JBS S.A. PRESENTATION TO THE MARKET MARCH, 2008
Disclaimer The forward-looking statements presented herein are subject to risks and uncertainties. These statements are based on the beliefs and assumptions of our management, and on information currently available to us. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur. Our future operating results, financial condition, strategies, market share and values may differ materially from those expressed in or suggested by these forward-looking statements. Many of the factors that will determine these results and values are beyond our ability to control or predict. Forward-looking statements also include information concerning our possible or assumed future operating results, as well as statements preceded by, followed by, or including the words ''believes,'' ''may,'' ''will,'' ''continues,'' ''expects,' ''anticipates,'' ''intends,'' ''plans,'' ''estimates'' or similar expressions. 1
AGENDA ACQUISITIONS SUMMARY FINANCIAL METRICS FINAL CONSIDERATIONS QUESTIONS AND ANSWERS 2
OUR MISSION - PART OF THE DAY-TO-DAY OF OUR EMPLOYEES To be the best at what we set out to do, totally focused on our business, ensuring the best products and services for our customers, solidity for our suppliers, satisfactory profitability for our shareholders and the certainty of a better future for all our employees. 3
OUR VALUES - THE FOUNDATION OF OUR CULTURE Planning Determination Discipline Availability Openness Simplicity 4
AGENDA ACQUISITIONS SUMMARY FINANCIAL METRICS FINAL CONSIDERATIONS QUESTIONS AND ANSWERS 5
JBS HISTORY HAS BEEN BUILT THROUGH MORE THAN 30 ACQUISITIONS IN 15 YEARS Net Revenue (in R$ million) Companies and plants acquired Inalca Swift Foods Co. Maringá (Amambay) Berazategui (Rio Platense) Colonia Caroya SB Holdings JV Beef Jerky National Beef Smithfield Beef Tasman Goiânia (Anglo) Barretos (Anglo) Pres. Epitácio (Bordon) Rio Branco Cacoal 1 Venado Tuerto 39630 Campo Grande (Bordon) Cacoal 2 Pontevedra Porto Velho (CEPA) Vilhena (Frigovira) Anápolis Barra do Garças (Sadia) Andradina Araputanga Cáceres (Frigosol) Iturama (Frigosol) Pedra Preta (Frigo Marca) Rosário (Swift ARG) San Jose (Swift ARG) 24076 (Bordon) (Sadia) (Frigoara) 650 890 1212 1292 1914 3158 3577 3968 1993 1996 1997 1999 2000 2001 2002 2003 2004 2005 2006 2007* 2008** Source: JBS * Pro-Forma JBS S.A. LTM Sept/07 and JBS USA LTM Sept/07 ** Pro-Forma JBS S.A. LTM Sept/07 and JBS USA LTM Sept/07; Inalca LTM Sept/07; National FY Aug/07; Smithfield Beef LTM Oct/07; Tasman FY Jun/07 6
ACQUISITIONS SUMMARY The Companies 100% 100% 100% Enterprise Value: ~US$970mm + + (1) Enterprise Value: ~US$565mm Enterprise Value: ~US$150mm Conditions for the acquisitions: Governmental authorities approval Ratification by JBS general assembly (1) JBS intends to capitalize US200MM in Five Rivers 7
JBS WILL BE A LEADING COMPANY IN THE GLOBAL BEEF INDUSTRY IN SALES AND SLAUGHTERING CAPACITY Total Beef Net Revenue (US$ billion) 19.4 10.6 5.6 2.8 0.5 Leading beef company in the world in terms of sales JBS Total Beef JBS Beef National Beef Smithfield Tasman 1º Total daily slaughter capacity (thousand cattle heads) 79.2 54.9 14.0 7.6 2.7 JBS global leadership in terms of slaughtering capacity JBS Total Beef JBS Beef National Beef Smithfield Tasman 1º Source: JBS S.A. LTM Sept/07, Swift FY May/07; Inalca LTM Sept/07; National - 10K - FY Aug/07; Smithfield Beef - 10K, 10Q, company LTM Oct/07; Tasman company - FY Jun/07 8
JBS HAS A GLOBAL PRODUCTION AND DISTRIBUTION PLATFORM JBS main units and markets x = Legend Slaughterhouse (Beef) Slaughterhouse and Industry Distribution Center Vegetable Canning Plant Beef Canning Plant Beef Jerky Plant (Beef Snack s) Slaughterhouse (Pork) Slaughterhouse (Lamb) x Beef and Pork Processing Plant = Wet Blue Processing Plant Headquarters Office Feed Lot Package Industry Inland Container Terminal Commercial Office 9
