(Convenience Translation into English from the Original Previously Issued in Portuguese) FEDERAL PUBLIC SERVICE BRAZILIAN SECURITIES COMMISSION - CVM

Transcription

1 LOJAS AMERICANAS S.A. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2007 AND In thousands of reais, except for the amounts per number of shares. 1 OPERATIONS Lojas Americanas operates 394 consumer product retail stores ( stores), of which 233 are traditional stores and 161 are Americanas Express model stores in the main state capitals and cities throughout Brazil, as well as 3 distribution centers. The Company also operates (i) in electronic commerce, through its subsidiary B2W Companhia Global do Varejo, which offers the Americanas.com, Submarino, Blockbuster.com.br and Shoptime websites (the latter also offers purchasing options through its TV shopping channel and catalogue), (ii) in the operation, development and sub-franchising in Brazil of the rental and sale of DVDs and games, under the BLOCKBUSTER trademark through the Americanas Express model stores and through its subsidiary BWU Comércio e Entretenimento S.A., and (iii) through its jointly controlled subsidiaries FAI - Financeira Americanas Itaú S.A. and Facilita Promotora S.A., offers financial products that include personal loans, insurance, Private Label credit cards and VISA and MASTERCARD (Cobranded). As from May 02, 2007, the services of credit information and agency of financed contracts, which were previously carried out by Facilita Serviços e Propagandas S.A., were transferred to Facilita Promotora S.A., a wholly-owned subsidiary of FAI Financeira Americanas Itaú S.A. Crédito Financiamento e Investimento. As a result of the shutdown of its activities, Facilita Serviços e Propaganda S.A. was incorporated by BWU Comércio e Entretenimento S.A., as per the Minutes of the Extraordinary General Meetings held by both companies on November 23, 2007 (Note 9). 2 PRESENTATION OF THE FINANCIAL STATEMENTS The financial statements have been prepared and are presented in conformity with generally accepted Brazilian accounting practices and with the regulations of the Brazilian Securities Commission (CVM). On December 31, 2007, the subsidiary B2W Companhia Global do Varejo reclassified balances relating to website development, recorded until then as Deferred Assets, to Intangible Assets (both are under Permanent Assets), understanding that this accounting classification be the most appropriate within Permanent Assets. This reclassification in the financial statements of the subsidiary B2W Companhia Global do Varejo and in the consolidated financial statements of Lojas Americanas S.A. have no retroactive or future impact on the results of the operations. The amount reclassified from Deferred to Intangible Assets in the consolidated statements of Lojas Americanas as at December 31, 2007, totals R$ (R$ of that stated as Deferred Assets at December 31, 2006 and reclassified to Intangible Assets. In addition, the parent company reclassified expenses relating to ERP software previously classified as Deferred Assets to Intangible Assets (both under Permanent Assets), in the amount of R$ as at December 31, 2007 (R$ as at December 31, 2006) parent company and consolidated balances.

2 3 SIGNIFICANT ACCOUNTING POLICIES (a) Accounting estimates When preparing the financial statements it is necessary to use estimates and judgments to account for certain assets, liabilities and other transactions. Accordingly, the financial statements include various estimates of the useful lives of fixed assets, the return on benefits to be achieved with the deferred and intangible assets, the expectation of realization of deferred income tax and social contribution, reserves for contingent liabilities, provision related to income tax and other items. Although they represent the best estimates and judgments of management, the actual results could differ from these estimates. (b) Determination of income Income and expenses are determined on the accrual basis, highlighting the following: Revenue from sales of products and services are recorded at the time of the transfer of ownership and risks to buyers at the gross value and after deducting returns, discounts and sales taxes. Sales orders of B2W Companhia Global de Varejo that have been approved by the credit card administrators, the products of which have not yet been invoiced nor delivered to the customers, and sales of gift vouchers that are in the possession of customers and will be used in the future, are recorded as advances from customers (current liabilities); Cost of goods sold and services rendered include the cost of acquisition of goods and costs of services, after deducting bonuses received from suppliers; Advertizing expenses are recognized at the time of publication of the advertising material; Freight costs relating to the delivery of goods are classified as sales expenses. (c) Foreign currency Assets and liabilities in foreign currency were translated into Brazilian Reais at the exchange conversion rates prevailing on the balance sheet date. The differences arising from this translation were recognized in the statement of income for the quarters. For subsidiary companies abroad, assets and liabilities were converted to Reais at exchange rates prevailing on the balance sheet date. (d) Current and long-term assets Temporary cash investments, primarily fixed-income securities, are stated at cost, including accrued income up to the balance sheet dates, not exceeding market value. The provision for possible defaults on payments was set up in an amount considered adequate by management to meet any losses on the realization of these credits. Inventories are stated at average purchase price, not exceeding market value or replacement cost. When applicable, a provision is set up for losses on inventories based on estimates that take into consideration management information records.

