CVM BRAZILIAN SECURITIES AND EXCHANGE COMMISSION STANDARD FINANCIAL STATEMENTS 12/31/ LUPATECH S.A.

Transcription

1 THIS IS A FREE TRANSLATION OF THE ORIGINAL TEXT IN PORTUGUESE IN CASE OF DIVERGENCE OF INTERPRETATION, THE PORTUGUESE TEXT WILL PREVAIL 1 - General Date Date Company name: LUPATECH S.A. Last change of company name 03/30/1993 Previous company name: Valmicro Indústria e Comércio de Válvulas S.A. Date of establishment: 08/08/1980 CNPJ: / CVM Code: Date of CVM registration: 05/08/2006 Status of CVM registry: Active Beginning date of status of CVM registration: 05/08/2006 Country of origin: Brazil Country where securities are held in custody: Brazil Internet page: Registry Participant type: Open Company Category of CVM registry: A Registry date of the current category: 01/01/2010 Emitter situation: Operational phase Date of beginning of situation 05/08/2006 Type of stocks control: Private Date of last change of stocks control: 05/15/2006 Date of last change of fiscal year: 08/08/1980 Fiscal year end: Day: 31 Month:12 Sector Activity Sector: Description of activity: Oil and Gas Production of equipment and redering of services for the oil and gas industrial valves and microcasting parts Newspapers of disclose New spapers: Diario Oficial do Rio Grande do Sul - RS Valor Econômico - SP Foreign Countries Country Admission date United States 11/16/2009 Luxembourg 07/10/ Address Headquarters: Company Mailing Address: Rua Dalton Lahm dos Reis, 201 Distrito Industrial, Caxias do Sul, RS, Brazil, CEP Telephone: (54) Fax: (54) ri@lupatech.com.br Rua Pequetita, conj. 44, Vila Olímpia, São Paulo, SP, Brazil CEP Telephone: (11) Fax: (11) ri@lupatech.com.br

2 3 - Securities Market: Stock Exchange Entity: BM&FBOVESPA Negotiation - beginning: 05/15/2006 Segment: New Market 4 - Auditors Information Name: Deloitte Touche Tohmatsu Auditores Independentes CVM Code Auditor Type: National CPF/CNPJ: / Technician in Charge: Fernando Carrasco CPF: Beginning: 03/24/ Custodian Agent Name: Banco Bradesco S.A. CPF/CNPJ: / Beginning: 04/25/2006 Address: Cidade de Deus - Prédio Amarelo, Subsolo, Vila Yara, Osasco, SP, Brasil CEP: Telephone: (11) Fax: (11) acoes@bradesco.com.br 6 - Investor Relations Officer Name: Thiago Alonso de Oliviera Type: CFO & IRO CPF/CNPJ: Beginning: 03/01/2006 Address: Rua Pequetita, conj. 44, Vila Olímpia, São Paulo, SP, Brazil CEP Telephone: (11) Fax: (11) ri@lupatech.com.br 7 - Investor Relations Department Contact: Thiago Alonso de Oliviera Beginning: 05/15/2006 Address: Rua Pequetita, conj. 44, Vila Olímpia, São Paulo, SP, Brazil CEP Telephone: (11) Fax: (11) ri@lupatech.com.br 8 - Capital Stock Number of shares (Units) 12/31/2010 Paid-up Capital Common Preferred 0 Total Treasury Stock Common Preferred 0 Total

3 Standard Financial Statements - 12/31/ LUPATECH S/A Individual Financial Statments / Balance Sheet Assets (In Reais Thousands) Last Year Penultimate Year Before the Penultimate Year Code Description 12/31/ /31/ /31/ Total Assets 1,241,685 1,284,075 1,053, Current Assets 139, , , Cash and Cash Equivalents 10,404 99,755 1, Accounts Receivable 44, , , Clients 43, , , Other Accounts Receivable 1, , Other Accounts Receivable - Related Parties 1, , Inventories 64,978 48,054 55, Recoverable Taxes 12,646 19,183 30, Recoverable Current Taxes 12,646 19,183 30, Prepaid Expenses 2, Other Current Assets 3,578 3,723 2, Other 3,578 3,723 2, Dividends Receivable 0 1, Derivative Financial Instruments 3, Other Accounts Receivable 509 1,852 2, Non-Current Assets 1,102, , , Long-Term assets 81,106 75,679 97, Deferred Tax 59,695 41,194 25, Deferred Income Tax and Social Contribution 59,695 41,194 25, Credit with Related Parties 0 11,205 57, Credit with Subsidiaries 0 11,205 57, Other Non-Current Assents 21,411 23,280 14, Judicial Deposits 2,680 1,012 5, Recoverable Taxes 18,024 22,216 8, Other Accounts Receivable Investments 856, , , Investments 856, , , Investments in Subsidiaries 830, , , Other investments 26, Fixed Assets 149, , , Fixed Assets in Operations 145, ,283 97, Fixed Assets in Progress 3,624 1,951 22, Intangible 15,350 11,414 11, Intangible 15,350 11,414 11, Software and Other Licenses 4,713 3,689 4, New Products Development 10,637 7,725 7,003