NATIONAL BEEF PACKING COMPANY, LLC Company Summary In fiscal year 2007, National Beef generated sales of US$ 5.6 billion and processed 3.9 million head of cattle National Beef has a slaughtering capacity of 14,000 cattle heads/day in 3 bovine slaughterhouse facilities National has also 2 case-ready beef processing plants, specialized in products for retailers and one plant specialized in products for commercial establishments The company has 1 carrier with approximately 1,200 vehicles among refrigerated and livestock transportation Brands Facilities Washington Montana North Dakota Minnesota Oregon Nevada Idaho Utah Wyoming Colorado South Dakota Nebraska Kansas 6.400 x Wisconsin Iowa Michigan Indiana Ohio Illinois x Pennsylvania Maryland Missouri West Virginia New England New York California Kentucky Virginia Arizona New Mexico Texas Oklahoma Arkansas Tennessee South Mississippi Alabama Georgia Caroline x North Caroline Louisiana Florida x National Beef Plants National Beef plants of packed and customized meat case ready 10
SMITHFIELD BEEF GROUP (beef division of Smithfield Foods, Inc. - USA) and FIVE RIVERS CF, LLC Smithfield Beef Summary In fiscal year 2007, generated sales of approximately US$ 2.8 billion and processed 1.9 million head of cattle Smithfield Beef has 4 bovine slaughterhouse facilities; 1 rendering plant; one cattle feedlot; and one carrier, with approximately 120 refrigerated trucks. Five Rivers Summary The world Leader company in the cattle feeding; Five Rivers owns ten cattle feedlot facilities and has a combined feeding capacity of 811,000 head of cattle with locations in Colorado, Idaho, Kansas, Oklahoma and Texas Brands Facilities Washington Montana North Dakota Minnesota Oregon Idaho Wyoming South Dakota Nebraska Iowa Wisconsin Michigan New York New England Nevada Utah Colorado Kansas 6.400 Missouri Illinois Indiana Ohio Pennsylvania Maryland West Virginia California Kentucky Virginia Arizona New Mexico Texas Oklahoma Arkansas Tennessee South Mississippi Alabama Georgia Caroline North Caroline Louisiana Florida Five Rivers Feedlot Smithfield Beef Plants 11
TASMAN Company Summary In fiscal year 2007, Tasman generated sales of approximately AUS$ 498 million (approximately US$ 465 million), and processed 2.7 million head of cattle and smallstocks Tasman owns six processing facilities; one cattle feedlot unit with a feedling capacity of 25,000 head of cattle and 45,000 head of lambs The export markets represents 67% of its sales (31% North America; 35% Japan and 8% South Korea) Brands Facilities Yambinya Tasman Group Services Slaughterhouse Tasman Group Services Feedlot Cobram Brooklyn King Island Devonport Yarrawonga Longford 12
USA MARKET: CONSTANT CONSUMPTION AND EXPORTS RECOVERY Despite crisis, beef consumption levels in the USA has been constant 12,051 12.051 EVOLUTION EVOLUÇÃO OF DO AMERICAN CONSUMO DE CARNE BEEF BOVINA CONSUMPTION AMERICANO 12,325 12.325 12,502 12.502 12,737 12.737 12,351 12.351 12,340 12.340 12,667 12.667 12,663 12.663 12,834 12.834 12,815 12.815 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: USDA Internet Bubble September,11 WTC BSE Mad Cow The USA exports are recovering after the slowdown since the BSE Mad 1142 USA Exports (1,000 tons Weight Equivalent Carcass) Cow disease, in December, 2003 650 776 519 209 317 2003 2004 2005 2006 2007E 2008E Source: USDA 13
AGENDA ACQUISITIONS SUMMARY FINANCIAL METRICS FINAL CONSIDERATIONS QUESTIONS AND ANSWERS 14
POTENTIAL SYNERGIES IMPACT Financing Rational Synergy CONSOLIDATED USA and AUSTRALIA (US$ MM) ENTERPRISE VALUE 1,459.0 970.0 565.0 150.0 3,144.0 Costs Synergies US$ MM / year Present Value Synergies US$MM (1) 35 70 25 2 132 284 558 199 18 1.059 EV - synergies 1,174.6 412.4 365.9 132.2 2,085.1 Historical EBITDA* 152.9 122.0 85.4 26.8 387.0 EV / Historical Ebitda* 7.7 3.4 4.3 4.9 5.4 Quotation: $ / US$= 1.43 AU$ / US$ = 0.94 EV - synergies / EBITDA*: 5.4 x Source: Swift company FY07 Smithfield Beef - 10K, 10Q, company - Pro-forma LTM Oct07, include Five Rivers 100% LTM Dec07 National - 10K, 10Q - LTM Nov07 Tasman company FY07 July (1) Present value of synergies after taxes for 5 years, discounted by a rate of 8% * Historical average EBITDA margin from the last 5 years and current net revenues 15
