Lojas Americanas S.A. (Convenience Translation into English from the Original Previously Issued in Portuguese)

Transcription

1 Lojas Americanas S.A. (Convenience Translation into English from the Original Previously Issued in Portuguese) Convenience Translation of the Quarterly Financial Information for the Quarter Ended June 30, 2006 and Independent Accountants Special Review Report Deloitte Touche Tohmatsu Auditores Independentes

2 (Convenience Translation into English from the Original Previously Issued in Portuguese) INDEPENDENT ACCOUNTANTS SPECIAL REVIEW REPORT To the Board of Directors and Shareholders of Lojas Americanas S.A. Rio de Janeiro RJ 1. We have performed a special review of the accompanying quarterly financial information (ITR) of Lojas Americanas S.A., for the quarter and semester ended June 30, 2006, prepared in accordance with accounting practices generally adopted in Brazil, under the responsibility of the Company`s management, consisting of the balance sheets (Company and Consolidated), the related statements of income and the performance report. The financial statements of Vitória Participações S.A., a jointly-controlled subsidiary, for the semester ended June 30, 2006, whose investment represents 13% of the Company total assets, and whose consolidated assets and revenue represent 17% and 0.6%, respectively, of the consolidated balances of the Company, and the financial statements of FAI Financeira Americanas Itaú S.A. Crédito, Financiamento e Investimentos, indirect subsidiary, for the semester ended June 30, 2006, whose consolidated assets and revenue represent 3% and 0.1%, respectively, of the consolidated balances of the Company, were reviewed by other accountants, and our report, insofar as it relates to the amounts included in the quarterly financial information, is based solely on the report of the other accontants. 2. We conducted our review in accordance with specific standards established by the Brazilian Institute of Independent Auditors (IBRACON), together with the Federal Accounting Council, which consisted principally of: (a) inquiries of and discussions with persons responsible for the accounting, financial and operating areas as to the criteria adopted in preparing the interim financial information, and (b) review of the information and subsequent events that had or might have had material effects on the financial position and results of operations of the Company and its subsidiaries. 3. Based on our special review, and the report of the other accountants, we are not aware of any material modifications that should be made to the financial information referred to above, for them to be in accordance with accounting practices generally adopted in Brazil and standards established by the Brazilian Securities Commission (CVM), specifically applicable to the preparation of mandatory quarterly financial information (ITR).

3 4. The financial information consisting of the balance sheets (Company and Consolidated), as of March 31, 2006 and the statements of income (Company and Consolidated) for the quarter and semester ended June 30, 2005, presented for comparison purposes, were reviewed by us and we issued unqualified special review reports dated May 5, 2006 and August 10, 2005, respectively. 5. The accompanying quartely financial information has been translated into English for the convenience of readers outside Brazil. Rio de Janeiro, August 8, DELOITTE TOUCHE TOHMATSU Auditores Independentes Celso de Almeida Moraes Engagement Partner

4 (Convenience Translation into English from the Original Previously Issued in Portuguese) FEDERAL PUBLIC SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) INTERIM FINANCIAL STATEMENTS (ITR) 06/30/2006 Corporate Law COMMERCIAL, INDUSTRIAL & OTHER COMPANIES IDENTIFICATION 1 CVM CODE 2 COMPANY NAME 3 Federal Corporate Taxpayers Registration Number (CNPJ) HEAD OFFICE 1 ADDRESS 2 SUBURB OR DISTRICT RUA SACADURA CABRAL, 102 SAÚDE 3 POSTAL CODE 4 MUNICIPALITY 5 STATE RIO DE JANEIRO RJ 6 AREA CODE 7 TELEPHONE 8 TELEPHONE 9 TELEPHONE 10 TELEX AREA CODE 12 FAX 13 FAX 14 FAX or INVESTOR RELATIONS OFFICER (Company Mail Address) 1 NAME ROBERTO MARTINS DE SOUZA 2- ADDRESS 3 SUBURB OR DISTRICT RUA SACADURA CABRAL, 102 SAÚDE 4 POSTAL CODE 5 MUNICIPALITY 6 STATE RIO DE JANEIRO RJ 7 AREA CODE 8 TELEPHONE 9 TELEPHONE 10 TELEPHONE 11 TELEX AREA CODE 13 FAX 14 FAX 15 FAX roberto.martins@lasa.com.br REFERENCE / INDEPENDENT ACCOUNTANT CURRENT YEAR CURRENT QUARTER PRIOR QUARTER 1 BEGINNING 2 END 3 QUARTER 4 BEGINNING 5 END 6 QUARTER 7 BEGINNING 8 END 01/01/ /31/ /01/ /30/ /01/ /31/ INDEPENDENT ACCOUNTANT 10- CVM CODE DELOITTE TOUCHE TOHMATSU AUDITORES INDEPENDENTES PARTNER RESPONSIBLE 12- INDIVIDUAL TAXPAYERS REGISTRATION NUMBER OF THE PARTNER RESPONSIBLE CELSO DE ALMEIDA MORAES

