Marisa S.A. (Incorporated in the Federative Republic of Brazil)

CONFIDENTIAL OFFERING CIRCULAR 44,000,000 Common Shares

Marisa S.A. (incorporated in the Federative Republic of Brazil)

We are offering a total of 44,000,000 common shares to (1) the public in Brazil, (2) certain qualified institutional buyers (as defined in Rule 144A (Rule 144A) under the United States Securities Act of 1933, as amended, (the Securities Act) in the United States, and (3) institutional and other investors outside the United States and Brazil that are not U.S. persons as defined in Regulation S under the Securities Act (or Regulation S). We have registered this offering of our common shares with the Brazilian Securities Commission (Comissão de Valores Mobiliários) or CVM. Our common shares have been approved for listing on the Novo Mercado segment of the São Paulo Stock Exchange (Bolsa de Valores de São Paulo), or BOVESPA. The ISIN number for our common shares is “BRMARIACNOR7.” The initial offering price for our common shares is R$10.00 per share. We have granted to Banco UBS Pactual S.A. an option, exercisable upon consultation with Banco de Investimentos Credit Suisse (Brasil) S.A., within a period of up to 34 days from the date of the underwriting agreement to place up to an additional 6,600,000 common shares at the initial offering price to cover over- allotments, if any. Investing in our common shares involves risks. See “Risk Factors” beginning on page 17. Price: R$10.00 per common share The common shares have not been and will not be registered under the Securities Act or under any U.S. state securities laws. The common shares may not be offered or sold within the United States or to U.S. persons, except to qualified institutional buyers as defined in Rule 144A under the Securities Act, in reliance on exemptions from registration provided under the Securities Act, and to certain non-U.S. persons outside the United States and Brazil in reliance on Regulation S. See “Transfer Restrictions” on page 151 for a description of restrictions on transfers of our common shares. Neither the United States Securities and Exchange Commission (or SEC), CVM nor any other securities commission has approved or disapproved of these securities or determined if this offering circular (or the prospectus in Portuguese used in connection with the offering of our common shares in Brazil) is truthful or complete. Any representation to the contrary is a criminal offense. Investors residing outside Brazil, including qualified institutional buyers in the United States and institutional and other investors elsewhere outside the United States and Brazil, may purchase our common shares if they comply with the registration requirements of CVM Instruction No. 325, dated January 27, 2000, and Resolution No. 2,689, dated January 26, 2000, as amended, of the Brazilian National Monetary Council (Conselho Monetário Nacional)or CMN. For a description on how to comply with these registration requirements, see “Market Information— Investment in our common shares by non residents of Brazil” on page 25. Payment for our common shares will be required to be made to us through the facility of the Brazilian Settlement and Custodial Company (Companhia Brasileira de Liquidação e Custódia), or CBLC, and we expect to deliver our common shares through the CBLC on or about October 24, 2007. Global Coordinators and Bookrunners Credit Suisse UBS Investment Bank Selling Agents HSBC Safra The date of this confidential offering circular is October 18, 2007.

TABLE OF CONTENTS

Page Page

FORWARD-LOOKING STATEMENTS...... iv BUSINESS ...... 79 PRESENTATION OF FINANCIAL AND CERTAIN MANAGEMENT ...... 105 OTHER INFORMATION ...... v PRINCIPAL SHAREHOLDERS ...... 113 SUMMARY ...... 1 RELATED PARTY TRANSACTIONS ...... 117 RISK FACTORS ...... 17 DESCRIPTION OF CAPITAL STOCK...... 122 USE OF PROCEEDS ...... 23 DIVIDENDS AND DIVIDEND POLICY ...... 137 EXCHANGE RATES ...... 24 TAXATION ...... 140 MARKET INFORMATION ...... 25 CERTAIN ERISA CONSIDERATIONS ...... 146 CAPITALIZATION ...... 29 PLAN OF DISTRIBUTION ...... 147 DILUTION...... 30 TRANSFER RESTRICTIONS...... 151 SELECTED FINANCIAL AND OPERATING NOTICE TO INVESTORS ...... 153 INFORMATION...... 33 NOTICE TO CANADIAN RESIDENTS ...... 154 MANAGEMENT’S DISCUSSION AND ANALYSIS LEGAL MATTERS ...... 157 OF FINANCIAL CONDITION AND RESULTS OF INDEPENDENT ACCOUNTANTS...... 157 OPERATIONS ...... 39 ENFORCEMENT OF JUDGMENTS AGAINST INDUSTRY ...... 76 FOREIGN PERSONS...... 158 INDEX TO FINANCIAL STATEMENTS ...... F-1

In this offering circular, references to “Marisa,” “Company,” “we,” “us” and “our” are to Marisa S.A. and its subsidiaries, except where the context requires otherwise. References to “common shares” refer to the common shares of Marisa S.A., except where the context requires otherwise. When used in this offering circular, the term “indirect controlling shareholders of Marisa S.A.” refers to Décio Goldfarb, Marcio Luiz Goldfarb and Denise Goldfarb Terpins. In this offering circular references to “Begoldi” are to Begoldi Comércio, Participação e Administração S.A. In this offering circular, references to “controlling shareholder” are to Begoldi. When used in this offering circular, “Marisa group” refers to Begoldi and its subsidiaries. References to “Marisa Lojas,” in this offering circular are to Marisa Lojas Varejistas Ltda.

The term “Brazil” refers to the Federative Republic of Brazil. The phrase “Brazilian government” refers to the federal government of the Federative Republic of Brazil and the term “Central Bank” refers to the Banco Central do Brasil, or the Central Bank of Brazil.

You should rely only on the information contained in this offering circular. Neither we, the Brazilian underwriters nor the agents appointed by the Brazilian underwriters to facilitate the placement of common shares outside of Brazil (the “agents”) have authorized anyone to provide you with information that is different or additional from that contained in this offering circular. If anyone provides you with different or additional information, you should not rely on it. You should assume that the information in this offering circular is accurate only as of the date on the front cover of this offering circular, regardless of time of delivery of this offering circular or any sale of our common shares. Our business, financial condition, results of operations and prospects may change after the date on the front cover of this offering circular. Neither Marisa, the Brazilian underwriters nor the agents is making an offer to sell the common shares in any jurisdiction where the offer or sale is not permitted.

i This offering circular is highly confidential and we have prepared it for use solely in connection with the proposed offering of our common shares outside Brazil. This offering circular is personal to the offeree to whom it has been delivered by the Brazilian underwriters or the agents and does not constitute an offer to any other person or to the public in general to subscribe for or otherwise to acquire our common shares. Distribution of this offering circular to any person other than the offeree is unauthorized, and any disclosure of any of its contents without our prior written consent is prohibited. Each offeree, by accepting delivery of this offering circular, agrees to the foregoing and agrees to make no photocopies of this offering circular, in whole or in part.

We are relying on the exemptions from registration under Rule 144A and Regulation S of the Securities Act for offers and sales of securities that do not involve a public offering. Our common shares offered through this offering circular are subject to restrictions on transferability and resale, and may not be transferred or resold in the United States except as permitted under the Securities Act and applicable U.S. state securities laws pursuant to registration or exemption from them. By purchasing these securities, you will be deemed to have made the acknowledgements, representations and warranties and agreements described under the heading “Transfer Restrictions” in this offering circular. You should be aware that you may be required to bear the financial risks of this investment for an indefinite period of time. In making an investment decision, you must rely on your own examination of our business and the terms of this offering, including the merits and risks involved.

You must comply with all applicable laws and regulations in force in any jurisdiction in which you purchase, offer or sell our common shares or possess or distribute this offering circular and must obtain any consent, approval or permission required for your purchase, offer or sale of our common shares under the laws and regulations in force in any jurisdiction to which you are subject or in which you make the purchases, offers or sales, and neither we, the Brazilian underwriters nor the agents will have any responsibility therefor.

We, the Brazilian underwriters and the agents reserve the right to reject any offer to purchase, in whole or in part, and for any reason, our common shares offered hereby. We, the Brazilian underwriters and the agents also reserve the right to sell or place less than all of our common shares offered hereby.

Unless otherwise indicated, all information contained in this offering circular assumes no exercise of Banco UBS Pactual S.A.’s option, upon consultation with Banco de Investimentos Credit Suisse (Brasil) S.A., to place up to an additional 6,600,000 common shares at the initial public offering price to cover over-allotments, if any, within a period of up to 34 days from the date of the underwriting agreement.

The offering of our common shares is being made in Brazil by a prospectus in Portuguese that has been filed with the CVM and that has the same date as this offering circular but has a different format and contains certain information generally not included in this document (the Brazilian prospectus). This offering is made in the United States and elsewhere outside Brazil solely on the basis of the information contained in this offering circular. Investors should take this into account when making investment decisions.