3 Other assets are stated at realizable values and include, when applicable, accrued income and monetary variations up to the balance sheet date. Deferred income taxes on tax loss carry-forwards and temporary differences are determined in accordance with CVM Instruction 371 of June 27, This calculation takes into consideration the profitability record of the Company and expectation of generation of future taxable income, based on technical studies approved annually by the Board of Directors. (e) Investments Investments made in subsidiary, jointly-controlled and associated companies are recorded by the equity method. A provision is set up for losses on interests in companies with unsecured liabilities, classified under Non-current liabilities - Long-term liabilities. (f) Property and equipment Property and equipment are carried at acquisition cost. Depreciation is calculated by the straight-line method at the rates mentioned in note 10 and takes into consideration the useful life of these assets. The amortization of the installations and improvements made in leased buildings is calculated based on the length of the respective lease agreements. (g) Intangible assets Goodwill on the acquisition of investments in subsidiaries, derived from estimates of future profitability, is amortized over a period of 5 to 10 years. Goodwill arising from the subsidiary B2W Companhia Global do Varejo buying back its own shares, are amortized over a period of up to 10 years (Note 9). Spending relating to website development (main sales channel of the subsidiary B2W Companhia Global do Varejo), such as development of operating and technological infrastructure programs (purchase and in-house development of software and installation of programs on the websites), as well as graphic layout development are recorded as intangible assets and amortized on the straight line basis taking into consideration the timeframe determined for their utilization and benefits derived there from (Note 11). Other intangible assets, such as licenses to use, right to use software and goodwill, are carried at acquisition cost. Amortization is calculated on the straight-line basis according to the useful life of the intangible assets up to a maximum of 10 years. (h) Deferred Deferred charges comprise expenses related to refurbishment and opening of stores, distribution centers and other pre-operating expenses and spending on restructuring of the Company and its subsidiaries.

4 These charges are amortized on the straight-line basis at the rates mentioned in Note 12, based on the opening date of the stores or project termination dates. (i) Current and non-current liabilities Loans and financing contracted in foreign currency are restated at the exchange rates in force on the balance sheet date and include accrued contractual interest. Loans and financing in Brazilian currency, including debentures, are restated in accordance with contractual rates. Provisions are recorded in the financial statements when the Company is under a legal obligation, as a result of a past event and when economic resources will probably be required to liquidate an obligation. Provisions are recorded at amounts based on the best estimates of the risk involved. Income tax and social contribution provisions are calculated at the effective tax rates of (i) 15% plus a surtax of 10% of taxable income in excess of R$ 240 for income tax and (ii) 9% of taxable income for social contribution and include, when applicable, income generated abroad by the subsidiary Klanil Services Ltd. and Louise Holdings Ltd. and take into account the use of tax losses carry-forwards to a limit to 30% of taxable income. Other accounts are stated at known or estimated amounts including, when applicable, financial charges and monetary or exchange variations accrued up to the balance sheet date. (j) Consolidation criteria The consolidated financial statements have been prepared in accordance with the consolidation principles established by Brazilian Corporate Law and CVM Instruction No. 247/96, and include the quarterly financial statements of the parent company, Lojas Americanas S.A., and of the subsidiaries and jointly-controlled subsidiaries (consolidated proportionally), as described in Note 9. The accounting practices were consistently applied to all the consolidated companies and are also consistent with the accounting procedures applied in the previous year. The following are eliminated in consolidation: asset and liability balances between consolidated companies; participation in capital, capital reserves and profits of the consolidated companies; income and expense, as well as unrealized profits, when applicable, of business transactions between the companies; highlighting the value of minority interests in the consolidated quarterly financial statements, when applicable. As at December 31, 2006, as a result of the merger of Americanas.com S.A. Cómercio Eletrônico and Submarino S.A., and the consequent creation of B2W Companhia Global do Varejo (note 9), the consolidated financial statements took into consideration the operations realized by Americanas.com S.A. Comércio Eletrônico from January 1, 2006 to December 13, 2006 and the operations realized by B2W Companhia Global do Varejo from December 13 to 31, 2006, as well as the Balance Sheet of B2W Companhia Global do

5 Varejo as at December 31, The minority interests were highlighted in relation to the results for the period December 13 to 31, 2006 and the Balance Sheet of B2W Companhia Global do Varejo, at a ratio of 46.75%. Pursuant to CVM Instruction No. 247/96, of the Brazilian Securities Commission (Comissão de Valores Mobiliários), the consolidations of Vitória Participações S.A. and Pandora Participações S.A. were effected in proportion to the parent company's participation in their capital (50%), as the share control of these companies is split, as established in agreements between the companies' stockholders. The main headings of the quarterly financial statements of Vitória Participações S.A., taking into consideration the shareholding stake, are: Vitória Participações S.A. Balance sheet Short term investments ,902 Other current assets Investments 13,359 21,973 TOTAL ASSETS 14, ,888 Taxes, contributions and other accounts payable 12 1,126 Stockholders equity 14, ,762 TOTAL LIABILITIES & STOCKHOLDERS EQUITY 14, ,888 Statement of Income for the period Financial income 5,640 25,548 Equity adjustment (30,864) (13,018) Other (147) (66) Income tax and social contribution on net income (2,396) (8,654) Net income (loss) (27,767) 3,810

6 Pandora Participações S.A. Balance sheet 2007 Short-term investments 37,635 Other assets 12 TOTAL ASSETS 37,647 Taxes, charges and contributions 955 Stockholders equity 36,692 TOTAL LIABILITIES & STOCKHOLDERS EQUITY 37,647 Statement of Income for the period 2007 Financial income 3,885 Operating expenses (167) Income tax and social contribution on net income (1,253) Net income 2,465 The financial statements of the subsidiaries together, Vitória Participações S.A. and subsidiaries and Pandora Participações S.A., are examined by other independent auditors. Pandora Participações S.A. began opertions in (k) Amendment to Brazilian corporate legislation, effective as from January 2008 (Law No. 11,638) Law No. 11,638 was issued on December 28, 2007 and amends, revokes and introduces new provisions to the Law on Joint-Stock Companies, notably with regard to chapter XV, on accounting matters, and come into effect as from the financial year beginning January 1, The main objective of this Law was to update Brazilian corporate legislation to enable the process of converging accounting practices adopted in Brazil with those contained in international accounting standards (IFRS) and enable the Brazilian Securities Commission CVM to issue new accounting standards and procedures in accordance with international accounting standards.

