Accordingly, for purposes of US
GAAP certain of these investments are treated on the
equity basis of accounting.
Under US GAAP, proportional
consolidation is permitted only in limited circumstances. Accordingly, for
purposes of US GAAP the investment in Guapurá is fully consolidated and the
equity interests that are not owned by the Company were assigned to minority
shareholders’ interest. Although these
differences in GAAP do not affect the Company's net income or shareholders'
equity, the line items in the consolidated balance sheet and statement of income
are affected.
|
(ii)
|
Revenue
recognition
|
Under Brazilian
GAAP, real estate development revenues, costs and related expenses are
recognized using the percentage-of-completion method of accounting by measuring
progress towards completion in terms of actual costs incurred versus total
budgeted expenditures for each stage of a development. Land is treated as a
portion of budgeted construction costs and is appropriated proportionally to
development. Under the percentage-of-completion method of accounting, revenues
for work completed are recognized prior to receipt of actual cash proceeds or
vice-versa. Revenues and costs are recognized under the percentage-of-completion
method when certain tests are met.
Under US GAAP, SFAS
66, Accounting for Sales of Real Estate, the basis for the measurement to
determine if construction is beyond a preliminary stage is different from
Brazilian GAAP. US GAAP requires construction to be beyond a preliminary stage
and
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
substantial sales
to have been incurred to ensure the project will not be discontinued before
revenue can be recognized. Construction is not beyond a preliminary stage if
engineering and design work, execution of construction contracts, site clearance
and preparation, excavation, and completion of the building foundation are
incomplete. Additionally, the percentage-of-completion method of accounting
should be applied to a sale that meets all of the following criteria: (a) the
buyer is committed to the extent of being unable to require a refund except for
nondelivery of the unit or interest; (b) sufficient units have already been sold
to assure that the entire property will not revert to rental property; (c) sales
prices are collectible; (d) aggregate sales proceeds and costs can be reasonably
estimated.
|
(iii)
|
Stock
option plan
|
Under Brazilian
GAAP, the rights to acquire shares granted to employees and executive officers
under the stock options plan were recorded as an expense as from the transition
date for the adoption of Law 11,638/2007. Previously, under Brazilian GAAP, the
stock option plans did not result in any expense being recorded. The purchase of
the stock by the employees is recorded as an increase in capital stock for the
amount of the purchase price. Under Law 11,638/2007 and the accounting guidance
provided by CPC 10, the stock option plans are treated as equity awards and
measured at fair value at the grant date, no further adjustments are made at the
balance sheet dates to reflect changes in fair values.
Under US GAAP, the
Company adopted SFAS 123R, "Share-based Payment". As the awards are indexed to
the IGP-M (inflation rate), the employee share options have been accounted for
as liability awards under the terms of SFAS 123R. The liability-classified
awards are remeasured at fair value through the statement of income at each
reporting period until settlement. The fair value of employee share options and
similar instruments was estimated using the Black-Scholes option-pricing model
through June 30, 2009 and thereafter using the Binomial and Monte Carlo
models.
|
(iv)
|
Earnings
per share
|
Under Brazilian GAAP, net income per
share is calculated based on the number of shares outstanding at the balance
sheet date. Information is disclosed per lot of one thousand shares, because,
generally, this is the minimum number of shares that can be traded on the
BOVESPA
BM&F.
Under US GAAP, because the Preferred and
Common shareholders have different voting, dividends and liquidation rights,
Basic and Diluted earnings per share have been calculated using the
"two-class" method, pursuant to SFAS 128, "Earnings per Share", which provides computation,
presentation and disclosure requirements for earnings per share.