This communication is directed only at persons who (1) are outside the United Kingdom, or (2) are investment professionals falling within Article 19(5) of the Financial Services and Markets Act of 2000 (Financial Promotion) Order 2001 (the Order) or (3) are persons falling within Article 49(2)(a) to (d) (“high net worth companies, incorporated associations etc.”) of the Order (all these persons together are being referred to as “relevant persons”). This communication must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only with relevant persons.

We are not, and the Brazilian underwriters and the agents are not, making any representation to any purchaser of the securities regarding the legality of an investment in the securities by the purchaser under any legal investment or similar laws or regulations. You should not consider any information in this offering circular to be legal, business or tax advice. You should consult your own attorney, business advisor and tax advisor for legal, business and tax advice regarding an investment in the securities.

ii NOTICE TO INVESTORS

Notwithstanding anything in this document to the contrary, except as reasonably necessary to comply with applicable securities laws, you (and each of your employees, representatives or other agents) may disclose to any and all persons, without limitation of any kind, the U.S. federal income tax treatment and tax structure of the offering and all materials of any kind (including opinions or other tax analyses) that are provided to you relating to this tax treatment and tax structure. For this purpose, “tax structure” is limited to facts relevant to the U.S. federal income tax treatment of the offering.

NOTICE TO NEW HAMPSHIRE RESIDENTS

Neither the fact that a registration statement or an application for a license has been filed under Chapter 421-B of the New Hampshire Revised Statutes with the state of New Hampshire nor the fact that a security is effectively registered or a person is licensed in the state of New Hampshire constitutes a finding by the secretary of state that any document filed under RSA 421-B is true, complete and not misleading. Neither any of these facts nor the fact that an exemption or exception is available for a security or a transaction means that the secretary of state has passed in any way upon the merits or qualification of, or recommended or given approval to, any person, security, or transaction. It is unlawful to make, or cause to be made, to any prospective purchaser, customer, or client any representation inconsistent with the provisions of this paragraph.

iii FORWARD-LOOKING STATEMENTS

This offering circular includes forward-looking statements subject to risks and uncertainties, in particular those under “Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business.” These forward-looking statements are based on our beliefs, assumptions, information currently available to us, current expectations, and projections about future events, as well as on financial trends that affect or may affect us and the price of our common shares.

In addition to the items discussed in other sections of this offering circular, there are many significant factors that could cause our financial condition and results of operations to differ materially from those set out in our forward-looking statements and estimates, including the following: • general economic, political and business conditions in Brazil; • the interests of our controlling shareholder; • changes in customer demand, preferences and purchasing power as well as increased market competition; • the continued success of our marketing and sales efforts; • changes in the costs of our products and operating costs; • our customers’ creditworthiness; • our ability to offer our customers competitive credit products; • our level of indebtedness and other financial obligations; • our ability to implement our expansion strategies; • inflation, appreciation or depreciation of the Brazilian real; • interest rate fluctuations; • increased rates of unemployment in Brazil; • changes in current or future Brazilian laws and regulations; • measures taken by the Brazilian government that result in changes to taxes, tariffs, the Brazilian regulatory framework and the economy; and • the risk factors discussed under “Risk Factors.”

Words such as “believe,” “could,” “may,” “will,” “would,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “plan” and other similar words are used in this offering circular to identify forward-looking statements. Forward-looking statements involve risks and uncertainties and are not a guarantee of future results or of our performance, which may materially differ from those expressed in the statements we make in this offering circular. Given these limitations, you should not make any decision to invest in our common shares on the basis of the forward-looking statements contained in this offering circular. These forward-looking statements are made only as of the date of this offering circular and we do not undertake any obligation to disclose any revision to these statements in order to reflect events or circumstances that may arise after the date of this offering circular.

iv PRESENTATION OF FINANCIAL AND CERTAIN OTHER INFORMATION

We prepare our financial statements in accordance with accounting practices adopted in Brazil, Brazilian Corporate Law (Law No. 6,404, dated December 15, 1976, as amended), complementary CVM regulations, technical releases issued by the Brazilian Institute of Independent Accountants (Instituto dos Auditores Independentes do Brasil), or IBRACON, and by the Brazilian Federal Accountants Council (Conselho Federal de Contabilidade), or CFC. These accounting practices, principles and procedures are referred to as the generally accepted accounting practices adopted in Brazil, or Brazilian GAAP.

Brazilian GAAP differs in certain significant respects from the accounting principles generally accepted in the United States, or U.S. GAAP. The consolidated financial statements contained in this offering circular differ from those that would be prepared based upon U.S. GAAP or International Financial Reporting Standards, or IFRS. We have made no attempt to identify or quantify the impact of those differences. No reconciliation to U.S. GAAP or IFRS of any of the financial statements presented in this offering circular has been prepared for the purposes of this offering circular or for any other purposes. There can be no assurance that reconciliation would not identify material quantitative differences as well as disclosures and presentation differences between our consolidated financial statements as prepared in accordance with Brazilian GAAP and these financial statements as prepared under U.S. GAAP or IFRS.

Combined and consolidated financial information Our combined financial information related to our balance sheets and income statements as of and for the years ended December 31, 2004, 2005 and 2006 and six-month period ended June 30, 2006, and our consolidated financial information related to our balance sheet and income statements as of and for the six-month period ended June 30, 2007, derive from our financial statements, which were prepared in accordance with Brazilian GAAP. Our combined financial information for the years ended December 31, 2004, 2005, and 2006 was audited by Deloitte Touche Tohmatsu Auditores Independentes. Our combined and consolidated financial statements for the six-month period ended June 30, 2006 and 2007 were specially reviewed by Deloitte Touche Tohmatsu Auditores Independentes.

In order to make the financial figures related to years ended December 31, 2004, 2005 and 2006, as well as the six-month periods ended June 30, 2006 and 2007 comparable to each other, we prepared our consolidated and combined financial statements included elsewhere in this offering circular according to the following guidelines: • our combined audited financial statements as of and for the years ended December 31, 2004, 2005 and 2006 were prepared as if the following companies had been our subsidiaries since January 1, 2004: Due Mille Participações Ltda. (or Due Mille), Marisa Lojas, Fix Participações Ltda. (or FIX), Credi-21, Participações Ltda. (or Credi-21), TEF Serviços de Processamento de Dados Ltda. (or TEF), TCM Participações Ltda. (or TCM) and Primos Participações Ltda. (or Primos); • our combined audited financial statements as of and for the years ended December 31, 2004, 2005 and 2006, were prepared as if the following special purpose entities or SPEs had been owned by us since January 1, 2004: Athol Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. (or Athol), Lógica Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. (or Lógica), Racional Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. (or Racional), Fax Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. (or FAX), Ativa Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. (or Ativa), Transfer Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. (Transfer), and Actio Participações Ltda, (or Actio); • our combined financial information as of and for the six-month period ended June 30, 2006 was subject to special review (performed to the extent described in the independent accountants’ review report, in accordance with specific rules established by IBRACON together with CFC) by Deloitte Touche Tohmatsu Auditores Independentes and was compiled as if the abovementioned subsidiaries and SPEs had been our subsidiaries since January 1, 2004;

v • our consolidated financial information as of and for the six-month period ended June 30, 2007 was subject to special review (performed to the extent described in the independent accountants’ review report, in accordance with specific rules established by IBRACON together with CFC) by Deloitte Touche Tohmatsu Auditores Independentes and was compiled based on our current corporate structure which is described in “Management’s Discussion and Analysis of Financial Condition and Result of Operations”; and • our combined financial statements include our financial statements, the financial statements of our direct and indirect subsidiaries, as well as our SPEs, which are explained in greater detail below. Our consolidated financial statements do not include our SPEs because beginning on January 1, 2007 the operations of the SPEs were fully transferred to Marisa Lojas, except for Actio which was transferred to Credi-21 as of March 1, 2007. Although we have not liquidated these SPEs yet, they are not in operation. For further information on the combination of financial statements of our subsidiaries and SPEs, see “Business—Corporate restructuring.”

The financial statements of the subsidiaries listed below are accounted for in our consolidated and combined financial statements in accordance with the following percentages:

Equity Interest (%) Marisa Lojas Varejistas Ltda...... 99.9 Due Mille Participações Ltda...... 99.9 Fix Participações Ltda...... 99.9 Credi-21 Participações Ltda.(1)...... 99.9 Primos Participações Ltda.(1) ...... 96.1 TCM Participações Ltda.(1) ...... 99.4 TEF Serviços de Processamento de Dados Ltda.(1) ...... 94.3

(1) Indirect subsidiaries.