4 Standard Financial Statements - 12/31/ LUPATECH S/A Individual Financial Statments / Balance Sheet Liabilities (In Reais Thousands) Last Year Penultimate YearBefore the Penultimate Year Code Description 12/31/ /31/ /31/ Total Liabilities 1,241,685 1,284,075 1,053, Current Liabilities 133,150 66, , Social and Labor Obligations 8,789 6,925 4, Labor Obligations 8,789 6,925 4, Suppliers 22,555 15,018 26, Domestic Suppliers 21,289 14,187 24, Export Suppliers 1, , Tax 5, , Federal Tax 3, , Other Federal Tax 3, , State Tax 1, Municipality Tax Loans and Financing 43,353 26,103 90, Loans and Financing 14,891 9,790 90, Local Currency 14,891 9,790 90, Debentures 28,462 16, Other Liabilities 53,443 17,829 29, Liabilities with Related Parties 9, Debts with Subsidiaries 9, Other 44,334 17,829 29, Losses on Derivatives 2, Commissions Payable 1,156 8,799 7, Advances from Customers 868 5,195 13, Profit Sharing , Accounts Payable Related to Investment Acquisition 27, , Other Liabilities 12,484 3,403 2, Non-Current Liabilities 926, , , Loans and Financing 424, , , Loans and Financing 95,325 98, , Local Currency 95,325 98, , Debentures 329, , Other Liabilities 440, , , Liabilities with Related Parties 423, , , Debts with Subsidiaries 423, , , Other 17,020 4, Taxes Payable 2,632 2, Accounts Payable Related to Investment Acquisition 14, Other Obligations 253 1, Deferred Tax 24,324 19,198 3, Deferred Income Tax and Social Contribution 24,324 19,198 3, Provisions 36,372 38,635 57, Social Security, Tax, Labor and Civil Provisions 2,801 4,659 10, Tax Provisions 2,577 3,668 10, Civil Provisions Shareholder's Equity 182, , , Paid-up Capital 312, , , Stock Options 15,505 11,002 7, Accumulated Earnings / Losses -77,993-4,770-20, Other Comprehensive income

5 Standard Financial Statements - 12/31/ LUPATECH S/A Individual Financial Statments / Statement of Income (In Reais Thousands) Last Year Penultimate Year Before the Penultimate Year Code Description 01/01/2010 to 12/31/ /01/2009 to 12/31/ /01/2008 to 12/31/ Gross Revenue from Sales and/or Services 178, ,709 87, Cost of Goods Sold -162, ,906-83, Gross Profit 16,095 61,803 4, Operating Income/Expenses -21,150-25,963-14, Selling -19,912-24,416-8, General and Administrative -22,293-17,628-9, Other Operating Income 3,110 2,255 5, Other Operating Expenses -7,716-12,851-8, Equity Pick-up 25,661 26,677 6, Operating Income/Expenses Before Financial R -5,055 35,840-10, Financial Results -89,080-20,301-30, Financial Income 98, ,676 9, Financial Income 12,302 19,263 3, Gain on Exchange Variance 86,095 89,413 5, Financial Expenses -187, ,977-39, Financial Expenses -120,646-79,358-24, Loss on Exchange Variance -66,831-49,619-15, Income Before IncomeTax -94,135 15,539-40, Provision for Income Tax and Social Contributio 20, , Deferred 20, , Net Income from Continuing Operations -73,224 15,408-29, Income/Loss for the Period -73,224 15,408-29, Earnings per Share (R$/Share) Basic Earnings per Share ON Diluted Earnings per Share ON

6 Standard Financial Statements - 12/31/ LUPATECH S/A Individual Financial Statments / Statement of Comprehensive Income (In Reais Thousands) Last Year Penultimate Year Before the Penultimate Year Code Description 01/01/2010 to 12/31/ /01/2009 to 12/31/ /01/2008 to 12/31/ Income/Loss for the Period -73,224 15,408-29, Other Comprehensive Income -14,559-72,423 19, Exchange Variation on Investments Abroad -14,435-72,423 19, Unrealized Losses on Cash Flow Hedges Comprehensive Income of the Period -87,783-57,015-10,185

7 Standard Financial Statements - 12/31/ LUPATECH S/A Individual Financial Statments / Statement of Changes in Shareholder's Equity - 01/01/2010 to 12/31/2010 (In Reais Thousands) Capital Reserves, Stock Other Code Description Capital Stock Options and Treasury Shares Profit Reserve Accumulated Profit/Loss Comprehensive Income Shareholders' Equity 5.01 Opening Balance 311,525 11, ,769-53, , Adjusted Balance 311,525 11, ,769-53, , Capital Transactions 1,178 4, , Capital Increase 1, , Stock Options 0 4, , Treasury Shares Comprehensive Income ,224-14,559-87, Income / Loss for the Period , , Other Comprehensive Income ,559-14, Cumulative Translation Effects ,435-14, Unrealized Losses on Cash Flow Hedges Ending Balance 312,703 15, ,993-67, ,460

8 Standard Financial Statements - 12/31/ LUPATECH S/A Individual Financial Statments / Statement of Changes in Shareholder's Equity - 01/01/2010 to 12/31/2009 (In Reais Thousands) Code Description Capital Stock Capital Reserves, Stock Options and Treasury Shares Profit Reserve Accumulated Profit/Loss Other Comprehensive Income Shareholders' Equity 5.01 Opening Balance 309,850 7, ,178 9, , Previous Years Adjustments ,907 9, Adjustment ,907 9, Adjusted Balance 309,850 7, ,178 19, , Capital Transactions 1,675 3, , Capital Increase 1, , Stock Options 0 3, , Comprehensive Income ,408-72,423-57, Income / Loss for the Period , , Other Comprehensive Income ,423-72, Cumulative Translation Effects ,423-72, Ending Balance 311,525 11, ,770-53, ,679