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
The Company has
issued employee stock options, the dilutive effects of which are reflected in
diluted earnings per share by application of the "treasury stock method". Under
the treasury stock method, earnings per share are calculated as if options were
exercised at the beginning of the period, or at time of issuance, if later, and
as if the funds received were used to purchase the Company's own stock. When the
stock options' exercise price was greater than the average market price of
shares, diluted earnings per share are not affected by the stock
options.
|
(v)
|
Business
Combinations
|
Under Brazilian
GAAP, goodwill arises from the difference between the amount paid and the
Brazilian GAAP book value (normally also the tax basis) of the net assets
acquired. This goodwill is normally attributed to the difference between the
book value and the market value of assets acquired or justified based on
expectation of future profitability and is amortized over the remaining useful
lives of the assets or up to ten years. Negative goodwill arises under Brazilian
GAAP when the book value of assets acquired exceeds the purchase consideration;
negative goodwill is not generally amortized but is realized upon disposal of
the investment. For US GAAP purpose, when a business combination process
generates a negative goodwill, this amount is allocated first to non-current
assets acquired and any remaining amount is recognized as an extraordinary gain.
Additionally, investments in affiliates, including the corresponding goodwill on
the acquisition of such affiliates are tested, at least, annually for
impairment.
Under US GAAP,
pursuant to SFAS 141 - Business combinations, fair values are assigned to
acquired assets and liabilities in business combinations, including identifiable
assets. Any residual amount is allocated to goodwill. Under US GAAP, SFAS 142 -
Goodwill and other intangible assets, goodwill is not amortized but, instead, is
assigned to an entity's reporting unit and tested for impairment at least
annually. The differences in relation to Brazilian GAAP arise principally from
the measurement of the consideration paid under US GAAP using the fair value of
shares, and the effects of amortization which are no longer recorded for US GAAP
purposes.
In October 21, 2008 Gafisa and Construtora Tenda signed an
agreement in which Gafisa will combine its wholly-owned subsidiary, Fit Residencial
Empreendimentos Imobiliários Ltda. with Tenda in an all-stock
transaction. After the transaction, Gafisa holds 60% of the total capital and
voting shares of Tenda which will continue to trade on the Novo Mercado of
the São Paulo Stock Exchange as an independent
company. For purpose of determining the purchase consideration, the fair value
of these shares was based on the average BOVESPA BM&F quoted stock price over a thirty day
period prior to the date the agreement was signed.
The total cost of the acquisition has
been allocated to the assets acquired and the liabilities assumed based on their
respective fair values in accordance with SFAS 141 - Business combinations,
which is mainly related to registered trademarks and existing contracts of units
sold.
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
|
(vi)
|
Classification
of balance sheet line items
|
Under Brazilian
GAAP, the classification of certain balance sheet items is presented differently
from US GAAP. The reclassifications are summarized as follows:
1) Under US GAAP, the proportional consolidation of
investees and subsidiaries is eliminated and in its place the associated
companies are presented using the equity method of
accounting and controlled subsidiaries are fully consolidated presenting their
respective minority interests.
2) For purposes of US GAAP, the sale of
receivables is not considered a true sale, if the entities do not meet the
pre-requisites of a qualifying special purpose entity, as defined by SFAS 140,
"Accounting for Transfer and Servicing of Financial Assets and Extinguishment of
Liabilities - a replacement of SFAS 125", which was amended by SFAS 156,
"Accounting for Servicing of Financial Assets". These receivables from clients
continue to be reported as receivable balances. The cash proceeds received from
the transfer of the receivables are presented as a
liability.
3) Under Brazilian GAAP certain
court-mandated escrow deposits made into court are netted against the
corresponding contingency provisions. For purposes of US GAAP, as these do not
meet the right of offset criteria, such deposits are presented as assets and not
netted against liabilities.
4) Under Brazilian GAAP, debt issuance
costs are netted against the loan balance, whereas under US GAAP such costs are
presented as deferred expenses in current and non-current
assets.
5) Under Brazilian GAAP, deferred income
taxes are not netted and assets are shown separately from liabilities. For
US GAAP purposes, deferred tax assets and liabilities are netted and classified as current or
non-current based on the classification of the underlying temporary difference.