The operations of the SPEs described below were transferred to Marisa Lojas as of January 1, 2007, except for the operations of Actio, which were transferred to Credi-21 as of March 1, 2007. The SPEs have not yet been dissolved. We intend to wind them up in the future. The SPEs were mainly used to carry out our clothing wholesale activities. The SPEs’ shareholders’ equity described in our combined financial statements were recorded as accounts payable in Begoldi’s financial statements for the years ended December 31, 2004, 2005 and 2006, given that prior to the corporate restructuring we held no direct interest in these SPEs. After the transfer of the operations of the SPEs to Marisa Lojas and as of January 1, 2007, the interest in these SPEs (except for Actio) was recorded as equity in our financial statements. The financial statements of the SPEs were included in our combined financial statements as provided for in CVM Instruction No. 408/04, because the results of their activities are directly influenced by Marisa Lojas and they were incorporated for the sole purpose of providing services to Marisa Lojas. Currently, the financial statements of the SPEs below are accounted for in our combined financial statements as follows:

Equity Interest (%) Actio Participações Ltda...... 100.0 Athol Comércio Atacadista de Artigos do Vestuário e Complementos Ltda...... 100.0 Lógica Comércio Atacadista de Artigos do Vestuário e Complementos Ltda...... 100.0 Racional Comércio Atacadista de Artigos do Vestuário e Complementos Ltda...... 100.0 Ativa Comércio Atacadista de Artigos do Vestuário e Complementos Ltda...... 100.0 Fax Comércio Atacadista de Artigos do Vestuário e Complementos Ltda...... 100.0 Transfer Comércio Atacadista de Artigos do Vestuário e Complementos Ltda...... 100.0

vi Our investments are proportionally offset by equity stakes, results, balances of assets and liabilities, unrealized revenue, expenses and results, net of income and social contribution taxes of our subsidiaries and SPEs, arising from intercompany transactions. See “Related Party Transactions.”

Accordingly, these financial statements are referred to as combined financial statements and were prepared for the purpose of increasing comparability between us and all subsidiaries (direct and indirect) and SPEs. Furthermore, our combined financial statements allow investors to interpret the results as if our subsidiaries (direct and indirect) and SPEs had been under our control since January 1, 2004.

The financial information in this offering circular, insofar as it refers to us, takes into account our consolidated financial information for the six-month period ended June 30, 2007 and combined financial information for the other periods.

Our combined and consolidated financial statements were prepared for the above-mentioned purposes and do not represent our results of operations and financial condition as if these transactions had actually occurred on the dates indicated, and are not indicative of our future results of operations. You should not rely on our consolidated and combined financial statements for the purpose of calculating dividends, taxes, or any other purpose provided by Corporate law. Our combined and consolidated financial statements do not represent the financial statements of any of our subsidiaries or SPEs individually.

Adjusted EBITDA Adjusted EBITDA information provides a measure of our operating performance. Adjusted EBITDA is not a measure of financial performance under Brazilian GAAP and should not be considered individually as a measure of our economic performance, as an alternative to net income or operating cash flows or as an indicator of liquidity. Our Adjusted EBITDA consists of EBITDA plus or minus the result from the equity method of accounting interest in real estate companies, revenue from the rental of spun-off property, net non-operating result and minority interests. There is no standard formula for calculating Adjusted EBITDA and our definition of Adjusted EBITDA may not be similar to the definition of Adjusted EBITDA used by other companies. For more information on our Adjusted EBITDA and how we calculate it, see “Selected Financial and Operating Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

vii The table below sets forth the reconciliation of our Adjusted EBITDA for the periods indicated.

Year ended December 31, Six month period ended June 30, Combined Combined Combined Combined Combined Consolidated Consolidated 2004 2005 2006 2006 2006 2007 2007 (in millions, except as otherwise indicated) R$ R$ R$ US$ R$ R$ US$ Net operating revenue..... 500.3 667.6 875.4 454.5 338.6 510.8 265.2 Net income (loss) for the period ...... (40.0) 13.8 (57.5) (29.8) (27.1) 37.3 19.4 Income and social contribution taxes: Deferred...... (5.3) (3.5) (22.0) (11.4) (20.8) (27.8) (14.5) Current ...... 10.2 22.8 18.4 9.6 10.1 5.3 2.7 Financial result, net ...... 4.9 9.3 63.1 32.8 42.5 22.8 11.8 EBIT(1) ...... (30.2) 42.4 2.0 1.1 4.7 37.6 19.4 Depreciation and amortization ...... 9.5 12.1 21.2 11.0 9.7 16.9 8.8 EBITDA(2)...... (20.7) 54.5 23.2 12.1 14.4 54.5 28.2 Expenses from depreciation of spun-off property and equipment ...... 3.4 2.7 1.6 0.8 1.3 — — Income (loss) from the equity method of accounting interest in real estate companies(3) ...... 18.5 (5.7) (6.2) (3.2) (2.1) — — Revenues from rental of spun-off property ...... (1.4) (1.6) (1.7) (0.9) (0.9) — — Minority interest ...... 0.3 18.4 56.4 29.3 18.8 0.5 0.3 Non-operating result, net.... 8.6 (5.3) (5.4) (2.8) (4.2) 0.3 0.2 Adjusted EBITDA ...... 8.7 63.0 67.9 35.3 27.3 55.3 28.7 Adjusted EBITDA Margin(4) ...... 1.7% 9.4% 7.8% 7.8% 8.1% 10.8% 10.8% (1) Pursuant to CVM Circular Notice No. 01/2007, EBIT is net income (loss) before deduction of net financial expenses, income and social contribution taxes. (2) Pursuant to CVM Circular Notice No. 01/2007, EBITDA is net income (loss) before deduction of net financial expenses, income and social contribution taxes, depreciation and amortization. (3) For further information on our corporate restructuring, real estate companies and organization of our activities see “Business—Corporate restructuring” and notes Nos. 1, 4 and 11 to our financial statements, included elsewhere in this offering circular. (4) Adjusted EBITDA margin equals Adjusted EBITDA divided by net operating revenue.

Market information The information presented in this offering circular is based on research studies prepared by us, reports prepared by independent consultants, trade associations and governmental agencies, such as the Brazilian Institute of Geography and Statistics (Instituto Brasileiro de Geografia e Estatística), or IBGE, Fundação Getulio Vargas, the Brazilian Association of Shopping Centers (Associação Brasileira de Shopping Centers), or ABRASCE, among others. Although we believe that these sources of information are reliable, neither we the Brazilian underwriters nor the agents independently verified and guarantee the accuracy of the information presented in this offering circular. Certain amounts and percentages included in this offering circular have been rounded, therefore the totals presented in certain tables may not be an exact arithmetic sum of the figures that precede them.

viii Other information All references in this offering circular to “real,” “reais” and the symbol “R$” are to the legal currency of Brazil. All references to “dollar,” “U.S. dollars” and to the symbol “US$” are to the legal currency of the United States.

Solely for the convenience of the reader, we have translated some of the real amounts contained in this offering circular into U.S. dollars at a rate equal (unless otherwise indicated) to R$1.926 to US$1.00, the commercial selling rate on June 30, 2007 as reported by the Central Bank. As a result of the recent fluctuations in the real/U.S. dollar exchange rate, the commercial selling rate may not be indicative of current or future exchange rates. Therefore, you should not read these translations as representations that any such amounts have been, could have been or could be converted into U.S. dollars at that exchange rate. On October 18, 2007, the commercial selling exchange rate was R$1.807 to US$1.00, as reported by the Central Bank. See “Exchange Rates” for information regarding exchange rates allocable to the Brazilian currency since 2002.

In this offering circular, all references to “comparable stores” are to our stores that have been operating for over 13 months. For calculation purposes, we have used data from our stores’ sales and related variations within the relevant calculation periods. If a comparable store is closed during the 13-month period, we disregard all its operating and financial data for calculation purposes.

References to “higher-income socioeconomic group” are to households with an average annual income of R$82,740.00; “middle-income socioeconomic group” are to households with an average annual income of R$32,760.00; “middle-lower income socioeconomic group” are to households with an average annual income of R$12,600.00; “lower-income socioeconomic group” are to households with an average annual income of R$6,720.00; and “very low socioeconomic group” are to households with an average annual income of R$3,360.00.

ix [THIS PAGE INTENTIONALLY LEFT BLANK] SUMMARY

This summary contains an overview of our business and financial and operating information. It does not contain all of the information that you should consider before making a decision to invest in our common shares. You should read this entire offering circular carefully for a more complete understanding of our business and this offering, including the information in “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as our financial statements and related notes attached to this offering circular.