TOTAL ESTIMATED ACQUISITIONS SYNERGIES Estimated cost reduction of US$132 MM 20 7 132 26 79 Selling, General and Administrative Expenses Purchases, Production and Supply Chain Assets Rational Saves with Marketing Total Estimated Synergies Note: Include annual synergies from Swift of US$35MM 16
ESTIMATED EBITDA MARGIN OF 3% Financing Rational Potential Margin CONSOLIDATED USA and AUSTRALIA (US$ MM) ENTERPRISE VALUE 1,459.0 970.0 435.0 130.0 150.0 3,144.0 Net Revenue (US$ MM) 9,504.8 5,578.5 2,795.3 1,520.4 464.7 19,863.7 (1) EBITDA (3%) 285.1 167.4 83.9 45.6 13.9 595.9 EV / Ebitda (3%) 5.1 x 5.8 x 5.2 x 2.9 x 10.8 x 5.3 x Quotation: $ / US$= 1.43 AU$ / US$ = 0.93 EV - synergies / EBITDA*: 5.3 x Source: Swift company FY May/07 National - 10K FY Aug/07 Smithfield Beef - 10K, 10Q, company - Pro-forma LTM Oct/07 Five Rivers company LTM Dec/07 Tasman company FY Jul/07 (1) Considering the hypothesis of addition of Five Rivers revenue *Estimated EBITDA Margin in the middle term 17
JBS: A BRAZILIAN GLOBAL COMPANY WITH SALES OF US$21.5 BILLION Combined Companies Pro-forma CONSOLIDADO Net Revenue (US$ MM) 12,712.7 5,578.5 2,795.3 464.7 21,551.2 EBITDA (US$ MM) 425.9 93.1 69.6 26.8 615.3 EBITDA Margin 3.4% 1.7% 2.5% 5.8% 2.9% Slaughter Capacity 54.9 14.0 7.6 2.7 79.2 Units 91 6 16 7 120 Employees 46,840 8,800 6,370 1,887 63,897 Quotations: R$ / US$ = 0.54 28/09/2007 $ / US$= 1.42 28/09/2007 AU$ / US$ = 0.86-30/06/2007 Source: JBS DFP, ITR - Pro-forma LTM Sep07, include JBS SA, JBS USA, Inalca Smithfield Beef - 10K, 10Q, company - Pro-forma LTM Oct07, include Five Rivers 100% LTM Dec07 National - 10K, 10Q - LTM Nov07 Tasman company FY07 July 18
ACQUISITION S FINANCIAL STRUCTURE Acquisitions Financial Structure From ~US$821 MM up to US$1,000 MM FIP J & F From ~US$148 MM Up to ~US$303 MM Market From ~US$197 MM up to ~US$531 MM US$1,500 MM 1 Cash US$95 MM Use US$1,500 MM 2 Cash Use US$290 MM USA 3 ~US$95 MM in Shares ~US$1,790 MM 9 4 ~US$50 MM ~US$100 MM 8 US$565 MM 6 7 ~US$200 MM 5 ~US$410 MM ~US$ 465 MM Creditors Shareholders Shareholders Five Rivers increase Capital Creditors Shareholders EV: ~US$150 MM Net Debt: ~US$50 MM Equity: ~US$100 MM EBITDA: US$ 21.4 MM EV: US$565MM Debt: US$0,00 Smithfield: ~US$435MM Five Rivers: ~US$130MM Five Rivers: US$200MM (K increase) EBITDA: US$44.2MM + US$25.4MM EV:~US$970MM Net Debt: ~US$410MM Equity: US$560MM EBITDA: US$93.5MM All these values are estimated and can be changed at closing of the transactions 19
ACQUISITION S FINANCIAL STRUCTURE Description of the Acquisitions`Main Points 1. Capital Increase in JBS S.A. of US$1,500 million; 2. Capital Increase of JBS S.A. (JBS USA) of US$1,500 million; 3. Payment of approximately US$95 million in JBS S.A. shares to the National Beef current shareholders ; 4. Payment of approximately US$465 million in cash to the National Beef current shareholders; 5. Net debt repayment from National Beef of approximately US$410 million; 6. Payment of US$565 million in cash to the Smithfield Beef and the Five Rivers current shareholders; 7. Capital Increase of US$200 million in Five Rivers; 8. Payment of approximately US$100 million in cash to the Tasman current shareholders; 9. Net debt repayment from Tasman of approximately US$50 million. All these values are estimated and can be changed in the closing of the transactions 20
AGENDA ACQUISITIONS SUMMARY FINANCIAL METRICS FINAL CONSIDERATIONS QUESTIONS AND ANSWERS 21
JBS IS A GLOBAL LEADER IN THE MEAT SECTOR WITH COMBINED REVENUES OF US$21.5 BILLION, 63 THOUSAND EMPLOYEES AND PRESENCE IN 6 CONTINENTS The acquisitions represent the conclusion of the investment plan in the USA and Australia, initiated in July 2007 through the Swift & Co acquisition In the coming years JBS will be focused in improving efficiency, capturing synergies and growing organically Acquisitions were made in a 5x 6x EBITDA multiple range or 60% of the replacement cost generating value to JBS shareholders A US$1.5 billion equity issuance will support an adequate capital structure for the acquisitions The combination of the acquired companies management with the JBS team guarantees the integration of the business 22
RECOGNIZED BRANDS IN ALL THE WORLD 23
QUESTIONS & ANSWERS 24