5 (Convenience Translation into English from the Original Previously Issued in Portuguese) FEDERAL PUBLIC SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) INTERIM FINANCIAL STATEMENTS (ITR) 06/30/2006 Corporate Law COMMERCIAL, INDUSTRIAL & OTHER COMPANIES IDENTIFICATION 1 CVM CODE 2 COMPANY NAME 3 Federal Corporate Taxpayers Registration Number (CNPJ) CAPITAL NUMBER OF SHARES 1 CURRENT QUARTER 2 PRIOR QUARTER 3 SAME QUARTER IN PRIOR YEAR (THOUSANDS) 06/30/ /31/ /30/2005 Paid-up Capital 1 Common 25,996,919 25,996,919 25,778,366 2 Preferred 43,602,615 42,572,546 42,188,027 3 Total 69,599,534 68,569,465 67,966,393 Treasury Shares 4 Common 662, , ,636 5 Preferred 1,288,392 1,150, ,686 6 Total 1,951,214 1,769,733 1,517, CHARACTERISTICS OF THE COMPANY 1 TYPE OF COMPANY Commercial, Industrial and Other Companies 2 SITUATION Operating 3 NATURE OF OWNERSHIP National 4 ACTIVITY CODE 119 Trade (Retail and Wholesale) 5 MAIN ACTIVITY Department stores 6 TYPE OF CONSOLIDATION Full 7 TYPE OF INDEPENDENT ACCOUNTANTS' REPORT Unqualified COMPANIES NOT INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS 1 ITEM 2 CNPJ 3 NAME CASH EARNINGS APPROVED AND/OR PAID DURING AND AFTER THE QUARTER 1-ITEM 2 - EVENT 3 APPROVAL 4 INCOME Stockholders meeting Stockholders meeting Stockholders meeting Stockholders meeting 5 BEGINNING OF PAYMENT 6 TYPE OF SHARE 7 INCOME PER SHARE 03/06/2006 Dividend 04/03/2006 ON /06/2006 Dividend 04/03/2006 PN /06/ /06/2006 Interest on Equity Interest on Equity 04/03/2006 ON /03/2006 PN

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7 (Convenience Translation into English from the Original Previously Issued in Portuguese) FEDERAL PUBLIC SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) INTERIM FINANCIAL STATEMENTS (ITR) 06/30/2006 Corporate Law COMMERCIAL, INDUSTRIAL & OTHER COMPANIES IDENTIFICATION 1 CVM CODE 2 COMPANY NAME 3 Federal Corporate Taxpayers Registration Number (CNPJ) SUBSCRIBED CAPITAL AND CHANGES IN THE CURRENT FISCAL YEAR 1 ITEM 2- DATE OF CHANGE 3 CAPITAL 4 AMOUNT OF CHANGE 5 NATURE OF CHANGE 7 NUMBER OF SHARES ISSUED 8 SHARE PRICE ON ISSUE DATE (In thousands of reais) (In thousands of reais) (Thousands) (Reais) 01 03/24/ ,114 28,321 Revenue Reserves /31/ ,951 38,837 Private Subscription in cash 1,007, /30/ , Private Subscription in cash 23, INVESTOR RELATIONS OFFICER 1 DATE 2 SIGNATURE 08/09/2006

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9 (Convenience Translation into English from the Original Previously Issued in Portuguese) FEDERAL PUBLIC SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) INTERIM FINANCIAL STATEMENTS (ITR) 06/30/2006 Corporate Law COMMERCIAL, INDUSTRIAL & OTHER COMPANIES IDENTIFICATION 1 CVM CODE 2 COMPANY NAME 3 Federal Corporate Taxpayers Registration Number (CNPJ) BALANCE SHEET ASSETS (IN THOUSANDS OF BRAZILIAN REAIS - R$) 1- CODE 2- DESCRIPTION 3-06/30/ /31/ Total assets 2,031,844 2,047, Current assets 1,112,726 1,167, Cash and cash equivalents 550, , Cash and banks 78,885 79, Temporary cash investments 471, , Receivables 21,534 38, Trade accounts receivable 21,534 38, Inventories 427, , Other 113, , Recoverable taxes 64,579 73, Deferred income and social contribution taxes 16,606 6, Interest on capital receivable Prepaid expenses 23,158 21, Other receivables 9,499 9, Long-term assets 272, , Sundry receivables Receivables from related parties 110,690 79, Affiliated companies Subsidiaries 53,138 50, Other related parties 57,552 29, Receivables from stockholders 57,552 29, Other 161, , Deferred income and social contribution taxes 121, , Escrow deposits 36,811 37, Prepaid expenses 3,536 3, Permanent assets 646, , Investments 381, , In affiliated companies In subsidiaries 381, , Equity Result 347, , Goodwill in subsidiaries 34,113 35, Other investments Property and equipment 181, , Installations 48,328 45, Machinery and equipment 41,072 39, Improvements 90,644 83, Construction in progress 1,487 5, Vehicles Other Deferred charges 82,693 83, Preoperating expenses 26,856 26, IT projects 40,910 42, Software license 6,224 6, Logistics and distribution projects Other 8,688 8,498

10 (Convenience Translation into English from the Original Previously Issued in Portuguese) FEDERAL PUBLIC SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) INTERIM FINANCIAL STATEMENTS (ITR) 06/30/2006 Corporate Law COMMERCIAL, INDUSTRIAL & OTHER COMPANIES IDENTIFICATION 1 CVM CODE 2 COMPANY NAME 3 Federal Corporate Taxpayers Registration Number (CNPJ) BALANCE SHEET LIABILITIES (IN THOUSANDS OF BRAZILIAN REAIS - R$) 1- CODE 2- DESCRIPTION 3-06/30/ /31/ Total liabilities 2,031,844 2,047, Current liabilities 873, , Loans and financing 238, , Debentures 16,536 8, Suppliers 408, , Taxes payable 44,318 34, Dividends payable 0 56, Provisions 21,781 30, Payroll and related charges 18,775 15, Employee profit sharing 0 10, Provision for contingencies 3,006 5, Payables to related parties Other 144, , Professional fees - third parties 5,130 3, Provisions for investments losses 101, , Other payables 38,376 37, Long-term liabilities 884, , Loans and financing 360, , Debentures 199, , Provisions 278, , Provision for contingencies 27,911 31, Income tax and Social Contribution 250, , Payables to related parties 45,916 53, Loans and advances from subsidiaries 45,916 53, Other Deferred income Stockholders equity 273, , Capital 155, , Paid-up capital 222, , Treasury stock (66,902) (53,220) Capital reserves Revaluation reserves Own assets Subsidiaries / affiliated companies Profit reserves 103, , Legal Statutory For contingencies Unrealized profits Profit retention Special for unpaid dividends Other profit reserves 103, , For future investments 103, , Retained earnings (accumulated deficit) 14,197 3,388