Overview

We are the largest Brazilian department store chain specialized in women’s clothing based on the number of stores published by our major competitors on their websites. Our business strategy and operations focus primarily on middle-lower income women between the ages of 20 and 35. Our target customers are members of the largest socioeconomic group in Brazil, according to the Brazilian Association of Population Studies (Associação Brasileira de Estudos Populacionais), or ABEP. We design and sell at competitive prices a wide variety of products that reflect current national and international fashion trends. Our products are sold primarily under our brand “Marisa” and are displayed in our stores according to “lifestyle” categories.

We began our business activities in 1948 in the city of São Paulo, under the leadership of Bernardo Goldfarb. Today, we are present in all Brazilian regions, with 181 stores and four distribution centers strategically located close to the largest Brazilian consumer markets.

During our almost 60 years in business, we have developed in-depth knowledge of the needs and tastes of our target customers. As a result, we have developed a corporate image that reflects the affinity we believe we share with Brazilian women. Our “Marisa” brand is recognized today throughout Brazil as young, modern and sexy. It is associated with the well-known slogan “By Women for Women” (“De Mulher para Mulher”), a slogan that reflects our image as a company that understands and responds to the needs and desires of our target market. For example, according to surveys carried out by Interscience at our request in 2001, 2002 and 2003, we are the first choice of middle and middle-lower income Brazilian women who want to be fashionable and to acquire quality lingerie at competitive prices. A 2006 Interscience survey of consumers ranking companies according to “respect for customers,” considering such factors as product quality, price, marketing, and customer service, ranked us ahead of other clothing retailers in Brazil.

In 1999, we launched an expansion strategy that involved the modernization, renovation and/or increase of our stores’ sales area. As of December 31, 2004, we had 148 stores with a total area of approximately 94,700 m2. By December 31, 2006, we had 166 stores, with a total area of approximately 152,400 m2, representing an increase in our total sales area of approximately 57,700 m2. In 2006, our net revenue increased 32.3% from R$500.3 million on December 31, 2004 to R$875.4 million on December 31, 2006.

During 1999, we also put in motion a number of efforts aimed at increasing our product mix, revitalizing our “Marisa” brand and logo and improving the display of the products in our stores. We added new product lines to our stores (men’s and children’s clothing as well as bed, bath and table linens), changed our logo, implemented the concept of “freshness” (which aims at constantly attracting customers to our stores) and began displaying our products according to “lifestyle” categories (to stimulate the purchases of complementary products).

1 instead of just the purchase of clothing. We seek to offer our customers a shopping experience that echoes our philosophy of establishing and cultivating a corporate image that reflects the affinity we share with Brazilian women.

Additionally, unlike our main Brazilian competitors, we are the only women’s clothing store that has an online store, Marisa Virtual (www.marisa.com.br). Our online store allows us to reach customers in Brazilian cities in which we do not have a physical presence and to increase our data base of target customers.

Demand by our target market for consumer credit and financial services in general exceeds the current supply of these services in Brazil. To create and foster conditions for our potential customers to purchase our products, we launched in 1999 the Marisa Card and the financial products affiliated with it. Through the Marisa Card, we offer our customers credit lines and insurance products in a quick, straightforward and simple manner. For further information on the insurance products we provide see “Business—Insurance.” The Marisa Card is an important aspect of our business strategy because it fosters long-term relationships with our customers and increases our revenue from sales. As of December 31, 2006, we had issued over seven million Marisa Cards and 51.6% of these cards were used during the preceding six months, representing more than 7% of the Brazilian private label credit card market, according to the Brazilian Association of Credit Cards and Service Companies (Associação Brasileira das Empresas de Cartões de Crédito e Serviços), or ABECS. As of June 30, 2007, we had issued over 8.5 million Marisa Cards, of which 48.7% had been used during the preceding six-months. In 2000, purchases made with the Marisa Card represented 5.6% of our sales revenue in 2000. As of December 31, 2006, revenue from Marisa Card sales represented 65.5% of our total sales revenue. As of the six-month period ended June 30, 2006, revenue from Marisa Card sales represented 61.7% of our total sales revenue, as compared to 66.2% of our sales revenue as of June 30, 2007.

To increase our profitability and the number of products offered through the Marisa Card, we are implementing a corporate restructuring process, pursuant to which we will indirectly control SAX S.A. Crédito, Financiamento e Investimento, or SAX, a financial institution currently controlled indirectly by Décio Goldfarb, Marcio Luiz Goldfarb and Denise Goldfarb Terpins and directly controlled by MAX Participac¸ões Ltda., or MAX. SAX is a financial institution that extends personal consumer financing to Marisa Card customers. SAX began operating in June 2006 with the plan named “Tá na Mão,” through which we offered selected customers cash advances of up to R$150.00 per transaction. The corporate restructuring process (which involves the purchase of control by us from indirect controlling shareholders of Marisa S.A. for the book value of R$7,419,000.00) remains subject to the approval of the Central Bank and should have a positive effect on our results of operations because of the profitability of SAX’s financing transactions. In addition, on December 31, 2006, Marisa Lojas transferred the investments of our indirect and direct controlling shareholder in the clothing retail, credit card and logistics businesses to us, while Begoldi continued to directly hold all activities not related to our clothing retail businesses; such as the real estate companies, management of our Marisa Card, insurance, etc). See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent corporate restructuring.”

We believe the Brazilian clothing retail industry has great growth potential, in particular due to the (1) favorable macroeconomic conditions in Brazil, which include increased availability of credit to middle-lower income consumers and a continued reduction in interest rates; (2) increasing number of women in the Brazilian labor market, their increasing purchasing power and their growing expenditure on clothing items; (3) contraction of the Brazilian informal job market, (4) consolidation of the clothing retail market, which is highly fragmented; and (5) increasing use of the internet by middle-lower income consumers and resulting growth of online purchases. We believe our leading position among women of Brazil’s middle-lower income socioeconomic group, our stores’ presence throughout Brazil, our online store and the credit products provided by our Marisa Card place us in a privileged position to benefit from the potential growth of the Brazilian clothing retail industry.

2 The table below sets forth our principal consolidated financial and operating data for the periods indicated:

Year ended December 31, Six-month period ended June 30, 2004 2005 2006 2006 2006 2007 2007 (in millions, except as other wise indicated) R$ R$ R$ US$ R$ R$ US$ Gross operating revenue ...... 721.3 977.7 1,299.4 674.7 497.1 743.6 386.1 Net operating revenue...... 500.3 667.6 875.4 454.5 338.6 510.8 265.2 Income (loss) from operations before financial earnings, depreciation of spun-off property and equipment, results from the equity method of accounting interest in real estate companies and revenue from lease of spun-off real property(1) ...... (0.8) 50.9 46.7 24.3 17.6 38.4 19.9 Net income (loss) from operations before minority interests, depreciation of spun-off property(5) and equipment, results from the equity method of accounting interest in real estate companies(5) and revenue from lease of spun-off real property(5) ...... (19.2) 27.6 (7.4) (3.8) (10.0) 37.9 19.7 Net income (loss) from operations after depreciation of spun-off property and equipment, results from the equity method of accounting interest in real estate companies and revenue from lease of spun-off real property ...... (40.0) 13.8 (57.5) (29.8) (27.1) 37.3 19.4 Adjusted EBITDA(2) ...... 8.7 63.0 67.9 35.3 27.3 55.3 28.7 Gross margin (%)(3) ...... 43.5% 49.4% 49.8% 49.8% 48.4% 48.5% 48.5% Adjusted EBITDA margin (%)(4) ...... 1.7% 9.4% 7.8% 7.8% 8.1% 10.8% 10.8% Short-term indebtedness ...... 55.8 120.2 341.6 177.3 310.4 491.2 255.1 Long-term indebtedness ...... 4.1 5.3 176.5 91.6 9.5 223.5 116.1 Number of stores ...... 148 149 166 166 152 175 175 Total sales area (in m2)...... 94,696 107,057 152,412 152,412 116,728 167,047 167,047 Average sales area (in m2)...... 639.8 718.5 918.1 918.1 767.9 954.6 954.6 Average sales in installments ticket including interest ...... 112.1 127.4 119.9 62.2 121.6 110.2 57.2 Average sales in installments ticket excluding interest ...... 87.8 91.0 90.1 46.8 82.7 89.8 46.6 (1) For further information on our corporate restructuring process, real estate companies and the organization of our activities, see “Business—Corporate restructuring” and notes Nos. 1, 4 and 11 to our financial statements, included elsewhere in this offering circular. (2) Adjusted EBITDA provides a measure of our operating performance. Adjusted EBITDA is not a measure of financial performance under Brazilian GAAP and should not be considered individually as a measure of our economic performance or as an indication of liquidity. Our Adjusted EBITDA consists of EBITDA plus or minus the result from the equity method of accounting interest in real estate companies, revenues from the rental of spun-off property, net non-operating result and minority interests. There is no standard formula for calculating Adjusted EBITDA. Our definition of Adjusted EBITDA and how we calculate it may not be similar to the definition or calculation method of Adjusted EBITDA used by other companies. For more

3 information on Adjusted EBITDA, see “Presentation of Financial and Certain Other Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” (3) Gross margin equals gross income divided by net operating income. (4) Adjusted EBITDA margin equals adjusted EBITDA divided by net operating revenue. (5) Discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Presentation of Financial and Certain Other Information—Combined and consolidated financial information” and Note No. 4 to our financial statements.