9 Standard Financial Statements - 12/31/ LUPATECH S/A Individual Financial Statments / Statement of Changes in Shareholder's Equity - 01/01/2010 to 12/31/2008 (In Reais Thousands) Code Description Capital Stock Capital Reserves, Stock Options and Treasury Shares Profit Reserve Accumulated Profit/Loss Other Comprehensive Income Shareholders' Equity 5.01 Opening Balance 307,511 4, , , Adjusted Balance 307,511 4, , , Capital Transactions 2,339 2, , Capital Increase 2, , Stock Options 0 2, , Comprehensive Income Total ,530 9,438-20, Income / Loss for the Period , , Other Comprehensive Income ,438 9, Cumulative Translation Effects ,438 9, Ending Balance 309,850 7, ,178 9, ,626

10 Standard Financial Statements - 12/31/ LUPATECH S/A Individual Financial Statements / Statement of Cash Flow - Indirect Method (In Reais Thousands) Last Year Penultimate Year Before the Penultimate Year Code Description 01/01/2010 to 12/31/ /01/2009 to 12/31/ /01/2008 to 12/31/ , ,135 86, Cash Flow from Operation -56,868 41,802 81, Cash Flow from Operation -73,224 15,408-29, Depreciation and Amortization 13,798 17,413 6, Negative Goodwill on Acquisition of Investment 0 0-5, Equity Pick-up -25,661-26,677-6, Cost of Write-off or Sale of Fixed Assets , Financial Expenses and Exchange Variation of Financing, Debentures and Derivatives 44,182 31, , Stock Option Expenses 4,503 3,486 2, Deferred income Tax and Social Contribution -20, , Change in Assets and Liabilities 87,181 74,333 4, Accounts Receivable 68,390 37,403-7, Inventories -16,924 7,445 6, Recoverable Taxes 10,729-2, Other Assets 4,421 2, Suppliers 7,537-11,327-4, Taxes Payable 18,193-1,160 2, Others -5,165 41,433 7, Cash Flow from Investing Activities -57, , , Acquisition Cost of Investments -45, , , Acquisition of Fixed Assets -9,740-23,893-15, Addition to Intangibles -5,516-1,983-6, Dividends and Interest on Equity Reserve Received 3,192 26,520 22, Cash Flow from Financing Activities -61, ,053 26, Proceeds from Loans and Financing 10,545 36, , Proceeds from Loans and Financing - Related Parties -14, , Proceeds from Debentures -38, , Capital Increase 1,178 1,675 2, Payments of Loans and Financing - Principal -9, , , Payments of Loans and Financing - Interest -11,191-45, Exchange Variation on Cash Equivalents 0 0 5, Increase/Decrease in Cash and Cash Equivalents -89,351 98,457 1, Cash and Cash Equivalents at the Beginning of Period 99,755 1, Cash and Cash Equivalents at the End of Period 10,404 99,755 1,298

11 Standard Financial Statements - 12/31/ LUPATECH S/A Individual Financial Statements / Statement of Added Value (In Reais Thousands) Last Year Penultimate Year Before the Penultimate Year Code Description 01/01/2010 to 12/31/ /01/2009 to 12/31/ /01/2008 to 12/31/ Revenue 213, , , Sales of Goods, Products and Services 210, , , Other Revenues 2,886 2,175 3, Allowance for Doubtful Accounts Input Acquired from Third Parties -166, ,775-78, Cost of Products, Goods and Services Sold -125, ,158-61, Materials, Energy, and Other Outsourced Services -32,766-16,951-7, Loss / Recovery of Assets Other Expenses -8,681-14,556-9, Gross Added Value 46,681 87,796 27, Retentions -13,798-17,413-6, Depreciation and Amortization -13,798-17,413-6, Net Added Value Generated by the Company 32,883 70,383 21, Added Value Received by Transfer 133, ,353 15, Equity pick-up 25,661 26,677 6, Financial income 98, ,676 9, Other 9, Total Added Value to be Distributed 166, ,736 37, Distribution of Added Value 166, ,736 37, Personal 50,154 42,766 27, Direct Compensation 40,067 34,702 22, Benefits 5,916 4,553 2, FGTS 4,171 3,511 1, Taxes and Contributions , Federal 3,265 16, States -2,828 1, Municipal Payment of debt 188, ,977 39, Interest 187, ,977 39, Other 1, Capital compensation -73,224 15,408-29, Income/Loss for the period -73,224 15,408-29,530