Similarly, certain judicial escrow deposits are netted against contingency
provisions and debt issuance costs netted against the liabilities under
Brazilian GAAP.
|
(vii)
|
Classification
of statement of income line items
|
Under Brazilian
GAAP, in addition to the issues noted above, the classification of certain
income and expense items is presented differently from US GAAP. The Company has
recast its statement of income under the Brazilian GAAP to present a condensed
consolidated statement of income in accordance with US GAAP. The
reclassifications are summarized as follows:
1) Brazilian listed
companies are required to present the investment in jointly-controlled
associated companies on the proportional consolidation method. For purposes of
US
GAAP, the Company has eliminated the effects of the proportional consolidation
and
Construtora
Tenda S.A.
Notes
to the Consolidated Financial Statements as of December
31, 2008 and
2007, and for the years ended December
31, 2008,
2007 and 2006.
(In
thousands of Brazilian
Reais,
unless otherwise stated)
reflected its
interest in the results of investees on a single line item (Equity in results)
in the recast consolidated statement of income under US GAAP.
2) Under Brazilian
GAAP, revenue from construction services rendered are recorded net of respective
costs incurred to deliver such services, as Construction and services rendered,
net as the Company considers it acts as an agent in providing construction
services to clients. For purposes of US GAAP, construction service costs are
classified in Operating costs as the Company is considered the primary obligor
and principal in the arrangement.
3) Interest income
and interest expense, together with other financial charges, are displayed
within operating income in the statement of income presented in accordance with
Brazilian GAAP. Such amounts have been reclassified to non-operating income and
expenses in the condensed consolidated statement of income in accordance with US
GAAP.
|
b.
|
Reconciliation
of significant differences between Brazilian GAAP and US
GAAP
|
|
12/31/08
|
|
|
Shareholders'
equity under Brazilian GAAP
|
1,062,214
|
|
Revenue
recognition - net operating
|
(227,897)
|
|
Revenue
recognition - operating costs
|
139,892
|
|
Liability-classified
stock options
|
(272)
|
|
Business
combination
|
27,347
|
|
Other
|
262
|
|
Deferred
income tax on adjustments above
|
35,944
|
|
Shareholders'
equity under US GAAP
|
1,037,490
|
* * * * *
PART
II
INFORMATION
NOT REQUIRED IN PRELIMINARY PROSPECTUS/INFORMATION STATEMENT
Item
20. Indemnification of Directors and Officers
Neither
the laws of Brazil nor other constitutive documents provide for indemnification
of directors and officers. However, the registrant’s directors and officers and
certain of their controlling persons benefit from insurance against civil
liabilities, including civil liabilities in connection with the registration,
offering and sale of the securities.
Item
21. Exhibits and Financial Statements
(a)
Exhibits.
The
following documents are filed as exhibits to the registration
statement:
|
2.1
|
Protocol
of Merger of Shares and Instrument of Justification of Tenda S.A. into
Gafisa S.A.—English translation (##)
|
|
3.1
|
Bylaws
(Estatuto Social)
of Gafisa S.A. (##)
|
|
3.2
|
Bylaws
(Estatuto Social)
of Construtora Tenda S.A.(##)
|
|
4.1
|
Amended
and Restated Deposit Agreement dated March 21, 2007 among the Registrant,
Citibank, N.A., as depositary, and the Holders and Beneficial Owners from
time to time of American Depositary Shares issued thereunder, including
the form of American Depositary Receipts.(##)
|
|
5.1
|
Form
of Opinion of Barbosa, Müssnich & Aragão, Brazilian legal counsel of
the Registrant, as to the legality of the common shares of
Gafisa.(##)
|
|
8.1
|
Form
of Opinion of Davis Polk & Wardwell LLP, U.S. legal counsel of the
Registrant, as to U.S. federal tax consequences of the Restructuring.