Our strengths

We believe our strengths increase our competitiveness and help us achieve our strategic objectives. They include the following: Strong brand and highly recognized slogan: “Marisa – By Women for Women” (“De Mulher para Mulher”). We believe we are the first choice of middle and middle-lower income Brazilian women who want to be fashionable and acquire quality lingerie at competitive prices, according to studies conducted by Interscience in 2001, 2002 and 2003. We have a strong brand recognized throughout Brazil and believe our products have added value because of our corporate brand “Marisa.” We believe we have developed a corporate image that reflects the affinity we believe we share with Brazilian women. Furthermore, we believe our brand is the only one that focuses exclusively on women, especially middle-lower income women customers. Our well-known slogan, “By Women for Women” (“De Mulher para Mulher”), reflects our philosophy of (1) designing products, adopting marketing strategies and offering a shopping environment focused on women; (2) providing higher quality customer service and a more pleasant overall shopping experience to our customers than that offered by our main competitors; and (3) focusing on the quality and variety of our products. We believe we are better positioned to take advantage of the increased demand for clothing and financial products among our target customers than our main competitors given our reputation and brand recognition.

Presence and experience in all regions of Brazil. Among the majority of our main competitors, we are one of the few women’s clothing retailers in Brazil with a broad national presence. We believe, that among the majority of our main competitors, we are the only women’s clothing retail store in Brazil with a nationwide distribution network (according to the information available on the websites of the majority of our major competitors as of the date of this offering circular). We have 181 stores and over 178,037 m² of sales area located throughout Brazil. Our years of experience in different regions of Brazil have allowed us to better understand the characteristics that are particular to each market, such as competition, customer preferences, climate, purchasing power, and the physical characteristics of the population in each region. As a result, we are able to adapt our products and stores to each region of Brazil. Having stores in every region of Brazil also allows us to dilute default risks, since economic crises affect regions differently. We have four strategically located distribution centers that operate close to the largest Brazilian consumer markets and deliver merchandise quickly, efficiently and at a low cost to all our stores. Our current distribution centers are capable of supporting our growing number of stores and business activities since they were designed to accommodate the demands created by our present expansion strategy. Also, among our competitors, we are the only retailer of women’s clothing with an online store that allows us to sell our merchandise in places where we do not own stores.

Flexible credit system. The Marisa Card is an important tool for retaining current customers and increasing our sales and customer base. In addition, the Marisa Card allows us to offer flexible payment conditions and sales promotions to our customers. Through our Marisa Card, our customers have the opportunity to quickly obtain credit through a simple application process. By granting our customers credit, we increase our customer’s short-term purchasing power and, thus, the number of items they are able to purchase. Additionally, we use the information we collect through the Marisa Card database when we design new marketing campaigns, promotions and business strategies.

4 Quality, fashion-oriented products at affordable prices and with attractive margins. We have significant experience selling women’s clothing to middle and middle-lower income customers and designing quality products at affordable prices, inspired by the latest national and international fashion trends. This allows us to offer our fashion-conscious and cost-sensitive target customers products at reasonable prices while obtaining margins that we believe are generally higher than those achieved by our competitors.

Modern stores. Approximately 85% of our stores have been remodeled to meet our current layout standards, which include modern equipment and renovated illumination. More than half of our stores were renovated or opened during 2006 and 2007. Additionally, our gross revenue from sales of merchandise at comparable stores (as defined below) as of the six-month period ended June 30, 2007, was 22.5% higher than our gross revenue from sales of merchandise at comparable stores as of the six-month period ended June 30, 2006; and 18.0% higher as of the year ended December 31, 2006, when compared to the year ended December 31, 2005. Comparable stores are stores that have been operating for over 13 months. When we close a store during a 13- month calculation period, we disregard all its operating and financial data for calculation purposes. As a result of these renovations, our stores will not require significant investments related to remodeling during the next five years.

Qualified and experienced management focused on results. Our senior management consists of highly qualified professionals with experience in the retail and financial markets. The majority of our senior officers have more than 25 years of experience in the retail industry and have worked with us for more than 20 years. Our senior management efficiently administers our information systems and database and consistently seeks to optimize our processes and business potential. We believe our senior management has significantly contributed to our financial and operating results, having been instrumental in increasing our revenue and profitability as well as managing the successful expansion of our business.

Our strategies

Our strategies focus on maintaining our position as the leading clothing retailer in Brazil, sustaining the continued growth of our business and increasing our profitability.

Expansion of our store network. We plan on consolidating our position as one of the largest retailers of women’s clothing in Brazil by taking advantage of the growth potential of our industry and our economies of scale. We will do so by: • Opening new stores. We intend to open new stores after conducting a detailed evaluation of: (1) the population of a given city and potential for consumption by middle- and middle-lower income prospective customers; (2) the proximity of stores we would compete against; and (3) our prospective market share in the city in question. We plan on opening new stores in shopping centers (to take advantage of the increasing presence of middle-lower income consumers in Brazilian shopping centers) and in street-side locations. We also plan to take advantage of our experience operating street stores to identify new strategic potential locations. Given that our current distribution network was designed to support our current expansion strategy, we should be able to expand our business, thus increasing our market share and strengthening our competitive position in the clothing retail market, without a significant increase in our administrative expenses. In 2007, 61.0% of our new stores will be opened in markets where we already operate and 39.0% will be inaugurated in new markets. In the first half of 2007, we increased our sales area by 14,600 m2, of which 11,300 m2 correspond to newly opened stores. We are already committed to expand 16 stores and open 24 new stores during the second half of 2007. These changes and new stores will represent a total of 37,500 m2 in additional sales area, of which 12,900 m2 are related to stores in street locations and 24,700 m2 to stores located in shopping centers. Finally, we have already committed to open three new stores totalling 4,000 m2 in total area in 2008.

5 • Expanding our stores and increasing product diversification. We intend to continue offering Brazilian women the convenience of purchasing clothing for all members of their families at our stores. We plan on increasing the size of our stores and adapting them to our updated store layout standards with sales areas averaging between 1,200 m² and 1,700 m². Historically, implementation of this improved layout has resulted in significant increases in our market share, gross operating revenue and enabled the addition of product lines. In 2004, 2005 and 2006, the gross revenue from sales in our new departments (men’s clothing, children’s clothing, bed, bath and table linens) grew twice as much as the sales in our women’s department. We believe the growth of our revenue was mainly due to our successful incorporation of the new departments because women shop for their families while acquiring products for themselves. • Analyzing acquisition opportunities. We plan on continually monitoring the clothing retail industry and constantly analyzing opportunities for acquisitions and strategic partnerships. We intend to explore selected opportunities for operating in complementary business segments, increasing profitability and gains from scale, and adding value to our shareholders.

Strengthening and expanding our offers of financial products. We intend to develop and offer a greater variety of financial products. We expect that this greater variety of financial products will increase the use of our Marisa Card. We believe these new products will add value to our business while increasing our sales and improving and expanding our customer database, as well as increasing the number of potential customers that come to our stores.

Increasing our productivity and operating efficiency. We believe the expansion of our business activities through the inauguration of new stores, expansion of existing stores and the increased number and variety of products we offer should increase our sales. Our growth should lead to a greater volume of purchase transactions with our current suppliers and possibly purchases from new suppliers, as well as the maximized use of our infrastructure, increasing our productivity and operating efficiency.

Recent events During the fourth quarter of 2006, we undertook some actions in order to increase the number of Marisa Card holders, including liberalizing our approach to the extension of credit and enrollment by gathering less personal information on the new card holders and the third parties involved in the enrollment of new card holders. Credit was granted to a significant number of additional customers with higher levels of credit risk than the average credit history of our previously enrolled card holders.