12 Standard Financial Statements - 12/31/ LUPATECH S/A Consolidated Financial Statements / Balance Sheet Assets (In Reais Thousands) Last Year Penultimate Year Before the Penultimate Year Code Description 12/31/ /31/ /31/ Total Assets 1,445,274 1,454,861 1,739, Current Assets 406, , , Cash and Cash Equivalents 58, , , Accounts Receivable 123, , , Clients 123, , , Inventories 160, , , Recoverable Taxes 39,605 45,535 51, Recoverable Current Taxes 39,605 45,535 51, Prepaid Expenses 5, Other Current Assets 19,316 28,171 8, Other 19,316 28,171 8, Derivative Financial Instruments 3, Securities 0 20, Other Accounts Receivable 16,247 7,594 8, Non-Current Assets 1,038, , , Long-term Assets 138,651 96,006 80, Accounts Receivable 0 3,457 2, Clients 0 3,457 2, Deferred Tax 84,375 62,708 38, Deferred Income Tax and Social Contribution 84,375 62,708 38, Other Non-Current Assents 54,276 29,841 39, Judicial Deposits 2,864 1,214 5, Securities 21, , Recoverable Taxes 22,284 23,432 10, Other Accounts Receivable 7,184 5,195 3, Investments 26,347 2,386 2, Investments 26,347 2,386 2, Investments in Subsidiaries 139 2,264 2, Other Investments 26, Fixed Assets 346, , , Fixed Assets in Operations 322, , , Fixed Assets in Progress 24,501 10,170 59, Intangible 526, , , Intangible 21,715 16,729 17, Software and Other Licenses 6,376 5,455 6, New Products Development 15,339 11,274 10, Goodwill 505, , ,280

13 Standard Financial Statements - 12/31/ LUPATECH S/A Individual Financial Statments / Balance Sheet Liabilities (In Reais Thousands) Last Year Penultimate Year efore the Penultimate Year Code Description 12/31/ /31/ /31/ Total Liabilities 1,241,685 1,284,075 1,053, Current Liabilities 133,150 66, , Social and Labor Obligations 8,789 6,925 4, Labor Obligations 8,789 6,925 4, Suppliers 22,555 15,018 26, Domestic Suppliers 21,289 14,187 24, Export Suppliers 1, , Tax 5, , Federal Tax 3, , Other Federal Tax 3, , State Tax 1, Municipality Tax Loans and Financing 43,353 26,103 90, Loans and Financing 14,891 9,790 90, Local Currency 14,891 9,790 90, Debentures 28,462 16, Other Liabilities 53,443 17,829 29, Liabilities with Related Parties 9, Debts with Subsidiaries 9, Other 44,334 17,829 29, Losses on Derivatives 2, Commissions Payable 1,156 8,799 7, Advances from Customers 868 5,195 13, Profit Sharing , Accounts Payable Related to Investment Acquisition 27, , Other Liabilities 12,484 3,403 2, Non-Current Liabilities 926, , , Loans and Financing 424, , , Loans and Financing 95,325 98, , Local Currency 95,325 98, , Debentures 329, , Other Liabilities 440, , , Liabilities with Related Parties 423, , , Debts with Subsidiaries 423, , , Other 17,020 4, Taxes Payable 2,632 2, Accounts Payable Related to Investment Acquisition 14, Other Obligations 253 1, Deferred Tax 24,324 19,198 3, Deferred Income Tax and Social Contribution 24,324 19,198 3, Provisions 36,372 38,635 57, Social Security, Tax, Labor and Civil Provisions 2,801 4,659 10, Tax Provisions 2,577 3,668 10, Civil Provisions Shareholder's Equity 182, , , Paid-up Capital 312, , , Stock Options 15,505 11,002 7, Accumulated Earnings / Losses -77,993-4,770-20, Other Comprehensive income

14 Standard Financial Statements - 12/31/ LUPATECH S/A Consolidated Financial Statments / Statement of Income (In Reais Thousands) Last Year Penultimate Year Before the Penultimate Year Code Description 01/01/2010 to 12/31/ /01/2009 to 12/31/ /01/2008 to 12/31/ Gross Revenue from Sales and/or Services 581, , , Cost of Goods Sold -435, , , Gross Profit 146, , , Operating Income/Expenses -127, , , Selling -61,434-57,170-60, General and Administrative -55,463-54,722-49, Other Operating Income 6,037 6,631 8, Negative Goodwill on Acquisition of Investment 0 0 5, Other Operating Income 6,037 6,631 2, Other Operating Expenses -16,988-17,775-10, Equity Pick-up Operating Income/Expenses Before Financial Results and Income Tax 18,662 29, , Financial Results -94,865-2, , Financial Income 111, ,323 43, Financial Income 16,725 26,390 8, Gain on Exchange Variance 94, ,933 34, Financial Expenses -206, , , Financial Expenses -133, , , Loss on Exchange Variance -72,364-65, , Income Before Income Tax -76,203 27,360-19, Provision for Income Tax and Social Contribution 3,043-11,952-10, Current -11,719-14,581-33, Deferred 14,762 2,629 23, Net Income from Continuing Operations -73,160 15,408-29, Income/Loss for the Period -73,160 15,408-29, Parent company's interest -73,224 15,408-29, Non-controlling interest Earnings per Share (R$/Share) Basic Earnings per Share ON Diluted Earnings per Share ON

15 Standard Financial Statements - 12/31/ LUPATECH S/A Consolidated Financial Statments / Statement of Comprehensive Income (In Reais Thousands) Last Year Penultimate Year Before the Penultimate Year Code Description 01/01/2010 to 12/31/ /01/2009 to 12/31/ /01/2008 to 12/31/ Income/Loss for the Period -73,160 15,408-29, Other Comprehensive Income -14,559-72,423 19, Exchange Variation on Investments Abroad -14,435-72,423 19, Unrealized Losses on Cash Flow Hedges Comprehensive Income of the Period -87,719-57,015-10, Parent Company's Interest -87,783-57,015-10, Non-Controlling Interest