(##)
|
|
8.2
|
Form
of Opinion of Barbosa, Müssnich & Aragão, Brazilian legal counsel of
the Registrant, as to Brazilian tax consequences of the Restructuring.
(##)
|
|
10.1
|
Investment
Agreement dated October 2, 2006 among Alphaville Participações S.A.,
Renato de Albuquerque and Nuno Luis de Carvalho Lopes Alves, as
shareholders, and Gafisa S.A., as investor, and Alphaville Urbanismo S.A.,
Fate Administração e Investimentos Ltda. and NLA Administração e
Participações Ltda. (##)
|
|
10.2
|
Acquisition
Agreement dated October 3, 2008 between Fit Residencial Empreendimentos
Imobiliários Ltda. and Construtora Tenda S.A. (##)
|
|
11.1
|
Statement
regarding computation of per share earnings for Gafisa
S.A.(##)
|
|
11.2
|
Statement
regarding computation of per share earnings for Construtora Tenda S.A.
(##)
|
|
16.1
|
Letter
from PricewaterhouseCoopers Auditores Independentes related to the change
in independent public accountants of Gafisa. (##)
|
|
21.1
|
List
of Subsidiaries of Gafisa S.A. (##)
|
|
23.1
|
Consent
of PricewaterhouseCoopers Auditores Independentes (#)
|
|
23.2
|
Consent
of Terco Grant Thornton Auditores Independentes
(#)
|
|
99.1
|
Valuation
Report of Banco Itaú BBA S.A. (##)
|
|
99.2
|
Financial
Analyses of Estáter Assessoria Financeira Ltda. (##)
|
|
99.3
|
Valuation
Report of N.M. Rothschild & Sons (Brasil) Ltda.
(##)
|
|
99.4
|
Valuation
Reports of APSIS Consultoria Empresarial Ltda (##)
|
|
99.5
|
Call
Notice for Extraordinary General Shareholders’ Meeting of Gafisa S.A.
(##)
|
|
99.6
|
Call
Notice for Extraordinary General Shareholders’ Meeting
of Construtora Tenda S.A. (##)
|
|
99.7
|
Form
of Power of Attorney (##)
|
|
99.8
|
Consent
of Banco Itaú BBA S.A. (#)
|
|
99.9
|
Consent
of Estáter Assessoria Financeira Ltda. (#)
|
|
99.10
|
Consent
of N.M. Rothschild & Sons (Brasil) Ltda. (#).
|
|
99.11
|
Consent
of APSIS Consultoria Empresarial Ltda. (#)
|
|
(#)
|
Filed
herewith.
|
|
(##)
|
Filed
previously.
|
(b)
Schedules.
None
required.
Item
22. Undertakings
(a)
The Registrant hereby undertakes:
(1)
To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i)
To include any prospectus required by Section 10(a)(3) of the Securities Act of
1933;
(ii) To
reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information in the registration statement. To reflect in the prospectus
any facts or events arising after the effective date of the registration
statement (or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in the
information set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the “Calculation of Registration Fee”
table in the effective registration statement; and
(iii)
To include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement.
(2)
That, for the purpose of determining any liability under the Securities Act of
1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3)
To remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
(4)
to file a post-effective amendment to the registration statement to include any
financial statements required by 17 CFR 210.3-19 at the start of any delayed
offering or throughout a continuous offering. Financial statements and
information otherwise required by Section 10(a)(3) of the Securities Act of 1933
will not be furnished, provided that the Registrant includes in the prospectus,
by means of a post-effective amendment, financial statements required pursuant
to this paragraph and other information necessary to ensure that all other
information in the prospectus is at least as current as the date of those
financial statements. Notwithstanding the foregoing, with respect to
registration statements on Form F-3, a post-effective amendment will not be
filed to include financial statements and information required by Section
10(a)(3) of the Securities Act of 1933 or 17 CFR 210.3-19 if such financial
statements and information are contained in periodic reports filed with or
furnished to the Commission by the Registrant pursuant to section 13 or section
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in the Form F-3.