We do not have not sufficient personnel to address the additional challenges posed by the higher volume of the new card holders which resulted in a higher number of defaults compared to the previous periods. We believe that our credit origination policy may result in additional future losses that may adversely affect our financial condition and our results of operations. We expect to report a loss of approximately R$57.1 million (considering clients that are in default for more than 180 days) or approximately R$58.0 million (considering our doubtful account) for the quarter ended September 30, 2007. For information on Marisa Card and collection policies, see “Business—Marisa Card.”

We recently undertook some actions in order to solve the default, financial and operational issues by (i) eliminating the use of the simplified data record of our Marisa Card holders; (ii) sharing with the stores the responsibility on any problems with the new Marisa Card holders, (iii) increasing the number of credit collection posts from 72 to 162, (iv) using third party service providers to enroll new Marisa Card holders only in the opening of new stores, provided they have the supervision of our Marisa Card coordinators (our employees) and internal auditors, (v) adjusting credit scores and (vi) enhancing auditing actions in stores where we offer Marisa Card enrollments.

6 We have amended certain financial agreements, in order to extend their term and we have entered in new CMN Resolution 2770 financings. As of the date of this offering circular, the total amount borrowed under CMN 2770 financings is R$194.3 million and the maturity dates of these loans now range from October 5, 2007 to March 3, 2008. Additionally, on October 10, 2007, we entered into a credit agreement with Banco Standard de Investimentos S.A., pursuant to which we borrowed US$6.0 million at a post-fixed interest rate of 5.0% per annum plus exchange rate variation, to be used to finance our working capital. In order to hedge our foreign exchange exposure, we entered into a swap agreement with Banco Standard de Investimentos S.A. in the total amount of R$10.7 million. For further information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financing agreements.”

7 THE OFFERING

Issuer ...... Marisa S.A.

Securities offered...... Atotal of 44,000,000 common shares, plus up to an additional 6,600,000 common shares if the over-allotment option described below is exercised, are being offered to: (1) the public in Brazil in accordance with Regulation S, (2) qualified institutional buyers in the United States as defined in Rule 144A of the Securities Act, and (3) institutional and other investors outside the United States and Brazil in accordance with Regulation S.

Offering price...... R$10.00 per common share.

Over-allotment option...... Wehave granted Banco UBS Pactual S.A. an option, exercisable upon consultation with Banco de Investimentos Credit Suisse (Brasil) S.A. to place up to 6,600,000 additional common shares, representing 15% of the common shares initially offered hereby, at the initial offering price, to cover over-allotments, if any, at any time within a period of up to 34 days from the date of the underwriting agreement.

Lock-up agreements ...... We,ourdirectors, Marcio Luiz Goldfarb, Décio Goldfarb, Denise Goldfarb Terpins, our officers and other shareholders have agreed with the agents, subject to certain exceptions, not to sell, offer, contract or agree to sell, pledge or otherwise dispose of directly or indirectly any shares issued by us, or other securities convertible into, or exchangeable for, or that represent the right to receive shares issued by us, except for the over-allotment shares and certain permitted transfers, for a period of 180 days following the date of this offering circular. See “Plan of Distribution.”

In addition, under Novo Mercado regulations, our controlling shareholder, Marcio Luiz Goldfarb, Décio Goldfarb, Denise Goldfarb Terpins, other shareholders and our directors and officers may not sell or offer to sell our common shares, any securities or other derivatives linked to securities issued by us, for six months following the date the common shares begin trading on the Novo Mercado. After the expiration of the initial six-month period, Marcio Luiz Goldfarb, Décio Goldfarb, Denise Goldfarb Terpins and our directors and officers will not be able to sell, offer or dispose of more than 40.0% of their respective holdings for an additional six-month period.

Trading, settlement and clearance ...... Payment for the common shares will be required to be made in reais and U.S. dollars, respectively. We expect the common shares to be delivered via book entry on October 24, 2007. Trades in the common shares on the BOVESPA will be settled through the facilities of the CBLC.

8 Use of proceeds ...... Thenetproceeds from this offering will be approximately R$422.2 million, assuming no exercise of the over-allotment option, after deduction of commissions, as described in “Use of Proceeds.” We intend to use these proceeds as described in “Use of Proceeds.”

Dividends ...... Brazilian Corporate Law and our bylaws require us to distribute at least 25.0% of our annual adjusted net income, as calculated under Brazilian GAAP and Brazilian Corporate Law, unless the payment of dividends is suspended by our board of directors after having concluded that the distribution of dividends would be incompatible with our financial condition. See “Description of Capital Stock.”

Our capital stock before and after the offering ...... Onthedate of this offering circular, our capital stock consisted of 133,903,230 common shares. After the offering, our capital stock will consist of 177,903,230 common shares (assuming no exercise of the over-allotment option).

Transfer restrictions ...... Thecommon shares have not been registered under the Securities Act. These securities are therefore subject to restrictions on transfer as described in “Transfer Restrictions.”

Listing ...... Wehave applied to list our common shares on the Novo Mercado segment of BOVESPA under the symbol “MARI3.” The ISIN number for our common shares is BRMARIACNOR7.

Taxation ...... Dividend distributions with respect to our common shares are not currently subject to withholding of Brazilian income tax. However, payment of interest attributable to shareholders’ equity (in lieu of dividends) is currently subject to withholding of Brazilian income tax. For certain Brazilian and U.S. tax consequences with respect to the acquisition, ownership and disposition of our common shares, see “Taxation.”

Tag-along rights...... Holders of our common shares are entitled to be included in a public tender offer in case our controlling shareholder sells its controlling stake in us. The minimum price to be offered for each common share shall be 100.0% of the price paid per share for the controlling stake. See “Description of Capital Stock.”

Voting rights...... Each common share entitles its holder to one vote at any annual or extraordinary shareholders’ meeting.

Risk factors...... See“Risk Factors” and the other information included in this offering circular for a discussion of the risk factors you should consider before deciding to invest in our common shares.

9 SUMMARY FINANCIAL INFORMATION

This is a summary of our financial statements and other information as of and for the periods indicated. You should read and analyze the information below in conjunction with our combined and consolidated financial statements and related notes included elsewhere in this offering circular, and with the information under “Presentation of Financial and Certain Other Information,” “Selected Financial and Operating Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Combined and consolidated financial information

Our combined financial information related to our balance sheets and income statements as of and for the years ended December 31, 2004, 2005 and 2006 and for the six-month period ended June 30, 2006, and our consolidated financial information related to our balance sheet and income statements as of and for the six-month period ended June 30, 2007, derive from our financial statements, which were prepared in accordance with Brazilian GAAP. Our combined financial information for the years ended December 31, 2004, 2005, and 2006 was audited by Deloitte Touche Tohmatsu Auditores Independentes. Our combined and consolidated financial statements for the six-month periods ended June 30, 2006 and 2007 were specially reviewed by Deloitte Touche Tohmatsu Auditores Independentes.

In order to make the financial figures related to years ended December 31, 2004, 2005 and 2006, as well as the six-month periods ended June 30, 2006 and 2007 comparable to each other, we prepared our consolidated and combined financial statements included elsewhere in this offering circular according to the following guidelines: • our combined audited financial statements as of and for the years ended December 31, 2004, 2005 and 2006 were prepared as if the following companies had been our subsidiaries since January 1, 2004: Due Mille, FIX, Credi-21, TEF, TCM and Primos; • our combined audited financial statements as of and for the years ended December 31, 2004, 2005 and 2006, were prepared as if the following special purpose entities or SPEs had been owned by us since January 1, 2004: Athol, Lógica, Racional, FAX, Ativa, Transfer, and Actio; • our combined financial information as of and for the six-month period ended June 30, 2006 was subject to special review (performed to the extent described in the independent accountants’ review report, in accordance with specific rules established by IBRACON together with CFC) by Deloitte Touche Tohmatsu Auditores Independentes and was compiled as if the abovementioned subsidiaries and SPEs had been our subsidiaries since January 1, 2004; • our consolidated financial information as of and for the six-month period ended June 30, 2007 was subject to special review (performed to the extent described in the independent accountants’ review report, in accordance with specific rules established by IBRACON together with CFC) by Deloitte Touche Tohmatsu Auditores Independentes and was compiled based on our current corporate structure which is described in “Management’s Discussion and Analysis of Financial Condition and Result of Operations”; and • our combined financial statements include our financial statements, the financial statements of our direct and indirect subsidiaries, as well as our SPEs, which are explained in greater detail below. Our consolidated financial statements do not include our SPEs because beginning on January 1, 2007 the operations of the SPEs were fully transferred to Marisa Lojas, except for Actio which was transferred to Credi-21 as of March 1, 2007. Although we have not liquidated these SPEs yet, they are not in operation. For further information on the combination of financial statements of our subsidiaries and SPEs, see “Business—Corporate restructuring.”