11 (Convenience Translation into English from the Original Previously Issued in Portuguese) FEDERAL PUBLIC SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) INTERIM FINANCIAL STATEMENTS (ITR) 06/30/2006 Corporate Law COMMERCIAL, INDUSTRIAL & OTHER COMPANIES IDENTIFICATION 1 CVM CODE 2 COMPANY NAME 3 Federal Corporate Taxpayers Registration Number (CNPJ) STATEMENTS OF INCOME (IN THOUSANDS OF BRAZILIAN REAIS - R$) 1- CODE 2- DESCRIPTION 3-04/01/2006 to 06/30/ /01/2006 to 06/30/ /01/2005 to 06/30/ /01/2005 to 06/30/ Gross revenue from sales and/or services 773,595 1,424, ,977 1,176, Deductions from gross revenue (164,313) (303,852) (114,995) (266,658) 3.03 Net revenue from sales and/or services 609,282 1,120, , , Cost of sales and/or services (442,963) (799,692) (291,297) (647,100) 3.05 Gross profit 166, , , , Operating income (expenses) (160,295) (318,142) (135,142) (264,759) Selling expenses (105,417) (201,602) (80,737) (165,489) General and administrative expenses (10,517) (21,034) (9,918) (19,106) Management fees (1,019) (2,041) (989) (1,960) Other (9,498) (18,993) (8,929) (17,146) Financial (38,527) (59,062) 6,442 (20,656) Financial income 13,888 26,937 62,273 74, Financial expenses (52,415) (85,999) (55,831) (95,653) Other operating income Other operating expenses (15,987) (30,555) (12,680) (25,040) Depreciation/amortization (15,987) (30,555) (12,636) (24,952) Other 0 0 (44) (88) Equity in subsidiaries and affiliates 10,153 (5,889) (38,249) (34,468) 3.07 Operating Income 6,024 2,530 (15,457) (2,238) 3.08 Non operating income (expenses) (915) 5, , , Income , , Capital Gain , , Expenses (915) 5,386 (89,954) (89,948) 3.09 Income before taxes and profit sharing 5,109 7,916 94, , Provision for income and social contribution taxes 0 0 2, Deferred income tax 5,700 6,281 7,148 7,148

12 (Convenience Translation into English from the Original Previously Issued in Portuguese) FEDERAL PUBLIC SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) INTERIM FINANCIAL STATEMENTS (ITR) 06/30/2006 Corporate Law COMMERCIAL, INDUSTRIAL & OTHER COMPANIES IDENTIFICATION 1 CVM CODE 2 COMPANY NAME 3 Federal Corporate Taxpayers Registration Number (CNPJ) 1 - CODE 2- DESCRIPTION 3-04/01/2006 to 06/30/ /01/2006 to 06/30/ /01/2005 to 06/30/ /01/2005 to 06/30/ Profit sharing/ Contributions statutory Profit sharing Employees Contributions Reversal of interest on capital Net income (loss) 10,809 14, , ,962 Number of shares, ex-treasury shares (thousand) 67,648,320 67,648,320 66,449,071 66,449,071 Earnings per share Loss per share

13 NOTES TO THE FINANCIAL STATEMENTS (In thousands of Reais, except for per share amounts) 1 OPERATIONS Lojas Americanas operates 207 consumer product retail stores, being 184 stores in tradicional model and 23 stores in express model ( : 200 stores and stores) in the main State capitals and cities throughout Brazil and 3 distribution centers. The Company also operates (i) in electronic commerce, offered by Lojas Americanas' subsidiary, Americanas.com Comércio Eletrônico S.A., (ii) offers the option of catalogue sales and purchases through the TV channel, through its indirect subsidiary Shoptime S.A., and (iii) provides registry information service and negotiates bank financing through its subsidiary Facilita Serviços e Propaganda S.A. to the jointly controlled FAI FINANCEIRA AMERICANAS ITAÚ S.A. CRÉDITO, FINANCIAMENTO E INVESTIMENTO. As indicated in note 9, beginning of May, 2006, the commercialization of financial products and services is the responsibility of the jointly controlled FAI FINANCEIRA AMERICANAS ITAÚ S.A. CRÉDITO, FINANCIAMENTO E INVESTIMENTO before named as PLATY PARTICIPAÇÕES S.A. The credit operations are carried out by Facilita Serviços e Propaganda S.A., and the fundings are carried out by a Banco Itaú S.A. company. 2 PRESENTATION OF THE FINANCIAL STATEMENTS The quarterly financial statements have been prepared in conformity with accounting practices followed in Brazil and in accordance the Brazilian corporate law and with the complementary regulations of the Brazilian Securities Commission (CVM). 3 SIGNIFICANT ACCOUNTING POLICIES (a) Accounting estimates in the Financial Statements When preparing the quarterly financial statements it is necessary to use estimates to account for certain assets, liabilities and other transactions. Accordingly, the quarterly financial statements include estimates of the useful lives of fixed assets, expectation of realization of deferred income tax and social contribution, reserves for contingent liabilities, provision related to income tax and similar provision Although they represent the best estimates of Management, they may be different when compared to actual amounts. (b) Results of operations Income and expenses are recognized on the accrual basis. (c) Foreign currency Assets and liabilities in foreign currency are translated into Brazilian Reais using monetary exchange conversion rates prevailing at the period end. The reflects arising from this translation are recognized in the quarterly statements of income. For subsidiary companies abroad, assets and liabilities were converted to Reais at monetary exchange rates prevailing at period end closing date.