16 Standard Financial Statements - 12/31/ LUPATECH S/A Consolidated Financial Statments / Statement of Changes in Share holder's Equity - 01/01/2010 to 12/31/2010 (In Reais Thousands) Ca pital Reserves, Other Stock Options and Accumulated Comprehensive Non-controlling Consolidated Treasury Sha res Code Description Capital Stock Profit Reserve Profit/Loss Income Shareholde rs' Equity intere st Share holders' Equity 5.01 Opening Balance 311,525 11, ,769-53, , , Adjusted Balance 311,525 11, ,768-53, , , Capital Transactions 1,178 4, , , Capital Increase 1, , , Stock Options 0 4, , , Treasury Shares Comprehensive Income ,224-14,559-87, , Income / Loss for the Period , , , Other Comprehensive Income ,559-14, , Cumulative Translation Effects ,435-14, , Unrealized Losses on Cash Flow Hedges Internal Equity Mutations ,829 1, Non-controlling interest ,829 1, Ending Balance 312,703 15, ,993-67, ,460 1, ,353

17 Standard Financial Statements - 12/31/ LUPATECH S/A Consolidated Financial Statments / Statement of Changesin Shareholder's Equity - 01/01/2010 to 12/31/2009 (In Reais Thousands) Capita l Re se rves, Stock Other Optionsand Treasury Accumulate d Comprehensive Non-controlling Consolida ted Share s Code Description Ca pital Stock Profit Reserve Profit/Loss Income Shareholders' Equity interest Shareholders' Equity 306, , Opening Balance 309,850 7, ,178 9, Previous Years Adjustments ,907 9, , Adjusted Balance 309,850 7, ,178 19, , , Capital Transactions 1,675 3, , , Capital Increase 1, , , Stock Options 0 3, , , Comprehensive Income ,408-72,423-57, , Income / Loss for the Period , , , Other Comprehensive Income ,423-72, , Cumulative Translation Effects ,423-72, , Ending Balance 311,525 11, ,770-53, , ,679

18 Standard Financial Statements - 12/31/ LUPATECHS/A Consolidated Financial Statments / Statement of Changesin Shareholder's Equity - 01/01/2010 to12/31/2008 (In ReaisThousands) Capital Reserves, Stock Options and Treasury Accumulated Other Comprehe nsive Non-controlling Consolidate d Code Description Capital Stock Share s Profit Reserve Profit/Loss Income Shareholders' Equity interest Shareholders' Equity 5.02 Previous Years Adjustments Adjusted Balance 307,511 4, , , , Capital Transactions 2,339 2, , , Comprehensive Income ,530 9,438-20, , Income / Loss for the Period , , , Non-controlling interest Ending Balance 309,850 7, ,178 9, , ,626

19 Standard Financial Statements - 12/31/ LUPATECH S/A Consolidated Financial Statments / Statement of Cash Flow - Indirect Method (In Reais Thousands) Last year Penultimate year Before the Penultimate year Code Description 01/01/2010 to 12/31/ /01/2009 to 12/31/ /01/2008 to 12/31/ Cash Flow from Operating Activities 125,621 97,388 47, Cash Flow from Operation 44,426 64, , Net Income/Loss for the Period -73,160 15,408-29, Depreciation and Amortization 29,218 36,227 23, Negative Goodwill on Acquisition of Investment 0 0-5, Equity Pick-up Cost of Write-off or Sale of Fixed Assets , Financial Expenses and Exchange Variation of Financing, Debentures and Derivatives 98,005 11, , Stock Option Expenses 4,503 3,486 2, Deferred income Tax and Social Contribution -14,762-2,629-23, Change in Assets and Liabilities 81,195 33, , Accounts Receivable 60,547 55, , Inventories -2,635 9,415-45, Recoverable Taxes 7,030-12,311-26, Other Assets -13, , Suppliers 15,378-11, Taxes Payable 17,207-5,558 4, Others -2,699-2,775 18, Income and Social Contribution Cash Flow from Investing Activities -66, , , Acquisition Cost of Investments -20,177-6,594-28, Payment of capital in subsidiaries and payment for acquisition of investment -9,435-71,282-76, Acquisition of Fixed Assets -28,387-54, , Addition to Intangibles -8,236-4,589-6, Securities-restricted , Cash Flow from Financing Activities -131, , , Proceeds from Loans and Financing 26, , , Proceeds from Loans and Financing - Related Parties , Proceeds from Debentures -41, , Capital Increase 1,178 1,675 2, Purchase of Treasury Shares Payments of Loans and Financing - Principal , , , Payments of Loans and Financing - Interest -78, , Exchange Variation on Cash Equivalents ,048 58, Increase/Decrease in Cash and Cash Equivalents -72, ,714 78, Cash and Cash Equivalents at the Beginning of Period 131, , , Cash and Cash Equivalents at the End of Period 58, , ,874