7 The modifications in the Brazilian corporate legislation are applicable to all joint-stock companies, including publiclyheld companies, and to large companies regardless of their corporate form, with provisions relating to the preparation and disclosure of financial statements. Some amendments must be applied as from the start of the coming financial year, while other first require regulation by the regulatory authorities. The main changes that could impact the Company s financial statements may be summarized as follows: Replacement of the Statement of source and application of funds by the Statement of cash flow. Inclusion of the Statement of value-added for publicly-held companies, which shows the value added by the Company, as well as the composition of the origin and application of these funds. Possibility to maintain bookkeeping transactions separate to comply with tax legislation and, subsequently, the adjustments necessary to comply with accounting practices. Obligation to record as permanent assets, rights relating to tangible assets used for the maintenance of the Company s activities, including those resulting from operations that transfer the benefits, risks and control of the assets to the Company (financial leasing). Modification of the concept for amounts recorded as deferred assets: only pre-operating expenses and restructuring costs that will effectively contribute to the increase in income of more than one financial period and that not only constitute a reduction in costs or increase in the operating efficiency, are to be classified under this heading Obligation of the Company to periodically analyze the likelihood of recovery of the amounts recorded in fixed, intangible and deferred assets, with the objective to ensure that: (i) the loss by non-recovery of these assets is recorded as a result of decisions to discontinue the activities relating to those assets or when there is evidence that the results of the operations will not be sufficient to ensure the realization of those assets; and (ii) the criteria used to determine the estimated remaining useful life of those assets for the purpose of recording depreciation, amortization and depletion, is revised and adjusted. Requirement that financial securities, including derivatives, be recorded: (i) at their market value or equivalent, in the case of saleable and negotiable securities; and (ii) at acquisition cost or issue value, updated in accordance with legal or contractual provisions, adjusted according to their probable realizable value, if this is lower. Creation of a new subheading of accounts, equity adjustments, under Stockholders equity, to allow recording of certain evaluations of assets at market prices, particularly securities; recording of foreign exchange variations on shareholdings abroad assessed by the accrual basis accounting method (up to December 31, 2007 these foreign exchange variations were recorded in the income statement); and adjustments to assets and liabilities at market value, as a result of merger and incorporation between unrelated parties, in which control is effectively transferred. Introduction of the concept of restatement at present value for long term assets and liabilities and for relevant short-term transactions. Requirement that the assets and liabilities of the company to be incorporated, resulting from transactions that involve incorporation, merger or spin-off between independent parties and in which control is effectively transferred, be recorded at market value. Elimination of the parameter of relevance for assessment of investments in affiliated companies and subsidiaries by the accrual method and replacement of the parameter of 20% of the share capital to 20% of the voting capital of the investment. As these amendments have been recently introduced and some still require regulation by the regulatory authorities before coming into effect, the Company s Management is still in the process of evaluating the effects that the abovementioned changes could produce in its financial statements and the results of the coming financial periods.

8 4 TEMPORARY CASH INVESTMENTS Parent company Consolidated Bank Deposit Certificates BDCs 3,857 20,471 42,875 20,471 Fixed-Income Funds and Securities 161, , , ,534 Fixed-income funds abroad 294, , , ,401 Debentures 66,061 30, , ,295 Exclusive Investment Funds 224, , , ,135 1,136,743 NON-CURRENT (3,858) (7,878) CURRENT 522, , ,257 1,136,743 Bank Deposit Certificates yield an average rate of 100% of the CDI (interbank deposit rate) and a portion was pledged as guarantee for the loan from the National Bank for Economic and Social Development (BNDES). Fixed-Income Investment Securities refer to Treasury Bills (LFTs) and National Treasury Notes (NTNs) and Fixed-Income Investment Funds refer mainly to quotas held in investment funds administered by top financial institutions. Fixed-Income Funds abroad refer basically to federal bonds issued by the Austrian Government, yielding interest of up to 84.5% of the CDI, and were held as guarantee of loans for working capital. The debentures were issued by a top financial institution, registered at present value and are remunerated at % of the Cetip overnight interbank deposit rate (Cetip Over), parent company and consolidated, respectively, and may be redeemed at any time at their current value and were used in guarantee of the association agreement entered into with Banco Itaú Holding Financeira S.A., which provides for the payment of a fine in the event of non-fulfillment of the specified goals (Note 17). Exclusive Investment Funds, registered in the subsidiary B2W Companhia Global do Varejo as at December 31, 2006, refer to 100% of the quotas of exclusive investment funds, set up in the form of open condominium with an indefinite duration and with tax neutrality, resulting in benefits for the subsidiary. Investments in exclusive investment funds have daily liquidity. Management of the portfolios of the exclusive funds is undertaken by outside administrators,