14 (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 its market value. Provision for possible defaults of payments was set up in an amount considered adequate by management to meet eventual losses in the realization of these credits receivables. Inventories are stated at average purchase price, not exceeding its market value or replacement cost. 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 are determined in accordance with CVM Instruction 371 dated June 27, 2002 on tax loss carry-forwards and temporary differences. 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 and jointly-controlled subsidiary companies are recorded by the equity method of accounting. A provision for losses is established for the participations in companies with negative Shareholder s equity, classified in the current liabilities. Goodwill arising from expectation of future income is amortized over a period of up to 10 years. Other permanent investments are valued at their cost of acquisition less provisions for devaluation, when applicable. (f) Property and equipment Property and equipment are carried at acquisition cost. Depreciation is calculated by the straight-line method at the following annual rates: installations 10% and 25%; machinery and equipment 10% and 15%; vehicles 20%; IT equipment 20%; software license for use 20%. Amortization of leasehold improvements is based on the respective length of time of each lease contract. (g) Deferred charges Deferred charges comprise expenses related to information technology projects (implantation of the SAP- Retail Program and others related to the e-commerce), renovation of stores, opening of new stores and distribution centers and other.

15 Company projects that are being amortized on a straight-line basis at the rate of 20%p.a., based on the stores opening date or on the end of the projects. (h) Current and long-term liabilities Loans and financing contracted in foreign currency are restated at exchange rates in force at the balance sheet date and include accrued contractual interest. Loans and financing in Brazilian currency, including debentures, are monetarily restated according to contractual rates. Provisions are recorded in the financial statements when the Company is under legal obligation as the result of a past event and when economic resources will probably be required to liquidate an obligation. Provisions are recorded at values based on the best estimates of the risk involved. Income tax and social contributions taxes are calculated at the effective tax rates of (i) 15% plus an additional of 10% over taxable income exceeding R$240 of taxable income and (ii) 9% of taxable income for social contributions and include, when applicable, income generated abroad by the subsidiaries Klanil Services Ltd., Louise Holdings Ltd., and Americanas.com and consider the utilization of tax losses carryforwards up to a limit to 30% of taxable income. Other payables are stated at known or estimated amounts including, when applicable, corresponding financial charges and monetary or exchange variations accrued up to the balance sheet date. (i) Critérios de consolidação The consolidated quarterly 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 financial statements of the parent company, Lojas Americanas S.A., its subsidiaries, and its jointly-controlled subsidiary, proportionally consolidated, as indicated in note 9a. Accounting practices were consistently applied to all the consolidated companies and are also consistent with the accounting procedures applied in the previous quarters. The consolidation process includes the following exclusions: Elimination of asset and liability balances between consolidated companies; Elimination of participation in capital, capital reserves and accumulated profits of controlled companies; Elimination of income and expenses balances, as well as un-realized profits, when applicable, from business transactions between the Consolidated companies; Highlighting of the value of minority interests in the consolidated quarterly information.

16 4 MONEY MARKET INVESTMENTS Parent Company Consolidated Certificates of Bank Deposits CDB s 26,432 25,515 26,432 25,515 Fixed-Income Funds 191, , , ,775 Fixed-Income Funds - Abroad 253, , , ,619 Debentures 195, , , , , ,050 LONG-TERM 15,541 27,664 SHORT-TERM 471, , , ,386 Certificates of Bank Deposits yield an average rate of 100% of the CDI (interbank deposit rate) and part of them were pledged as guarantee for the loan from the National Bank for Economic and Social Development (BNDES). Fixed-Income Investment Funds refer mainly to quotas held in investment funds administered by top financial institutions. Fixed-Income Investment Funds abroad refer basically to bonds issued by the Austrian Government and yield interest of up to 84.3% of the CDI and were held as guarantee of working capital debts. Debentures, registered in the jointly controlled FAI FINANCEIRA AMERICANAS ITAÚ S.A. CRÉDITO, FINANCIAMENTO E INVESTIMENTO, were issued by top financial institutions, registered at present value, remunerated at 100% of the DI Cetip Over, and may be redeemed at any time at their updated amount.

17 5 ACCOUNTS RECEIVABLE Parent Company Consolidated Credit cards from third parties 12,025 26,487 72,216 75,278 Debt Cards and Checks 2,780 6,678 2,780 6,678 Financing to clients 8,223 Other 8,951 7,821 28,641 45,825 23,756 40, , ,781 Allowance for doubtful accounts (2,222) (2,380) (3,807) (3,590) 21,534 38, , ,191 Credit card operations can be paid in up to 12 installments and are managed by third parties. The Financing to clients reflects the commercialization of products and services offered by the jointly controlled FAI FINANCEIRA AMERICANAS ITAÚ S.A. CRÉDITO, FINANCIAMENTO E INVESTIMENTO and began in the current quarter. The allowance for doubtful accounts considers the average loss over the last twelve months, adjusted in accordance with management estimates and judgements of probable losses on accounts not yet due. Receivables overdue for more than 180 days are considered uncollectible and, consequently, are written off against the allowance for doubtful accounts. 6 INVENTORIES Merchandise Parent Company Consolidated At stores 353, , , ,281 - At distribution centers 69,277 97, , ,687 Packaging and supplies 3,973 4,023 4,970 5, , , , ,083

18 7 RECOVERABLE TAXES Parent Company Consolidated ICMS (state added value tax) 33,933 36,253 33,933 36,253 IPI (tax on industrialized products) 20,000 20,000 20,000 20,000 IRRF (witholding income tax) 3,285 2,724 6,012 2,986 COFINS (tax on revenue) 7 5,633 1,327 5,633 PIS ( tax on revenue) 209 1, ,575 IRPJ (Legal Entity Income Tax) 4, CSLL (Social Contribution on Net Income) 1, Social security contributions and other 7,145 7,146 9,031 9,033 64,579 73,331 77,385 76,755 8 DEFERRED INCOME TAX AND SOCIAL CONTRIBUTION (a) Presentation According to CVM Instruction No. 371, of June 27, 2002, and based on technical viability studies that show the Company's ability to generate future taxable income, the company keeps, approved by the Board of Directors, tax credits arising from income tax losses, negative social contribution bases and temporary differences that will only be taxed or deducted when they meet the conditions required by tax legislation.