10 The financial statements of the subsidiaries listed below are accounted for in our consolidated and combined financial statements in accordance with the following percentages:

Equity Interest (%) Marisa Lojas Varejistas Ltda...... 99.9 Due Mille Participações Ltda...... 99.91 Fix Participações Ltda...... 99.9 Credi-21 Participações Ltda.(1) ...... 99.9 Primos Participações Ltda.(1) ...... 96.1 TCM Participações Ltda.(1)...... 99.4 TEF Serviços de Processamento de Dados Ltda.(1) ...... 94.3

(1) Indirect subsidiaries.

The operations of the SPEs described below were transferred to Marisa Lojas as of January 1, 2007, except for the operations of Actio, which were transferred to Credi-21 as of March 1, 2007. The SPEs have not yet been dissolved. We intend to wind them up in the future. The SPEs were mainly used to carry out our clothing wholesale activities. The SPEs’ shareholders’ equity described in our combined financial statements were recorded as accounts payable in Begoldi’s financial statements for the years ended December 31, 2004, 2005 and 2006, given that prior to the corporate restructuring we held no direct interest in these SPEs. After the transfer of the operations of the SPEs to Marisa Lojas and of January 1, 2007, the interest in these SPEs (except for Actio) was recorded as equity in our financial statements. The financial statements of the SPEs were included in our combined financial statements as provided for in CVM Instruction No. 408/04, because the results of their activities are directly influenced by Marisa Lojas and they were incorporated for the sole purpose of providing services to Marisa Lojas. Currently, the financial statements of the SPEs below are accounted for in our combined financial statements as follows:

Our investments offset proportionally to equity stakes, results, balances of assets and liabilities, unrealized revenue, expenses and results, net of income and social contribution taxes of our subsidiaries and SPEs, arising from intercompany transactions. See “Related Party Transactions.”

Accordingly, these financial statements are referred to as combined financial statements, and were prepared for the purpose of increasing comparability between us and all subsidiaries (direct and indirect) and SPEs. Furthermore, our combined financial statements allow investors to interpret the results as if our subsidiaries (direct and indirect) and SPEs had been under our control since January 1, 2004.

11 the dates indicated, and are not indicative of our future results of operations. You should not rely on our consolidated and combined financial statements for purpose of calculating dividends, taxes, or any other purpose provided by Brazilian Corporate Law. Our combined and consolidated financial statements do not represent the financial statements of any of our subsidiaries or SPEs individually.

Solely for the convenience of the reader, we have translated some of the real amounts contained in this annual report into U.S. dollars at a rate equal (unless otherwise indicated) to R$1.926 to US$1.00, the commercial selling rate on June 30, 2007 as reported by the Central Bank.

12 Income statement data

Year ended December 31, Six-month period ended June 30, Combined Combined Combined Combined Combined Consolidated Consolidated 2004 2005 2006 2006 2006 2007 2007 (in millions, except as otherwise indicated) R$ R$ R$ US$ R$ R$ US$ Gross operating revenue ...... 721.32 977.7 1,299.4 674.7 497.1 743.6 386.1 Sales deductions...... (221.0) (310.1) (424.0) (220.2) (158.5) (232.8) (120.9) Net operating revenue ...... 500.3 667.6 875.4 454.5 338.6 510.8 265.2 Cost of sales and services ...... (282.5) (337.7) (439.6) (228.2) (174.6) (262.9) (136.5) Gross profit ...... 217.8 329.9 435.8 226.3 163.9 247.9 128.7 Operating income (expenses) ..... Selling expenses...... (171.7) (204.3) (305.3) (158.5) (128.7) (178.6) (92.8) General and administrative expenses ...... (47.5) (57.2) (69.9) (36.3) (27.9) (35.9) (18.6) Other operating income (expenses)...... 0.6 (17.5) (13.9) (7.2) 10.2 5.0 2.6 Income (loss) from operations before financial income (expenses), depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property...... (0.9) 50.9 46.7 24.3 17.6 38.4 19.9 Financial income (expenses), net . . (4.9) (9.3) (63.1) (32.8) (42.5) (22.8) (11.8) Income (loss) from operations before depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property ...... (5.7) 41.6 (16.4) (8.5) (24.9) 15.6 8.1 Non operating income (expenses), net...... (8.6) 5.3 5.4 2.8 4.2 (0.3) (0.2) Income (loss) before income and social contribution taxes, depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property ...... (14.3) 46.9 (11.0) (5.7) (20.7) 15.3 7.9 Income and social contribution taxes – current ...... (10.2) (22.8) (18.4) (9.6) (10.1) (5.3) (2.7) Income and social contribution taxes – deferred ...... 5.3 3.5 22.0 11.4 20.8 27.8 14.5 Income (loss) before minority interest, depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property...... (19.2) 27.6 (7.4) (3.9) (10.0) 37.9 19.7 Minority interest in net income before depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property...... (0.3) (18.4) (56.4) (29.2) (18.8) (0.5) (0.3)

13 Year ended December 31, Six-month period ended June 30, Combined Combined Combined Combined Combined Consolidated Consolidated 2004 2005 2006 2006 2006 2007 2007 (in millions, except as otherwise indicated) R$ R$ R$ US$ R$ R$ US$ Income (loss) before depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property ...... (19.5) 9.0 (63.8) (33.1) (28.8) 37.3 19.4 Equity in real estate companies ...... (18.5) 5.7 6.2 3.2 2.1 — — Depreciation of spun-off property and equipment ...... (3.4) (2.7) (1.6) (0.8) (1.3) — — Revenue from rental of spun-off property ...... 1.4 1.6 1.7 0.9 0.9 — — Net income ...... (40.0) 13.8 (57.5) (29.8) (27.1) 37.3 19.4

Balance sheet data At December 31, At June 30, Combined Combined Combined Combined Combined Consolidated Consolidated 2004 2005 2006 2006 2006 2007 2007 (in millions) R$ R$ R$ US$ R$ R$ US$ Assets Current assets Cash and cash equivalents ...... 33.8 60.6 186.1 96.6 79.6 162.3 84.3 Securities ...... 1.2 3.4 81.9 42.5 76.2 81.8 42.5 Trade accounts receivable...... 153.7 241.8 388.3 201.6 240.6 431.5 224.0 Inventories ...... 43.5 74.6 92.8 48.2 93.8 135.2 70.2 Recoverable taxes...... 1.5 11.1 16.1 8.4 10.3 18.6 9.7 Dividends receivable ...... — 1.2 — — — — — Deferred income and social contribution taxes...... — — 6.6 3.4 — 24.7 12.8 Other receivables ...... 6.2 6.7 10.2 5.3 21.3 11.7 6.1 Total current assets...... 239.9 399.4 782.0 406.0 521.8 865.8 449.6 Non-current assets Intercompany receivables ...... 11.7 41.1 9.2 4.8 14.8 1.9 1.0 Deferred income and social contribution taxes...... 20.3 23.6 38.7 20.1 44.9 48.5 25.2 Other receivables ...... 0.4 1.7 4.0 2.1 2.1 9.8 5.1 Property and equipment, net (except spun-off property and equipment)...... 37.9 52.6 144.3 74.9 82.4 160.6 83.3 Intangible assets ...... 3.2 9.7 16.0 8.3 12.5 15.0 7.8 Deferred charges...... 0.3 0.7 1.5 0.8 0.7 5.0 2.6 Total noncurrent assets ...... 73.8 129.4 213.7 111.0 157.4 240.8 125.0 Investments in real estate companies ...... 54.7 60.2 13.1 6.8 60.7 — — Property and equipment, net (spun-off)...... 43.3 39.2 16.4 8.5 38.0 — —