9 following investment policies determined by the Company. These funds were withdrawn in the first quarter of 2007, with the objective to pay for the preferred shares of Submarino S.A., by force of the merger of this company with Americanas.com S.A. - Comércio Eletrônico (Note 9 (a)). 5 TRADE ACCOUNTS RECEIVABLE Parent company Consolidated Credit cards - third parties 663, ,753 1,961,118 1,431,893 Discounts on receivables (345,061) (55,892) (1,118,398) (421,630) FAI credit card 21, , , ,720 1,010,263 Electronic debits and checks 16,598 11,204 16,598 17,614 Financing to customers (FAI) 119,052 91,207 Other 2,580 11, ,733 86, , ,321 1,228,103 1,205,652 Allowance for doubtful accounts (3,771) (2,655) (54,177) (31,996) 355, ,666 1,173,926 1,173,656 Credit card operations may be paid in up to 12 monthly installments. The credit risk of the Company and its subsidiaries is minimized to the extent that the credit card administration companies act as intermediaries for the portfolio of receivables, except in respect of credit card receivables administered by the joint subsidiary FAI - Financeira Americanas Itaú S.A. Crédito, Financiamento e Investimento. The Company discounts credit card receivables with the banks or the credit card administrators, in order to create working capital. In this operation, the Company delivers the receivables in guarantee of fund raising. Accordingly, the risk is transferred to the administrators. Customer financing refers to the commercialization of products and services by the joint subsidiary FAI Financeira Americanas Itaú S.A. Crédito, Financiamento e Investimento. Other accounts receivable comprise mainly sales made through corporate transactions, loyalty projects and commercial agreements. The allowance for doubtful accounts, except for FAI - Financeira Americanas Itaú S.A. Crédito, Financiamento e Investimento, takes into account the average effective losses over the last twelve months and management estimates of probable losses on accounts not yet due. Receivables overdue for more than 180 days are

10 considered uncollectible and, consequently, are written off against the allowance. Of the balance of R$ 54,177 recorded in the consolidated statements as of december 31, 2007 (2006 R$ 31,996), R$ 42,905 refers to allowances recorded by the joint subsidiary FAI - Financeira Americanas Itaú S.A. Crédito, Financiamento e Investimento (R$ 26,951, in 2006). In the case of FAI - Financeira Americanas Itaú S.A. Crédito, Financiamento e Investimento, the amount of the allowance for doubtful accounts is considered sufficient to cover any losses in accordance with the provisions of article 5 of CMN Resolution no , of December 21, 1999, amended by article 2 of CMN Resolution no of February 24, This Resolution limits the risk to the operation in the event of delay to level A. Credit write-offs are effected 360 days after credit becomes overdue or after 540 days in the case of operations with over 36 months still to run. 6 INVENTORIES Parent company Consolidated Merchandise - In stores 499, , , ,725 - In distribution centers 145,246 58, , ,284 Supplies and packaging 3,979 3,558 7,249 4, , , , ,244 7 RECOVERABLE TAXES ICMS (state value-added tax) IRRF (withholding income tax) Parent company Consolidated ,678 19,038 24,758 23,240 4,064 2,102 5,053 6,189 COFINS - tax for social security financing (tax on revenue) 1,335 6,037 IRPJ - Corporate Income Tax 341 4,901 CSLL (social contribution on net income) 119 2,097 Other ,381 27,784 21,206 32,005 43,845

11 8 DEFERRED INCOME TAX AND SOCIAL CONTRIBUTION (a) Presentation In accordance with CVM Instruction No. 371, of June 27, 2002, and based on annual technical feasibility studies, approved by the Board of Directors that show the capacity to generate future taxable income, the Company and its subsidiaries maintain the tax credits arising from income tax losses, negative social contribution bases and temporary differences, which will only be taxable or deductible on meeting the requirements of the tax legislation. (b) Composition of tax credits Parent company Consolidated Deferred income tax: - Tax losses 45,791 60,186 83,243 - Temporary differences 31,452 10,891 77,949 30,352 31,452 56, , ,595 Deferred social contribution: - Negative bases 49,825 21,852 63,569 - Temporary differences 11,323 3,921 20,608 10,814 11,323 53,746 42,460 74,383 42, , , ,978 NON-CURRENT (10,356) (74,686) (103,644) (142,584) CURRENT 32,419 35,742 76,951 45,394

12 (c) Expectation of realization The estimated realization of deferred tax credits determined in each year, based on future taxable income adjusted to present value, as at December 31, 2007, is shown below: Parent company Consolidated ,419 76, ,595 39, ,241 28, ,520 17, , , , , , ,721 42, ,595 The Company was awarded a favorable ruling in a lawsuit judged in the fourth quarter of 2005, claiming the right to offset payments of other taxes managed by the Federal Revenue Agency - SRF, against tax credits resulting from income tax losses and negative social contribution bases. The right to update the tax credits in accordance with the variation of the Selic index was also recognized. In September 2006, the Federal Revenue Agency - SRF recognized the right assured by the court, by approving the Tax Credit Request. Accordingly, on September 30, 2007, the Company, recorded the effects of the variation in the SELIC rate on the tax credits and wrote off the PIS/COFINS amounts offset in the course of the lawsuit and recorded in Long-Term Liabilities Taxes and Contributions against the updated tax credits. The updating of the tax credits was recorded as Financial Income and the effect on the Company's Net income for the period ended September 30, 2006 was approximately R$ 68,000, net of taxes and other expenses of bringing the suit. In 2007, the Company offset tax liabilities of R$ 95,642 against this credit.