19 (b) Composition of tax credits Assets Parent Company Consolidated Deferred income tax: - Tax losses 93,898 89, , ,014 - Temporary differences 10,574 10,444 15,924 13, , , , ,834 Deferred social contribution : - Tax losses 29,824 28,344 44,519 40,508 - Temporary differences 3,807 3,760 5,747 4,995 33,631 32,104 50,266 45, , , , ,337 LONG-TERM 121, , , ,520 SHORT-TERM 16,606 6,766 19,968 11,817 The indirect subsidiary companies - Shoptime S.A. and TV Sky Shop S.A. still have, on June 30, 2006, income tax loss carryforwards of R$13,079 and R$29,447, respectively, and negative social contribution bases carryforwards of R$13,109 and R$30,294, respectively, whose corresponding credits were not recorded in the financial statements due to their non-compliance with specific CVM rules governing the capacity of future taxable income generation. (c) Expectation of realization Over the past fiscal periods, the Company has been showing a significant development in its main operational and financial indicators. This improvement results from a thorough review of the Company's management strategy, with a view to increasing the synergy among the various corporate areas and its suppliers. The new strategies of management allowed a optimization of the cost structurre together with a better margin on sales, generated from the improvement in "buy and sell" operations due to continuous training aimed at employee qualification.

20 Estimated realization of deferred tax credits based on taxable income adjusted to present value is as follows: Parent Company Consolidated ,606 19, ,663 30, ,895 34, ,248 35, ,193 33, ,498 22, , , , , , ,275 Furthermore, the Company was awarded a favorable ruling in a lawsuit that was 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 originated by income tax losses and negative social contribution bases, being the tax credits updated by the Selic variation index. The Company filed with the SRF the credit habilitation request and is awaiting the homologation of the values of the credits for the recognition of the right recognized in the lawsuit.

21 (d) Reconciliation between nominal and effective rates Reconciliation between nominal and effective income tax and social contribution rates is presented below, referring to the semester ended June 30, 2006: Parent Company Consolidated Income for the semester before income tax, social contribution and profit-sharing 7,916 4,446 Nominal rate 34% 34% Income and social contribution taxes at nominal rate (2,691) (1,511) Effects of Income Tax and Social Contribution on (additions) and exclusions on net income - Equity in subsidiaries. Exchange variation Equity participation (2,771) - Loss from subsidiary abroad (6,232) - Reversal of provision for which on tax credit was recognized previously 2,142 2,142 - Interest on Capital paid proportional until June 30, ,880 3,880 - Constituted tax credits 12,355 - Other exclusions, net 4, Income tax and social contribution at effective rate 6,281 12,113 The interest on capital was accounted for as financial expenses because of specific fiscal regulation and reversed before the semester net income. In accordance with the Brazilian Securities Commission (CVM) orientation, the interest on capital is not included in the statement of income, as it has no effect on the results of the operations, except for the effects recognized under the heading income and social contribution taxes.

22 9 INVESTMENTS Parent Company Consolidated Subsidiaries 136, ,228 Jointly-controlled investment 211, ,667 Goodwill registered in the acquisition of participation in Americanas.com 42,465 42,465 42,465 42,465 Goodwill registered in Americanas.com S.A. Comércio Eletrônico, relating to the acquisition of participation in Shoptime S.A. e TV Sky Shop S.A. 135, ,305 Amortization of goodwill (8,352) (7,128) (11,679) (8,249) Others investments at cost , , , ,269 The Company is in the process of implementing, a Corporate reorganization of the shareholders interest in the subsidiaries abroad, with the intention of simplifying its fiscal and stockholder s capital structure. As a result, the indirect subsidiaries Louise Holdings Limited and Americanas.com S.A. Comércio Eletrônico, with respective goodwills, became direct subsidiaries of Lojas Americanas S.A. The participations transfer between Lojas Americanas S.A. and the subsidiaries was realized through the accounts and dividends payments declared by the subsidiaries abroad. The Company, in 2005, acquired, through its indirect subsidiary Americanas.com S.A. Comércio Eletrônico, the equivalent of 44% of TV Sky Shop S.A. and 98.85% of Shoptime S.A., which owns 56% of the capital of TV Sky Shop S.A. The acquisition cost was R$116,983, including goodwill of R$74,932 and R$59,547, respectively (in 2006, the goodwill on these acquisitions calculated in 2005 was adjusted by R$826). After this operation, in 2005, Americanas.com S.A. Comércio Eletrônico, made a contribution of capital to TV Sky Shop S.A., by using the outstanding balance of a loan, in the amount of R$ 8,504 and, in this manner, its participation in Shoptime S.A. and TV Sky Shop S.A. was duly altered to 47.25% and 52.75%, respectively. The goodwill on these acquisitions is based on technical reports based on expectation of future profitability of subsidiary companies. The amortization of goodwills related to the investments made in Americanas.com S.A. Comércio Eletrônico, Shoptime S.A and TV Sky Shop S.A are being recorded based on the term of profitability projections, that are revised annually and do not exceed the limit of ten years.