20 Standard Financial Statements - 12/31/ LUPATECH S/A Consolidated Financial Statements / Statement of Added Value (In Reais Thousands) Last Year Penultimate Year Before the Penultimate Year Code Description 01/01/2010 to 12/31/ /01/2009 to 12/31/ /01/2008 to 12/31/ Revenue 665, , , Sales of Goods, Products and Services 659, , , Other Revenues 5,973 2,175 3, Allowance for Doubtful Accounts Input Acquired from Third Parties -401, ,775-78, Cost of Products, Goods and Services Sold -281, ,158-61, Materials, Energy, and Other Outsourced Servi -108,311-16,951-7, Loss / Recovery of Assets 2, Other Expenses -15,171-14,556-9, Gross Added Value 263,658 87,796 27, Retentions -29,218-17,413-6, Depreciation and Amortization -29,218-17,413-6, Net Added Value Generated by the Company 234,440 70,383 21, Added Value Received in Transfer 118, ,353 15, Equity pick-up ,677 6, Financial income 111, ,676 9, Other 7, Total Added Value to be Distributed 353, ,736 37, Distribution of Added Value 353, ,736 37, Personal 154,105 42,766 27, Direct compensation 128,838 34,702 22, Benefits 16,375 4,553 2, FGTS 8,892 3,511 1, Taxes and contributions 62,327 18, Federal 51,103 16, States 8,680 1, Municipal 2, Payment of debt 210, ,977 39, Interest 206, ,977 39, Rent 2, Other 1, Capital compensation -73,160 15,408-29, Income/Loss for the period -73,224 15,408-29,530

21 Dear Sirs, Lupatech S.A. ( Company ) presents the Management Report and the Company s Consolidated Financial Statements for the 2010 fiscal year and for the fourth quarter ended on December 31, 2010 (4Q10) drawn up in line with the international accounting standard established by the International Accounting Standards Board IASB (IFRS). It is recommended to read this material together with the Notes to the Consolidated Annual Financial Statements. COMPANY PROFILE AND BUSINESS OVERVIEW We are a supplier of manufactured products and services with high value added, with focus on the oil and gas sector and with global presence. On December 31, 2010 our backlog was R$2.5 billion, 235.2% increase compared to the previous year. We are well positioned to capture the growing opportunities associated to the significant and increasing volume of operating costs and expected capital expenditures for the oil and gas sector in Brazil and worldwide, focused mainly on the maintenance of oil and gas production infrastructure and its expansion, which will result in the increase of capacity for oil and gas production. The oil and gas sector in Brazil is passing through a period of strong expansion resulting from the large discoveries announced in the past years, due to the successful exploratory campaign initiated in the late 90 s. In this process, new exploration and production companies have appeared, leveraging significant business opportunities for us. Only Petrobras has announced investments of R$224 billion for the period of 2010 to 2014, 28.7% growth compared to the investment plan announced for the period of 2009 to The current policy of the Federal Government, which prioritizes the acquisition of services and manufactured products in Brazil, associated to the low number of competitors installed in Brazil with capacity to conclude all necessary investments to attend the requirements of the industry players, contribute, in our vision, to our business model. Our competitiveness in this sector is largely based in our capacity to attend the high standards for quality and technology required by the exploration and production companies and its suppliers in the EPCs (Engineering, Procurement and Construction) contracts. We consider that our manufactured products and services are recognized by their high level of customization, technological innovation and quality. We believe to be one of the few Brazilian suppliers of valves ranked with the highest quality level of Petrobras suppliers list ( Level A ). Our manufactured products, services and production processes incorporate ultimate technology and count also with quality certifications issued by recognized international institutions. We have an outstanding position in the supply of manufactured products for the oil and gas sector such as anchoring ropes for production platforms, valves and manufactured products for flow control and automation and lining and coating for production and injection pipes. We believe that our brands are strongly recognized within our institutional clients. On December 2010, we received from the Brazilian Oil Institute (Instituto Brasileiro do Petróleo - IBP), together with the National Organization of Oil Industry (Organização Nacional da Indústria do Petróleo - ONIP), the award of Featured Professional of Oil and Gas Industry in the category of business excellence in the supply of capital goods.

22 Currently, our businesses are organizes in three segments: Energy Products, Flow Control and Metallurgy. The Energy Products segment offers manufactured goods and services for the oil and gas sector. Within the manufactured goods, it stands out the ropes to anchor platforms in deep waters, valves, tools for well completion, fiber optic sensors, and in services, those related to the maintenance of production structures, such as well intervention and workover, lining and coating for pipelines. The Flow Control segment produce valves especially for the chemical, petrochemical, pharmaceutical, food, pulp and paper and construction industries. The Metallurgy segment produces casted parts and components mainly for the automotive industry. We believe that Lupatech s main strengths are: Unique Positioning to Capture the Growth of the Oil and Gas Sector in Brazil. It is increasing the concerns from the E&P companies with the availability of installed capacity in Brazil in order to attend all the demand for manufactured products and services. Nevertheless, we count with installed capacity for critical manufactured products, due to the capital investments concluded in the past years, seeking to capture the growth in demand for manufactured products from E&P companies, which potential reserves are estimated by sector experts in about 100 billion barrels of oil equivalent (boe) compared to the 13 billion boe of proven reserves in 2006, positioning Brazil among the 5 largest countries in oil and gas reserves in the world. Due to this scenario, the production growth plans exceed 12% per year in average during the next 10 years. The main drivers of our revenues from manufactured products are the required capital investments in the Development and Production phases. During the Development phase, we supply manufactured products to EPC companies. Lately, the oil and gas producers require once again our manufactured products to the necessary replacement due to their natural use. Additionally, as a result of our strategy of diversifying sources of revenues and being a integrated solution provider, we ensured more than R$2.0 billion in revenues through long term contracts in maintenance services of production structures. The main driver for additional contracts of services are the operational expenditure of the E&P companies, which will be correlated primarily to the number of wells in operation in the coming years. Solid Track Record Supply for the Oil and Gas Sector. We supply manufactured products for the oil and gas sector for nearly 30 years, and since 1999 we also provide services. We have a strict relationship with Petrobras, world s largest E&P company in deep water, supplying manufactured products and services with high quality and exceptional performance, which we believe to have positioned ourselves as one of its main suppliers. We achieved this position due to the developments of solutions together with Petrobras, and we believe that similar solutions will be demanded by players with more exposure in the Brazilian oil and gas exploration and production market, such as Repsol, BG, Galp, Shell, Exxon, OGX, HRT, among others. Well Organized and Skilled Commercial Structure in our Markets. Our commercial structure and the capabilities of our sales force are essential to build relationships with our clients. We believe to be one of few suppliers of manufactured products and services able to serve our clients in markets where we operate, through a sales team and technical assistance, and a wide network of certified distributors and representatives with high technical knowledge. We export our products to almost 40 countries and have independent representatives in the United States, Europe, Asia and Latin America, providing us with more agility and efficiency compared to other market players. Our strong presence guarantees the closeness with our clients and the faster and efficient offer of