13 (d) Reconciliation of nominal and effective rates The reconciliation of nominal and effective income tax and social contribution rates is shown below Controladora Consolidado Net income for the period before income tax, social contribution and profit-sharing 139, , , ,436 Nominal rate 34% 34% 34% 34% Income tax and social contribution at nominal rate (47,427) (60,370) (68,437) (61,348) Effect of income tax/social contribution on the additions to and eliminations from net book income: - Equity in subsidiaries. Exchange variation 8,654 1,247 8,654 1,247. On income (loss) (13,575) (10,119). Capital gain due to variation in percentage participation (equity accounting) 12, , Loss of subsidiary abroad (20,687) (16,365) - Reversal of provision on which no tax credit was recognized 4,182 4,182 - Interest on capital paid, proportional up to date 4,590 7,122 4,590 7,122 - Statutory employee profit sharing 2,040 2,380 4,056 2,380 - Tax credits constituted (net of R$ 13,100, written off in Americanas.com S.A. Comércio Eletrônico in view of the termination of the company on December 13, 2006) 23,105 - Other exclusions (additions), net 2,963 7,808 2,035 (5,396) Income tax and social contribution at effective rate (30,528) (47,038) (57,562) (44,361) The interest on capital paid was accounted for as financial expenses because of specific fiscal regulation and reversed before net income for the quarter, in accordance with Brazilian Securities Commission (CVM) instructions. Accordingly, it has no effect on the net income for the quarter, except for the tax effects recognized under the heading income and social contribution taxes.

14 9 INVESTMENTS Parent company Participation in subsidiaries 438, ,366 Participation in jointly-controlled subsidiaries 50, ,762 (a) Acquisitions and corporate restructuring in 2007 BWU Comercio Entretenimento S.A. 489, ,128 In an Extraordinary General Meeting called on January 24, 2007 by Lojas Americanas S.A., an agreement was entered into for the acquisition of the company BWU Comércio e Entretenimento S.A. from Unibanco Empreendimentos e Participações. A licensing agreement was also signed with Blockbuster Internacional, Ind. for the use of the BLOCKBUSTER trademark for a period of 20 years. BWU Comercio Entretenimento S.A. controls the development and sub-franchising in Brazil of the rental and sale of DVDs, games and VHS tapes, under the BLOCKBUSTER trademark. The transaction was ratified in a General Meeting of the Stockholders of Lojas Americanas, held on March 23, 2007, in accordance with article 256 of Law No /76, and dissenting stockholders, if any, are assured of the right to withdraw, pursuant to 2 of article 256, with reimbursement based on the equity value of the share. The initial transaction cost was R$ 186,200, payable on May 24, 2007, subject to the normal adjustments made on this type of transaction, after accounting and tax due diligence on the balance sheet of the transfer of the operations from the seller to the purchaser, made on January 23, On April 27, 2007, the Company paid the amount of R$ 184,625, the difference being justified, basically, by the early payment. On May 23, 2007 Blockbuster Inc. was paid the amount of R$ 9,732, for the license to use the BLOCKBUSTER trademark in Brazil for a period of 20 years, which will permit the Company to continue with the rental and sale of DVDs, games and VHS tapes, and the use of the BLOCKBUSTER trademark in the sale in the stores of certain products, as previously authorized by the licensor. This amount paid was recorded in Intangible Assets as shown in Note 11. As a result of this transaction, 127 new stores (32 thousand m2) were added to the Lojas Americanas chain, equivalent to an increase of 54% in the number of stores (8.6% in m2). The stores acquired are located in high movement areas, with access to classes A and B, and their layout and size are compatible with the format of the Lojas Americanas Express stores. By December 31, 2007, 107 of these stores had already been transformed to the Lojas Americanas Express format, recorded in the accounts of the parent company, continuing with the activities of rental and sale of DVDs under the BLOCKBUSTER trademark.

15 On September 30, 2007 and December 26, 2007, Lojas Americanas S.A. effected a capital increase in the company BWU, in the amounts of R$ 30,000 cash and R$ 8,000, respectively, for the assignment of the license to use the BLOCKBUSTER trademark solely for electronic sales activities, based on the book value assessment issued by an independent expert. Statement of calculation of the acquisition cost and goodwill: Original amount of transaction 186,200 Price adjustment (1,575) Other expenditure relating to the acquisition 4,120 Acquisition cost 188,745 Equity value as of January 23, 2007 (15,585) Goodwill (Note 11) 173,160 B2W Companhia Global do Varejo An Extraordinary Stockholders' Meeting held on December 13, 2006 by Americanas.com S.A. Comércio Eletrônico, a wholly-owned subsidiary of Lojas Americanas S.A., approved the following decisions: a) An increase of R$ 175,000 in the Company's capital, fully subscribed and paid up at the time by Lojas Americanas S.A., the sole stockholder, R$ 120,276 in cash and R$ 54,724 by using a credit held by the parent company against the subsidiary. b) The merger of the Company with Submarino S.A., a publicly-held company, resulting in termination of both companies and the setting up of a new company (B2W). The new company that resulted from the merger was set up with the net assets of Americanas.com S.A Comércio Eletrônico and Submarino S.A, as of September 30, 2006, appraised based on audited financial statements, adjusted to the merger date (December 13, 2006), and is called B2W Companhia Global do Varejo. As a result of the merger and the contribution of the net assets of Americanas.com S.A Comércio Eletrônico and Submarino S.A to B2W Companhia Global do Varejo, the stockholders of Americanas.com S.A Comércio Eletrônico and Submarino S.A subscribed and paid up the initial capital of B2W Companhia Global do Varejo. The substitution ratio of the common shares previously held by the stockholders of Americanas.com S.A Comércio Eletrônico and Submarino S.A, in terms of the number of shares received by these stockholders at the time of establishment of the initial capital of B2W, was based on the reports issued by the investment banks contracted by the two companies, which decided that the substitution ratio in accordance with the parameters informed is equitable for the stockholders of both companies. Each common share of Submarino S.A. outstanding on the date of the Stockholders' Meeting that set up B2W was substituted by 1 (one) common registered share without par value of B2W and 1 (one) redeemable preferred share, which were cancelled immediately after redemption. Each common share of