23 (a) Changes in the Parent Company s investments: Klanil Services Ltd. Americanas. com Lojas Americanas da Amazônia S.A. Subsidiaries Americanas.com S.A. - Comércio Eletrônico Goodwi ll Louise Holdings Ltd. Facilita Serviços e Propaganda S.A. Lojas Americanas Home Shoppin g Jointly controll ed investm t Vitória Participações S.A. At January 1, ,778 55,103 3, ,888 Additions 3 3 Equity adjustments. Participation results (39,530) (1,329) 8,029 (32,830) Other s Total.Exchange variation (8,235) (8,235).Capital Gain 200, ,000 Dividends and Interest on Capital (430) (80) (510) At December 31, ,013 53,344 3, , ,316 Transfers of investments (1) (35,660) 69,136 35,575 (69,051) Equity adjustments:. Participation results (11,176) 1,624 (10,525) 2,114 2,715 (15,248).Exchange variation (656) (1,317) 1,179 (794) Amortization of goodwill (238) (238) Investments loss provision 23,479 78, ,876 At March 31, ,443 35,337 55,458 3, , ,912 Capital reduction / Statutory lien (343) (402) (745) Transfers of investments (1) (70,244) 70,244 Equity adjustments. Participation results 48 (3,259) 72 6,799 2, (4) 724 7,098.Exchange variation 103 4,403 (1,451) 3,055 Amortization of goodwill (1,224) (1,224) Investments loss provision (151) (72) (918) (1,141) At June 30, ,043 34,113 55,807 3, , ,955 (1) On May 26, 2006, proceeding with the corporate reorganization of the shareholder s interest in the subsidiaries abroad, Americanas.com had its social capital decreased and its shareholders interest in the subsidiary Americanas.com S.A. Comércio Eletrônico transfered to the Parent Company Lojas Americanas S.A.

24 (b) Information on related parties % Participation Capital Sharehol der s equity Net income (loss) Balances assets (liabilities) Revenue (expenses) net Subsidiaries Klanil Services Ltd. 100,0 22,417 (23,328) (11,681) Facilita Serviços e Propaganda S.A. 100,0 26,928 55,807 2,463 (44,237) (51,871) 3,882 1,969 Lojas Americanas da Amazônia S.A. 100,0 2,288 (268) Lojas Americanas Home Shopping Ltda. 100,0 6,877 3,323 (4) (1,679) (1,679) Louise Holdings Ltd. 100,0 11 (77,479) (8,428) Americanas.com S.A. Comércio Eletrônico 81,0 75,458 95,096 10,237 52,901 50,204 6,159 3,157 Jointly-controlled investment Vitória Participações S.A. (1) 50,0 16, ,715 6,877 Indirect subsidiaries Cheyney Financial S.A. 100,0 8,099 (11,692) (10,862) FAI Financeira Americanas Itaú S.A. Crédito, Financiamento e Investimento (1) and (3) 50,0 80,002 59,313 (10,669) 1,970 1, Shoptime S.A. 79,6 80,028 11,098 5,661 TV Sky Shop S.A. 80,0 146,372 11,104 10, Related Company São Carlos Empreendimentos e Participações S.A. (2) (564) (575) (8,408) (3,909) (1) The financial statements were reviewed by other independent accountants. (2) Recorded as "Other accounts payables" in the balance sheet and as "Selling expenses" in the statement of income. (3) Recorded as Accounts receivable in the balance sheet and as reduction Expenses on sales in the statement of income.

25 The main inter-company transactions are agreed at rates, terms and values usually applied in the market in transactions of the same nature and are: Balances arising from intercompany transactions, recorded in intercompany accounts; Income and expenses (net) arising from loan, remuneration, sale of merchandise and reimbursement based and the allocation of common administrative expenses; Transactions with the related company refer to real estate rent; Lojas Americanas S.A. and Banco Itaú Holding Financeira S.A. organized on April 27, 2005 a jointly controlled subsidiary to act as a financial institution under the name of FAI - FINANCEIRA AMERICANAS ITAÚ S.A. CRÉDITO, FINANCIAMENTO E INVESTIMENTO (previously denominated Platy Participações S.A.). On February 23, 2006, BACEN (Brazilian Central Bank) granted authorization for the initiation of the financial company, that it began its operating activities in May, 2006 and acts in the creation and commercialization of financial services and products for the customers of Lojas Americanas, Americanas Express, Americanas.com S.A. Comércio Eletrônico and TV Sky Shop, with exclusiveness, for a period of 20 years, renewable automatically for undetermined period. With this association, Vitória Participações S.A. was constituted, as the controlling company of FAI, whose social capital is held 50% by Lojas Americanas and 50% by Banco Itaú Holding Financeira S.A. The initial social capital of FAI is R$80,002. On April 27, 2005, Banco Itaú Holding Financeira S.A. acquired 50% of Vitória Participações S.A., for an amount of R$400,000, being assigned R$3 to the social capital account and the difference as goodwill to a capital reserve account, based on the perspective of future profitability of the company. Due to this subscription, Lojas Americans recognized, in April 2005, a capital gain, recorded as non-operating income, in the amount of R$200,000. The association agreement establishes target performance goals for Lojas Americanas S.A. and Americanas.com S.A. Comércio Eletrônico, that must be reached in a maximum of 6 (six) years. It was also determined that Lojas Americanas S.A. will pay penalties should these goals not be achieved. The Company keeps a provision, in the amount of R$19,500, recorded as non-operating expenses, for fines in case of not meeting the goals. This provision is reviewed and adjusted, periodically, if necessary, in accordance with the achievement of these targets. As a guarantee of the contractual fines in case of not meeting the goals, Lojas Americanas will transfer to Banco Itaú, or any of its affiliates, credit rights existing with REDECARD, in up to 120% of the total value of the penalties, updated monthly by the variation of CDI. On June 16, 2005, the contract of temporary and partial permission between the Company and Banco Itaucred Financiamentos S.A. was signed, to offer, distribute and commercialize personal loans to customers, until the beginning of operations of FAI. Due to the new association and exclusiveness right with Banco Itaú Holding Financeira S.A. signed on April 27, 2005, the Contract of Comercial Partnership with Unibanco União de Bancos Brasileiros S.A. and Banco Fininvest S.A. of December, 2003 was canceled on April 26, 2005, subjecting Lojas Americanas to a payment of R$ 44,774, recorded as non-operating expense in the 2005 fiscal team.