(5)
That prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration statement, by
any person or party who is deemed to be an underwriter within the meaning of
Rule 145(c), such reoffering prospectus will contain the information called for
by the applicable registration form with respect to reofferings by persons who
may be deemed underwriters, in addition to the information called for by the
other items of the applicable form.
(6)
That every prospectus (i) that is filed pursuant to paragraph (4) immediately
preceding, or (ii) that purports to meet the requirements of Section 10(a)(3) of
the Securities Act of 1933 and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to the
registration statement and will not be used until such amendment is effective,
and that, for purposes of determining any liability under the Securities Act of
1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(7)
That, for purposes of determining any liability under the Securities Act of
1933, each filing of the Registrant’s annual report pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan’s annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(8)
To respond to requests for information that is incorporated by reference into
the joint information statement/prospectus pursuant to Item 4, 10(b), 11 or 13
of Form F-4, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means and to
arrange or provide for a facility in the United States for the purpose of
responding to such requests. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(9)
To supply by means of a post-effective amendment all information concerning a
transaction, and the Company being acquired involved therein, that was not the
subject of and included in the registration statement when it became
effective.
(b)
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event
that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly
caused this amendment to the registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of São Paulo, State
of São Paulo, Brazil, on December 23, 2009.
|
GAFISA
S.A.
|
|||
|
By:
|
/s/ Wilson Amaral de
Oliveira
|
||
| Name: |
Wilson
Amaral de Oliveira
|
||
| Title: |
Chief
Executive Officer
|
||
|
By:
|
/s/
Alceu Duilio Calciolari
|
||
| Name: |
Alceu
Duilio Calciolari
|
||
|
Title:
|
Chief
Executive Officer
|
||
POWER
OF ATTORNEY AND SIGNATURES
We, the
undersigned officers and directors of Gafisa S.A., hereby severally constitute
and appoint Wilson Amaral de Oliveira and Alceu Duilio Calciolari (with full
power to act alone) our true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution in each of them for him and in his
name, place and stead, and in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this registration statement,
and to file the same, with all exhibits thereto and other documents in
connection therewith, with the U.S. Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in an and about the premises, as full to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them or his or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant
to the requirements of the U.S. Securities Act of 1933, as amended, this
amendment to the registration statement has been signed by the following persons
in the capacities held on December 23, 2009.
|
Signature
|
Title
|
|
|
/s/
Wilson Amaral de Oliveira
|
||
|
Wilson
Amaral de Oliveira
|
Chief
Executive Officer
(Principal
Executive Officer)
|
|
|
/s/
Alceu Duilio Calciolari
|
||
|
Alceu
Duilio Calciolari
|
Chief
Financial and Investor Relations Officer
(Principal
Financial and Accounting Officer)
|
|
|
*
|
||
|
Gary
R. Garrabrant
|
Chairman
of the Board of directors
|
|
|
*
|
||
|
Caio
Racy Mattar
|
Director
|
|
|
*
|
||
|
Richard
L. Huber
|
Director
|
|
|
Signature
|
Title
|
|
|
*
|
||
|
Thomas
J. McDonald
|
Director
|
|
|
*
|
||
|
Gerald
Dinu Reiss
|
Director
|
|
|
*
|
||
|
Jose
Ecio Pereira da Costa Junior
|
Director
|
|
Authorized
Representative of Gafisa S.A. in the United States:
|
/s/
Donald Puglisi
|
|
Donald
Puglisi
Authorized
Representative in the United States
|
|
*By:
|
/s/
Wilson Amaral de Oliveira
|
|
Wilson
Amaral de Oliveira
|
|
|
Attorney-in-fact
|
|
|
*By:
|
/s/
Alceu Duilio Calciolari
|
|
Alceu
Duilio Calciolari
|
|
|
Attorney-in-fact
|
II-6