16 Americanas.com outstanding on the date of the Stockholders' Meeting that set up B2W was substituted by 0.8 of a common registered share without par value of B2W. After the merger and approval of the redemption of the preferred shares initially subscribed, Lojas Americanas S.A. became the holder of shares representing 53.25% of the total and voting capital of B2W (54,38% as of December 31, 2007). After the initial formation of the share capital of B2W Companhia Global do Varejo (before incorporation in TV Sky Shop) on December 13, 2006, and the constitution of a capital reserve in that company, all the preferred shares of B2W were recorded at the time of the payment of R$ 441,047 in the first quarter of 2007 with the respective cancelation of preferred shares without a reduction in share capital. With the substitution of the investment corresponding to 100% of the participation in the capital of Americanas.com S.A Comércio Eletrônico by the investment in B2W Companhia Global do Varejo, corresponding to 53.25% of the total and voting capital of the new company, Lojas Americanas S.A. determined goodwill, as shown below, which will be amortized over up to 10 years. Investment in Americanas.com as of December 13, 2006 Equity value (equity accounting) 271,768 Goodwill not amortized 31, ,670 Participation in B2W Companhia Global do Varejo (53.25% of R$ 359,553) (193,205) Goodwill calculated at the acquisition / merger 110,465 Goodwill in the acquisition of shares on the stock market during ,439 Goodwill in the acquisitions (Note 11) 146,904 Goodwill in the acquisition, by the subsidiary, of its own shares, during 2007 (Note 11) 51,343 Total goodwill 198,247 As at December 31, 2007 Lojas Americanas had acquired 548,000 common shares of the subsidiary B2W on the stock market, at an average weighted cost of acquisition of R$ The lowest and highest costs of acquisition were R$66.22 and R$ 87.74, respectively. The difference between the equity value and the cost of acquisition was recorded as goodwill, under Intangible Assets, and will be amortized over the same period used currently, that is, up to 10 years. As at December 31, 2007, the subsidiary B2W held 1,439,200 common shares in treasury, at an average weighted cost of acquisition of R$ 69.26, in the total value of R$ 99,677. The lowest and highest costs of acquisition were R$68.73 and R$ 88.07, respectively. The difference between the equity value and the cost of acquisition of the B2W shares by B2W itself was recorded in Lojas Americanas S.A. as goodwill, classified under Intangible Assets.

17 An Extraordinary General Meeting of B2W Companhia Global do Varejo held on March 31, 2007 approved the merger of that company by its wholly-owned subsidiary TV Sky Shop S.A.. As a result of the merger, the stockholders' equity of TV Sky Shop S.A. increased by the amount corresponding to the net book assets of B2W as of December 31, 2006 (base date of the Financial Statements for the takeover process), less the investment in TV Sky Shop S.A. itself. The changes in net equity, from December 31, 2006 to the date of approval of the merger (March 31, 2007), as calculated by B2W, were appropriated to TV Sky Shop S.A. B2W is constituted under the rules established by the BOVESPA Novo Mercado, the highest level of corporate governance. These include a share base comprised exclusively of common shares and the election of independent members to the Board of Directors. B2W has a Board of Directors made up of nine members, five of whom are nominated by the controlling shareholder, Lojas Americanas S. A. and four independent members. B2W presented to the Brazilian Securities Commission (CVM) and the Sao Paulo Stock Market (BOVESPA), respectively, its request for registration of an open capital company and for admission to trade its shares in the special listed segment, Novo Mercado, both of which were granted in July 2007, enabling B2W to take the measures necessary to conclude the replacement of the Submarino shares, originally traded in the New market segment under the code SUBA3, for shares of B2W, its legal successor, trading on the new Market segment under the code BTOW3. The B2W shares issued at the time of incorporation are traded on equal terms as the previously existing shares with regard to all the benefits, including dividends and capital remuneration approved by the Company after said incorporation. Vitória Participações S.A. In 2005 Lojas Americanas S.A. and Banco Itaú Holding Financeira S.A. entered into an association agreement. Through this association, Victoria Participações S.A. was created, the share capital of which is held 50% by Lojas Americanas S.A. and 50% by Banco Itaú Holding Financeira S.A.. FAI Financeira Americanas Itaú S.A. Crédito Financiamento e Investimento (a wholly-owned subsidiary of Vitória Participações S.A.) was established to offer financial products that include personal loans, in the form of cheques and credit cards, insurance, private label credit cards and VISA and MASTERCARD cobranded credit cards. On February 23, 2006, the Brazilian Central Bank BACEN granted authorization for FAI to start operations, which it did in May 2006, operating exclusively in structuring and commercialization of financial products and services and related services for the customers of Lojas Americanas S.A. Americanas Express, Americnas.com and Submarino websites and the TV channel Shoptime, for a period of 20 years, automatically renewable for an indefinite period. On April 30, 2007, there was a partial spin-off of the equity of Vitória Participações S.A., which stood at R$419,095 (base date March 31, 2007), according to the report issued by the independent expert. Of the % of its equity interest (R$339,379), % (R$169,690) were conveyed to Facilita Serviços e Propaganda S.A and % (R$169,689) to Itauvest Administração e Participações S.A. Pandora Participações S.A. Complementing the agreement entered into in 2005, an agreement was signed on December 29, 2006 between Lojas Americanas S.A. and Banco Itaú S.A. for the commercialization of financial products and services, exclusively for customers of the Shoptime stores, for an indefinite period. As a result of this agreement, Banco Itaú Holding Financeira S.A. acquired a 50% interest in the capital of Pandora Participações S.A., a wholly-