26 10 LOANS AND FINANCING Parent Company Consolidated Object Annual charges Final Maturity IN LOCAL CURRENCY BNDES (Refurbishing and opening of new stores and expansion of IT systems) Working Capital Interest of 4.25% 04/15/2008 (1) 6,914 7,821 6,914 7,821 p.a. over TJLP Interest of 4.25% p.a. over variation of basket of currencies 04/15/2008 (1) Interest up to 111.5% of CDI 06/16/ , , , ,009 IN FOREIGN CURRENCY Opening of new stores (IFC) Opening of new stores - Floating Rate Note (FRN) Working Capital Interest of 4.75% p.a. + Libor Interest of 4.45% p.a. + Libor Exchange variation + interest of 7.76% p.a.+ Libor and/or up to 110.0% of CDI 05/15/ ,721 78,705 76,721 78,705 06/15/2010 (1) 38,635 44,615 03/21/ , , , , , , , ,645 LONG-TERM 360, , , ,003 SHORT-TERM 238, , , ,642

27 Long-term financing by maturity year: Parent Company Consolidated ,005 34,459 97,481 74, , , , , ,228 44,267 49,847 53, ,233 52,393 59,043 57, ,555 30,669 30,555 30, ,912 8,945 8,912 8, ,912 8,945 8,912 8, ,912 8,945 8,912 8, ,455 4,473 4,455 4, , , , ,003 (1) The Company and its subsidiaries are subject to certain debt covenants established in the financing agreements. These covenants also include the maintenance of some minimum financial ratios calculated on an annual basis. Garantees The financing is guaranteed by CDBs Certificates of Bank Deposit in the amount of R$17,822; Fixed-Income Fund abroad, amounting to R$253,831; liens on financed machinery and equipment; bankers guarantor letters and promissory notes.

28 11 DEBENTURES On February 2, 2004, the Company received an amount of R$203,054 arising from the second public debentures issue, approved at a Board of Directors meeting held on November 25, 2003, as shown below: Issue date Type of issue Outstanding debentures Value at issue date Annual financial charges st series 01/01/2004 Public 10,000 R$ 100,000 CDI + 0.9% 108, ,203 2 nd series 01/01/2004 Public 10,000 R$ 100,000 CDI + 0.9% 108, , , ,406 LONG-TERM 199, ,934 CURRENT 16,536 8,472 After the Assembly of Lojas Americanas S.A. Debenture Holders, held on October 5, 2005, the debentures incorporated the following characteristics: Form & type: simple, registered, subordinated and book-entry debentures, non convertible into shares; Face value: the debentures will have a unit face value of R$10 (ten thousand Reais); Guarantee: no guarantees; Maturity: 1st and 2nd series in a normal flow of amortization in three equal and consecutive installments, being the first on January 2, 2009; Price, subscription and payment: the debentures were subscribed at their unit face value, plus pro rata temporis remuneration, from the issue date to their respective subscription date; Financial index: the financial indicator that measures the relation between the consolidated EBITDA and the consolidated financial result, both related to the last 12 months, may not be less than 2.0; Remuneration: 1st and 2nd series debentures will bear interest equal to the average daily rate of overnight deposits in unrelated financial institutions, on a two hundred and fifty-two business day basis, provided by CETIP (Clearinghouse for the Custody and Financial Settlement of Securities), plus an annual rate of 0.9%, paid semiannually and annually, respectively. Disclosure: information of interest to debentures holders are published in Diário Oficial do Estado do Rio de Janeiro and in Jornal Valor Econômico. Limits and financial indices: in the case of default of the contractual clauses, the Fiduciary Agent shall call a General Assembly Meeting of the Debenture Holders to deliberate on the early expiration of the debentures. After the Assembly, the Fiduciary Agent shall declare the early expiration of all obligations attached to the debentures, unless the Debenture Holders at the meeting representing at least 75% of the debentures in circulation decide not to anticipate liquidation. Premiums: payment of premiums will be made, as from the last quarter of 2005, of 0.25% calculated over the unit face value of both debenture series, in case of any default of financial indicator limits, individually or collectively cited in the issue registry, should the Debenture Holders at an Assembly meeting decide not to go forth with the early expiration of the debentures.

29 12 LONG-TERM TAXES AND CONTRIBUTIONS The Company and its subsidiaries are claiming in court the approval for credits offset against PIS and COFINS (taxes on revenue) and questioning the collection of some taxes, such as the broadening of the PIS tax basis (Law No. 9718/98); Workers Compensation Insurance (SAT) payable to the National Institute of Social Security (INSS) and salary premium for education; increase in the FGTS rate, and the full offset of tax loss carryforwards (Law No. 8981/95) limited to 30% of taxable income. A provision for unpaid amounts or escrow deposits has been established and these amounts are monetarily restated according to the SELIC (Central Bank overnight rate), as shown below: Parent Company Consolidated Tax for Social Security financing COFINS 122, , , ,642 Social Integration Program - PIS 19,460 16,920 21,860 19,169 Income tax and Social Contribution 66,002 65,957 69,005 70,264 Education Salary and Accident Insurance SAT 40,957 42,493 40,957 42,493 Others 1,638 1,596 2,774 2, , , , ,226 The Company and its subsidiaries have opted for the special installment payment plans for taxes and social security debts in accordance with Law no /02 and Nº10.684/03. The debts refer to PIS, COFINS, Education Salary, Industrial Accident Insurance - SAT and credit compensations not confirmed by the Internal Revenue Service. The debts which are in accordance with Law nº10.684/03 are being consolidated by the appropriate agencies for future adhesion confirmation to the program payment by installments.