23 maintenance services, which we believe to strengthen the link with our clients. We believe that this give us a significant competitive advantage over the competition. High Potential of Operational Leverage. Our plants and operational bases are prepared to prompt attend incremental volumes of demand, which we believe will occur as a result of signals from our clients for the increasing necessity for access to installed capacity in Brazil. As a consequence of this demand growth and due to the existence of available capacity, we believe that will be possible to obtain more efficiency in our costs structure through operational leverage. We expect that the impact of the higher capacity utilization will result in improvements of our operational margins, highlighting (i) gross margin by the dilution of fixed costs, (ii) EBITDA margin by the dilution of fixed sales, general and administrative expenses and (iii) operational margin by the dilution of financial expenses, resulting in improvements in our profitability. Skilled and Experienced Management with focus on Value Creation. Our Management is highly skilled and with wide experience in the sectors we are present, working with us for in average more than 25 years. Our metric for value creation is the EVA (Economic Value Added) which has become the indicator for the variable compensation of our executives, aligning their interests with our shareholders. OUR STRATEGY Our strategy is focused on positioning ourselves to achieve profitable and sustainable growth of our businesses seeking value creation for our shareholders. In the execution of this strategy, we focused in the oil and gas sector, as we believe it will keep growing significantly in the coming years due to the new investments announced by the sector participants and the necessity for the maintenance of existent infrastructure such as subsea systems, production platforms and refineries. The major projects will be developed in Brazil, Gulf of Mexico and western coast of Africa, in ultra deep water oilfields requiring special manufactured products and services. We developed new technologies already tested and currently in use in several offshore projects, which brings us an important advantage to attract new clients with projects in deep water. Our main goal is to capture all opportunities associated to these investments. For that, the main components of our strategy are: Increase Share in Markets with Higher Return Rates. We seek to expand the offer of integrated solutions combining our operational skills with the ones from strategic partners. Additionally, we seek the continuous development of alliances with our clients that signalize future demands, which together with to our capacity of innovation will allow us to find the ideal strategic partner to address these demands. Increase Penetration in the Brazilian and International Markets. We seek to expand significantly our presence in Brazil and other markets, seeking the increase in our capacity utilization of our manufacturing units focused in the oil and gas sector and also the increase in demand for our services. We are implementing this strategy mainly through (i) increase in productivity, quality and competitiveness of our manufactured products and services, (ii) global sourcing of relevant raw materials for our businesses, and (iii) partnerships with strategic clients and alliances with international companies. Maximize the Capital Allocation Efficiency. We will invest according to the guidelines of our Strategic Plan and prioritizing capital allocation in projects with attractive return rates as part of

24 our value creation process. To execute this strategy, we seek to improve the return on invested capital through disciplined investment in fixed assets, efficient use of working capital and monetization of non-core and non-strategic assets. Seek, Attract, Develop and Retain Talents and Leaderships. We are aware of the growing demand for skilled and experienced professionals in the oil and gas sector, and we constantly seek to attract, train, develop and retain talents inside our organization, engaging and inspiring people and creating a strong atmosphere of trust and commitment. We will continue to offer incentives to the Management to have the maximum commitment from our key employees, aligning these professionals interests to our interests and our shareholders interests, through, among others, stock option programs. [The remaining of this page was left in blank intentionally]