18 owned subsidiary of Lojas Americanas S.A., through a financial contribution of R$ 68,500, paid up on January 10, 2007, generating capital gain of R$ 34,250, recorded in the first quarter of (Note 22). As in the original agreement, certain performance targets were established for the Company, as well as a penalty to be paid by Lojas Americanas S.A. if the targets are not achieved. The Company recorded a provision of R$ 15,500, as non-operating expenses, in 2007 to cover the potential payment of these fines. This provision is reviewed and adjusted periodically, if necessary, in line with achievement of these targets. Facilita Serviços e Propaganda S.A. As from May 02, 2007, the services of credit information and agency of financed contracts for FAI Financeira Americanas Itaú S.A. Crédito, Financiamento e Investimento, which were previously carried out by Facilita Serviços e Propagandas S.A., a wholly-owned subsidiary of Lojas Americanas S.A., were transferred to Facilita Promotora S.A.. As a result, the employees involved in these services and the respective labor obligations, were also transferred to Facilita Promotora S.A. On November 23, 2007, the Extraordinary General Meeting of Facilita Serviços e Propaganda S.A. approved the incorporation by BWU Comércio e Entretenimento S.A. both of which are wholly-owned subsidiaries of Lojas Americanas. As a result of this incorporation, the share capital of BWU Comércio e Entretenimento S.A. was increased by R$ 202,945, the net book value of the assets of Facilita Serviços e Propaganda S.A. on November 20, 2007 (base date of the Financial Statements for the incorporation process). Equity variations in Facilita Serviços e Propaganda S.A. from November 20, 2007 until the date on which the incorporation was approved (November 23, 2007) were recorded in the financial statements of BWU Comércio e Entretenimento S.A.. (b) Corporate restructuring in 2006 In 2006, the Company restructured the interests in subsidiaries abroad in order to simplify their corporate and tax structures. As a result of this restructuring, in the first half of 2006, the indirect.subsidiaries Louise Holdings Limited and Americanas.com S.A. Comércio Eletronico, and the related goodwill, became direct subsidiaries of Lojas Americanas S.A. The transfer of participations between Lojas Americanas S.A. and the subsidiaries was effected through the liquidation of intercompany loans and payments of dividends declared by subsidiaries abroad. In May 26, 2006, as part of the corporate restructuring process in its off-shore subsidiaries, Americanas.com had its stockholders equity reduced and its participation in the subsidiary Americanas.com S.A. Comércio Eletrônico transferred to its parent company Lojas Americanas S.A. With a view to the integration and synergy of the operating and administrative activities of the parent company, Lojas Americanas S.A. and the subsidiary Americanas.com S.A. Comércio Eletrônico, Extraordinary Stockholders Meetings were held on July 14, 2006 by Americanas.com. S.A. Comércio Eletrônico and August 7, 2006 by the parent company Lojas Americanas S.A., which approved the incorporation of the subsidiary s shares by the parent company, thereby converting Americanas.com. S.A. Comércio Eletrônico into a wholly-owned subsidiary of Lojas Americanas S.A. In order to determine the exchange ratios of Americanas.com S.A. Comércio Eletrônica for common and preferred Lojas Americanas S.A. shares, an asset accounting appraisal was prepared by independent experts, using the base date

19 of March 31, 2006, as well as financial-economic evaluation reports of the respective Companies, prepared by a top investment bank, based on the discounted cash flow method. In view of the above-mentioned valuations, the Board of Directors and stockholders of the respective Companies approved the substitution of one common share in Americanas.com. S.A. Comércio Eletrônica for Lojas Americanas S.A. shares, namely common shares and preferred shares. Consequently, the share capital of the subsidiary, on that date, was increased by R$16,199, with the issue of 2,171,991,176 common shares and 3,642,912,173 preferred shares.

20 (c) Changes in investments in the parent company: Americanas. com Americanas. com Comércio Eletrônico BWU B2W Companhia Global do Varejo Comércio e Entretenimento S.A. Facilita Serviços e Propaganda S.A. Klanil Services Ltd. Lojas Americanas Amazônia S.A. da Lojas Americanas Home Shopping Ltda. Louise Holdings Ltd. Vitória Participações S.A. Pandora Participações S.A. Other Total As of January 1, ,344 24,013 3, , ,316 Transfer of investments 69,136 (35,660) (69,051) (35,575) Decrease in capital / Disposal (343) (680) (1,023) Transfer of Investments (70,244) 70,244 0 Share merger 16,199 16,199 Capital Increase 175, ,000 Acquisition of investment (271,768) 193,205 (78,563) Equity value - Profit sharing (1,635) 8,232 6,118 1,898 (19,104) 281 (1,526) (27,838) 3,810 (29,764) - Exchange variation 3,086 (105) 683 3,664 Capital gain due to change in the percentage participation 2,093 2,093 Provision for loss on investment 30,856 (281) 96, ,781 As of December 31, , , , , ,128 Acquisition of investment 1,817 15,585 17,402 Capital Increase 38,000 8,506 46,506 Transfer of investment due to spinoff 169,690 (169,690) 0 Transfer of investment due to incorporation 202,945 (202,945) 0 Effect of the goodwill on the purchase by the subsidiary of its own shares (51,343) (51,343) Equity value - Profit sharing 33,373 5,111 8, (328) (61,707) (27,767) 2,465 (39,926) - Exchange variation 5,060 20,394 25,454 Capital gain due to change in the percentage participation 1,713 34,250 35,963 Dividends (9,486) (30,051) (37) (23) (39,597) Provision for loss on investment (14,429) ,313 27,212 As of December 31, , , , ,268 36, ,799