30 13 PROVISION FOR CONTINGENCIES Parent Company Consolidated Fiscal 5,139 6,868 7,690 9,419 Labor 5,114 8,932 5,776 9,594 Civil Contractual fines 19,500 19,500 19,500 19,500 Other 1,088 1,088 11,129 6,174 30,917 36,696 44,687 45,448 LONG-TERM 27,911 31,645 34,535 33,314 CURRENT 3,006 5,051 10,152 12,134 The Company and its subsidiaries are parties to legal and administrative proceedings involving tax, labor, civil and other claims. Based on the opinion of its legal advisers, on analyses of outstanding claims and on prior experience relating to amounts claimed in labor cases, the Company set up a provision at an amount considered sufficient to cover potential losses. Also, the Company set up a provision, in the amount of R$19,500 for payment of fines in case of not meeting the goals established in the contract with Banco Itaú Holding Financeira S.A. The Company has other tax contingencies in the amount of approximately R$169,525 (Parent Company) and R$176,860 (Consolidated), referring basically to ICMS (State VAT). Based on the Company s legal counsel opinion, who consider such losses as possible, no provisions for these contingencies have been recorded. 14 STOCKHOLDERS EQUITY (a) Capital Capital may be increased by the Board of Directors, without requiring any change in the Company's bylaws, up to 75,000,000,000 common and/or preferred shares. There are also no preferential subscription rights.

31 (b) Changes in Capital Stock Number of book-entry shares, without par value Common Nominative Preferred Nominative Total At December 31, 2004 and March 31, ,775,235,072 42,182,518,198 67,957,753,270 Capital increase 3,131,136 5,508,864 8,640,000 At June 30, ,778,366,208 42,188,027,062 67,966,393,270 Capital increase 218,553, ,518, ,071,755 At December 31, 2005 and March 31, ,996,919,413 42,572,545,612 68,569,465,025 Capital increase 1,030,069,000 1,030,069,000 At June 30, ,996,919,413 43,602,614,612 69,599,534,025 Preferred shares are non-voting, but have priority in the distribution of dividends and return of capital, without premium, and in accordance with Law No /97, receive dividends at a minimum rate of 10% over those received by common shares. Subscribed and paid-up shares from the Stock Option Plan in the first half of the year are entitled to 100% of the declared dividends for the year; and shares subscribed and paid up in the second half of the year are entitled to 50% of the declared dividends for the year.

32 (c) Changes in Shareholders equity Resvenue reserves Capital Legal For new investments Treasury stocks Accumulated income January 1, ,882 19,513 56,123 (39,769) 188,749 Capital contribution in cash 1,911 1,911 Acquisition of own shares (11,134) (11,134) Net Income for the period 176, ,148 Appropriations of net income:. Legal Reserve 8,808 (8,808) -. Reserve for new investments 107,340 (107,340) -. Interest on Capital (18,000) (18,000). Interim dividends (42,000) (42,000) December 31, ,793 28, ,463 (50,903) - 295,674 Total Capital increase with reserve 28,321 (28,321) Acquisition of own shares (2,317) (2,317) Net Income for the quarter 3,388 3,388 Interest on Capital (25,000) (25,000) Interim dividends (35,000) (35,000) March 31, , ,463 (53,220) 3, ,745 Capital contribution in cash 39,724 39,724 Acquisition of own shares (13,682) (13,682) Net Income for the quarter 10,809 10,809 June 30, , ,463 (66,902) 14, ,596 (d) Treasury Stock In accordance with CVM Instructions No. 10/80 and No. 268/97, the Board of Directors approved, at a meeting held on June 4, 2003, the Company's new Share Repurchase Program aimed at keeping shares in treasury or subsequently

33 canceling them. The program provides for the repurchase of up to 1,078,894,232 registered common book-entry shares, and 3,650,532,342 registered preferred book-entry shares. Said Share Repurchase Program is being extended every three hundred and sixty-five (365) days, since its publication, in order for the Company to effectively achieve the authorized repurchase level. At June 30, 2006, the Company had already repurchased a total of 662,822,027 registered common book-entry shares and 1,288,392,375 registered preferred book-entry shares. At June 30, 2006, the Company held registered common and preferred book-entry shares in treasury at an average cost of (per one thousand shares) R$40.03 (R$36.58 in March of 2006) and R$31.33 (R$26.57 in March of 2006), respectively. Changes in treasuary shares: Quantity of book-entry shares, without par value Common Nominative Preferred Nominative Total Balance R$/ thousand At Janaury 1, ,140, ,294,652 1,486,434,743 39,769 Acquisition of shares 8,496,591 22,390,861 30,887,452 1,225 At June 30, ,636, ,685,513 1,517,322,195 40,994 Acquisition of shares 62,433, ,944, ,377,794 9,909 At December 31, ,070,427 1,129,629,562 1,737,699,989 50,903 Acquisition of shares 11,500,000 20,532,813 32,032,813 2,317 At March 31, ,570,427 1,150,162,375 1,769,732,802 53,220 Acquisition of shares 43,251, ,230, ,481,600 13,682 At June 30, ,822,027 1,288,392,375 1,951,214,402 66,902 Market value at June30, 2006 per one thousand shares R$ R$ (e) Profit Sharing In accordance with the Company's bylaws, employees are entitled to an annual participation of up to 6% of net income, net of any accumulated losses; management's profit sharing scheme is based on criteria approved each year by the Board of Directors.