25 MESSAGE OF THE MANAGEMENT TO SHAREHOLDERS AND MARKET AGENTS Dear shareholders and capital market agents, we present the results of Lupatech S.A. for 2010 fiscal year and fourth quarter of 2010 (4Q10). OPERATIONAL PERFORMANCE The operational performance of the Company in 2010 presented progress of 4.8% in Net Consolidated Revenues reaching an amount of R$581.6 million, and 29.5% increase in Operational Cash Flow reaching R$125.2 million. The increase in Net Consolidated Revenues is due to the increase in Net Revenues of the Flow Control and Metallurgy segments, while the Energy Products segment presented a decrease mainly due to the low demand of manufactured products for new oil and gas production platforms. The increase in Operational Cash Flow results from significant reduction in allocated working capital, 25.0% of the allocated volume by the end of 2009, representing monetization of R$77.0 million or about 13.2% of Net Consolidated Revenues in the year. We attribute this significant improvement to the adoption of management tools based on EVA, which contributed in a relevant way to improve the employed working capital volume. Although we have seen improvements in Net Consolidated Revenues and in Operational Cash Flow, there was a 3.9% retraction on Gross Consolidated Profit, due to the lower value added mix of manufactured products and also lower level of operational leverage in the Energy Products segment. As a consequence of the decrease in Gross Consolidated Profit and the 4.5% increase of Consolidated Sales, General and Administrative Expenses and Management Salary, there was a retraction of 11.5% in the Consolidated EBITDA. The Financial Result presented great variation versus 2009 mainly due to the lower exchange variance, resulting from the appreciation of the Real over the US Dollar. As consequence of these factors, the Net Consolidated Result of 2010 was a loss of R$73.2 million. [The remaining of this page was left in blank intentionally]

26 BUSINESS SEGMENTS OVERVIEW ENERGY PRODUCTS SEGMENT The Energy Products segment offers manufactured products and services for the oil and gas sector. Within the manufactured products, it stands out the ropes to anchor platforms in deep waters, valves, tools for well completion, fiber optic sensors, and in services, the ones related to the maintenance of production structures, such as well intervention and workover, and lining and coating for pipelines. The main driver of demand for manufactured products of the Energy Products segment is the development of oil and gas fields projects and the maintenance activity of existing production structures through the replacement of equipments. For the services businesses, the demand comes from the necessity to maintain the production structures, especially wells. We believe that both activities for development and maintenance of production infrastructure will have in 2011 higher volumes of operations than the ones noticed in FLOW CONTROL SEGMENT The Flow Control segment produces valves especially for chemical, petrochemical, pharmaceutical, food, pulp and paper and construction industries. The main driver of demand for manufactured products of the Flow Control segment is projects of capacity expansion of the industry in general in Brazil and Argentina, as well as its maintenance. We believe that both countries present attractive growth rates and will present in 2011 higher volumes of operations than the ones verified in METALLURGY SEGMENT The Metallurgy segment produces casted parts and components mainly for the automotive sector. The main driver of demand is the production of automotive vehicles. The demand for these vehicles can be affected by the available credit and also tax incentives. [The remaining of this page was left in blank intentionally]

27 BACKLOG During the year of 2010, we observed an expressive growth of 235.2% in our backlog (firm orders). An important part of this increase, R$1.5 billion, is due to new services contracts representing 84.1% of the backlog. The other part of this increase, about R$287.9 million, is related to manufactured products contracts. R$ m Backlog Trend 2,384 2,535 2, Sep-07 Feb-08 Apr-08 Jul-08 Oct-09 Jan-09 Dec-09 May-10 Jun-10 Oct -10 Dec year over 1 year The strong growth in services is aligned with the Management goals to increase the exposure to long term contracts that are usual in services, as a way to increase revenues visibility and thus reducing volatility. The execution of the backlog generated in services during 2010 will bring an average Return on Invested Capital (ROIC) around 20%, which we understand to be extremely attractive to create value to our shareholders. For the manufactured products, backlog conversion and spot orders it will be essential to increase operational leverage. CAPEX The Management, considering the goals for value creation, reviewed, in details, all the projects that Lupatech is involved, prioritizing EVA. During this year, it was possible to expand the EVA on projects significantly through the option to change capex for leasing of goods (Operational Leasing). Thus, the amount to be allocated in Capex in 2011 is R$121.8 million, being 79.1% in expansion of the service businesses for contracts in the existing backlog and to qualify us to execute them during the next years. Investments (R$ million) 2011 Maintenance Expansion TOTAL Services % of Total Capex 5.2% 79.1% 84.3% Manufactured Products % of Total Capex 11.9% 3.2% 15.1% Research & Development (CPDL) % of Total Capex 0.0% 0.6% 0.6% Total % 82.9% 100.0% [The remaining of this page was left in blank intentionally]

28 FINAL REMARKS The Management would like to reaffirm the long term commitment to clients, shareholders, creditors, employees and the capital markets. The independent auditor, Deloitte Touche Tohmatsu Auditores Independentes (Deloitte), which analyzes the financial statements since 2008, has offered to Lupatech S.A. services related to the financial statements auditing as well as other services that are under 5% of the total auditor compensation (R$15.000,00). The comments on the Company s consolidated businesses performance are available on its website The Company is subject to the rules of the Market Arbitration Panel pursuant to the arbitration clause in the Company s Bylaws. Caxias do Sul, March 2, Board of Directors Nestor Perini Alcinei Cardoso Rodrigues Armando Mariante Carvalho Junior José Teófilo Abu-Jamra Clóvis Benoni Meurer José Coutinho Barbosa José Mauro Mettrau Carneiro da Cunha Board of Directors Substitute Members Ivan Magalhães Junior Teresa Rodriguez Cao Fiscal Council Amoreti Franco Gibbon Egon Handel Humberto Santamaria Fiscal Council - Substitute Members Bruno Oliva Girardi Eduardo Grande Bittencourt Juliano Puchalski Teixeira Directors Nestor Perini José Teófilo Abu-Jamra Gilberto Pasquale da Silva Thiago Alonso de Oliveira [The remaining of this page was left in blank intentionally]