21 (d) Related parties - information and transactions % Participation Capital Stockholders' equity Net Income (loss) Balances Assets (liabilities) Income (expenses), net Direct subsidiaries Americanas.com S.A. Comércio Eletrônico 11,765 BWU Comércio e Entretenimento S.A. (4) 100% 282, ,641 5,111 (81,781) B2W Companhia Global do Varejo 54.38% 174, ,520 62,204 7, ,582 Facilita Serviços e Propaganda S.A. (5) (45,927) 7,206 6,836 Klanil Services Ltd. 100% 18,346 (16,427) 863 Lojas Americanas da Amazônia S.A. 100% 2,288 (386) (328) 47 Lojas Americanas Home Shopping Ltda. 100% 6,877 1,801 (1,679) (1,679) Louise Holdings Ltd. 100% 9 (137,519) (61,707) Jointly-controlled subsidiary Pandora Participações S.A.(1) 50% 68,502 73,384 4,930 Vitória Participações S.A. (1) 50% 4,700 28,537 (55,537) Indirect subsidiaries 8M Participações Ltda % 2,661 1,816 (190) Cheyney Financial S.A. 100% 14,599 (6,960) 1,095

22 FAI Financeira Americanas Itaú S.A. Crédito, Financiamento e Investimento (1) e (2) 50% 88,446 26,718 (61,728) 21,184 7,284 1,751 2,488 Facilita Promotora S.A. 50% 6,141 7,539 1,834 Ingresso.com S.A % 5,016 5, TV. Sky Shop S.A.(6) 9 Posto Vicom 99.99% Submarino Finance Promotora de Crédito Ltda % 8,505 2,172 (3,327) Submarino Viagens e Turismo Ltda % 3,922 3,670 1,486 ST Importações LTDA 54.38% 4,050 1, Related company São Carlos Empreendimentos e Participações S.A. (3) (7,857) (7,926) (20,968) (19,854) (1) The quarterly financial statements were revised by other independent auditors. (2) Recorded in Accounts receivable from customers in the balance sheet and as selling expenses in the statement of income. (3) Recorded in Other accounts payable in the balance sheet and as selling expenses in the statement of income. (4) Net Income reflects results as from January 23, 2007, the date of the acquisition of the shareholding by the Company, as well as the adjustments made resulting from unrealized income between companies within the group. (5) Incorporated by the wholly-owned subsidiary BWU Comércio de Entretenimento S.A.. (6) Incorporation of TV Sky Shop and B2W Companhia Global do Varejo. The main inter-company transactions are contracted at normal market rates, terms and amounts for transactions of the same type and refer to: Assets and liabilities arising from intercompany operations, recorded in loans; Net income and expense derived from interest on loans, sale of goods and refunds as a result of apportionment of common administrative expenses, commission of letter of credit and sale of permanent assets (during 2007). Operations with the related company (jointly controlled), relating to real estate rentals.

23 10 PROPERTY AND EQUIPMENT Annual depreciation/ amortization rate Cost Parent company Consolidated Accumulated depreciation/ amortization Net Net Cost Accumulated depreciation/ amortization Net Net Facilities, furniture and fittings 10% a 20% 140,164 (66,496) 73,668 53, ,939 (90,211) 93,728 69,307 Goods for rental (*) 9,064 (2,859) 6,205 52,539 (40,091) 12,448 Machinery and computer equipment 10% a 40% 168,886 (98,905) 69,981 51, ,766 (103,352) 86,414 63,853 Leasehold improvements 10% a 40% (**) 286,098 (115,296) 170, , ,920 (123,806) 171, ,814 Vehicles 20% 1,106 (829) ,106 (829) ,318 (284,385) 320, , ,270 (358,289) 363, ,441 Construction in progress and other 2,566 2, ,182 (7,861) 15,321 5, ,884 (284,385) 323, , ,452 (366,150) 379, ,273 (*) DVDs for rental depreciated over up to 9 months. (**) Calculated on the basis of the respective terms of the lease agreements. The average term of the lease agreements is 10 years, renewable.

24 11 INTANGÍVEL Goodwill on acquisitions of investments: - B2W Cost 146,904 Parent company Consolidated Accumulated amortization Net Net Cost (11,974) 134, , ,904 Accumulated amortization Net Net (11,974) 134, ,943 - BWU 173, , , ,160 - TV Sky Shop and other 135,305 (28,795) 106, ,432 Goodwill on B2W s shares buyback 51,343 (855) 50,488 51,343 (855) 50, ,407 (12,829) 358, , ,712 (41,624) 465, ,375 Software license 67,766 (35,473) 32,293 31,812 82,283 (39,408) 42,875 35,454 Website and systems development 134,610 (34,875) 99,735 56,598 License to use BLOCKBUSTER brand. 1,732 (39) 1,693 9,732 (39) 9,693 Goodwill 37,620 (1,448) 36,172 3,973 Other 22,139 (3,220) 18,919 (a) Goodwill: 478,525 (49,789) 428, , ,476 (119,166) 636, ,400 As mentioned in Note 9, goodwill on acquisitions of investments is amortized in line with estimates of future profitability, which are reviewed annually and do not exceed a period of 10 years. In the case of the goodwill of BWU, the estimates did not foresee future profitability in the operating results of 2007, and as such there was no amortization in this period. The goodwill on B2W s buyback of its own shares, as described in note 9, is being amortized using the same criteria established at the time of the acquisition of that investment (10 years).