Total assets ...... 411.7 628.2 1,025.2 532.3 777.9 1,106.6 574.6

14 At December 31, At June 30, Combined Combined Combined Combined Combined Consolidated Consolidated 2004 2005 2006 2006 2006 2007 2007 (in millions) R$ R$ R$ US$ R$ R$ US$ Liabilities and shareholders’ equity Current liabilities Trade accounts payable ...... 62.4 106.2 156.6 81.3 97.8 150.9 78.4 Intercompany payables ...... — 19.4 97.1 50.4 17.4 2.3 1.2 Loans and financing...... 55.8 120.2 341.6 177.4 310.4 491.2 255.1 Accrued payroll and related charges ...... 9.0 11.1 18.8 9.8 12.3 19.6 10.2 Taxes payable ...... 35.4 60.8 72.8 37.8 27.1 35.4 18.4 Dividends payable ...... — 3.7 25.9 13.4 0.7 35.5 18.4 Other payables ...... 4.2 6.9 11.4 5.9 7.1 11.1 5.7 Total current liabilities...... 166.8 328.3 724.2 376.0 472.8 746.0 387.4 Non-current liabilities Loans and financing...... 4.1 5.4 176.5 91.6 9.5 223.5 116.1 Reserve for contingencies...... 40.8 50.4 76.6 39.8 78.0 78.8 40.9 Taxes in installments ...... 2.7 2.9 11.8 6.1 2.8 10.7 5.5 Total noncurrent liabilities ...... 47.6 58.7 264.9 137.5 90.3 313.0 162.5 Minority interest ...... 0.1 0.1 1.0 0.6 0.4 1.1 0.6 Shareholders’ equity: Capital ...... 207.6 207.6 41.3 21.4 244.4 44.6 23.1 Treasury shares ...... (2.7) (2.7) — — — — — Legal Reserve ...... — 0.1 — — 0.1 1.9 1.0 Accumulated deficit...... (7.7) (3.4) (6.2) (3.2) (30.0) — — Total shareholders’ equity...... 197.2 201.7 35.1 18.2 214.4 46.5 24.1 Funds for capital increase ...... — 39.4 — — — — — Total shareholders’ equity and funds for capital increase ..... 197.2 241.1 35.1 18.2 214.4 46.5 24.1 Total liabilities and shareholders’ equity ...... 411.7 628.2 1,025.2 532.3 777.9 1,106.6 574.6

15 Other financial data Year ended December 31, Six-month period ended June 30, Combined Combined Combined Combined Combined Consolidated Consolidated 2004 2005 2006 2006 2006 2007 2007 (in millions, except as otherwise indicated) R$ R$ R$ US$ R$ R$ US$ Net operating revenue...... 500.3 667.6 875.4 454.5 338.6 510.8 265.2 Net income (loss) for the period ...... (40.0) 13.8 (57.5) (29.8) (27.1) 37.3 19.4 Income and social contribution taxes – Deferred ...... (5.3) (3.5) (22.0) (11.4) (20.8) (27.8) (14.5) Income and social contribution taxes – Current ...... 10.2 22.8 18.4 9.6 10.1 5.3 2.7 Financial result, net ...... 4.9 9.3 63.1 32.8 42.5 22.8 11.8 EBIT(1) ...... (30.2) 42.4 2.0 1.1 4.7 37.6 19.4 Depreciation and amortization. . . 9.5 12.1 21.2 11.0 9.7 16.9 8.8 EBITDA(2)...... (20.7) 54.5 23.2 12.1 14.4 54.5 28.2 Expenses from depreciation of spun-off property and equipment ...... 3.4 2.7 1.6 0.8 1.3 — — Income (loss) from interest in real estate companies(3) (equity method of accounting) ...... 18.5 (5.7) (6.2) (3.2) (2.1) — — Revenues from rental of spun-off property ...... (1.4) (1.6) (1.7) (0.9) (0.9) — — Minority interest...... 0.3 18.4 56.4 29.3 18.8 0.5 0.3 Non-operating result, net ...... 8.6 (5.3) (5.4) (2.8) (4.2) 0.3 0.2 Adjusted EBITDA(4) ...... 8.7 63.0 67.9 35.3 27.3 55.3 28.7 Adjusted EBITDA margin(5) ...... 1.7% 9.4% 7.8% 7.8% 8.1% 10.8% 10.8%

(1) Pursuant to CVM Circular Notice No. 01/2007, EBIT is profit before deduction of net financial expenses, income and social contribution taxes. (2) Pursuant to CVM Circular Notice No. 01/2007, EBITDA is profit before deduction of net financial expenses, income and social contribution taxes, depreciation and amortization. (3) For further information on our corporate restructuring, real estate companies and organization of our activities, see “Business—Corporate restructuring” and notes Nos. 1, 4 and 11 to our financial statements, included elsewhere in this offering circular. (4) Adjusted EBITDA information provides a measure of our operating economic performance. Adjusted EBITDA is not a measure of financial performance under Brazilian GAAP, and should not be considered individually as a measure of our economic performance or as an indicator of liquidity. Our Adjusted EBITDA consists of EBITDA plus or minus the result from the equity method of accounting interest in real estate companies, revenue from the rental of spun-off property, net non-operating result and minority interests. There is no standard formula for calculating Adjusted EBITDA. Our definition of Adjusted EBITDA and how we calculate it may not be similar to the definition or calculation method of Adjusted EBITDA as used by other companies. For more information on Adjusted EBITDA, see “Presentation of Financial and Certain Other Information,” “Selected Financial and Operating Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” (5) Adjusted EBITDA margin equals Adjusted EBITDA divided by net operating revenue.

16 RISK FACTORS

An investment in our common shares involves a high degree of risk. You should carefully consider all the information set forth in this offering circular, particularly the risks described below, before making an investment decision. Our business, financial condition and results of operations could be materially and adversely affected by any of these risks. The market price of our common shares could decline due to any of these risks or other factors, and you may lose all or part of your investment. The risks described below are those that we currently believe may materially affect us.

Risks relating to Brazil The Brazilian government has exercised, and continues to exercise, significant influence over the Brazilian economy. This involvement, as well as Brazilian political and economic conditions, may adversely affect us and the market price of our common shares. The Brazilian government frequently intervenes in the Brazilian economy and occasionally makes significant changes in policy and regulations. The Brazilian government’s actions to control inflation and other policies and regulations have often involved, among other measures, increases in interest rates, changes in tax policies, price controls, currency devaluations, capital controls and limits on imports. Our business, financial condition and results of operations may be adversely affected by changes in policy or regulations involving or affecting factors such as: • interest rates; • exchange controls and restrictions on remittances abroad, briefly imposed in 1989 and early 1990; • currency fluctuations; • inflation; • liquidity of domestic capital and lending markets; • tax policies and legislation; and • other political, social and economic developments in or affecting Brazil.

Uncertainty over whether the Brazilian government will implement changes in policies or regulations affecting these or other factors in the future may contribute to economic uncertainty in Brazil and to heightened volatility in the Brazilian securities markets.

Inflation and government efforts to combat inflation may contribute significantly to economic uncertainty in Brazil and could adversely affect us. Brazil has in the past experienced extremely high rates of inflation. Inflation, along with government measures to combat inflation and public speculation about possible future government measures, has had significant negative effects on the Brazilian economy, and contributed to economic uncertainty in Brazil and heightened volatility in the Brazilian securities market.

The Brazilian government’s measures to control inflation have often included maintaining a tight monetary policy with high interest rates, thereby restricting the availability of credit and reducing economic growth. As a result, interest rates have fluctuated significantly. For example, as set by the Brazilian Committee on Monetary Policy (Comitê de Política Monetária), or COPOM, the official interest rates in Brazil at the end of 2004, 2005 and 2006 were 17.8%, 18.0% and 13.3%, respectively. The official interest rate set by COPOM as of June 30, 2007, was 12.0% per annum.

17 Future Brazilian government actions, including interest rate decreases, intervention in the foreign exchange market and actions to adjust the value of the real, may trigger increases in inflation. If Brazil experiences high inflation, we may not be able to adjust the prices we charge from our customers to offset the effects of inflation on our cost structure, including increases in the prices of merchandise we buy from our suppliers, which could increase our costs and reduce our net and operating margins.

In addition, high inflation generally results in an increase in interest rates, therefore the cost of our debt denominated in reais could increase, adversely affecting our profits. Furthermore, high inflation and its effect on interest rates may reduce the liquidity of local credit markets, which may negatively affect our ability to negotiate the refinancing of our debt.

Exchange rate instability may adversely affect the Brazilian economy and the market price of our common shares. As a result of several pressures, the Brazilian currency has been devalued periodically in relation to the U.S. dollar and other foreign currencies during the last four decades. Throughout this period, the Brazilian government has implemented various economic plans and utilized a number of exchange rate policies, including sudden devaluations, periodic mini devaluations during which the frequency of adjustments ranged from daily to monthly, floating exchange rate systems, exchange controls and dual exchange rate markets. From time to time, there have been significant fluctuations in the exchange rate between the Brazilian currency and the U.S. dollar and other currencies. For example, the real depreciated against the U.S. dollar 8.5% in 2000, 15.7% in 2001 and 34.3% in 2002. Although the real appreciated 22.3%, 9.0%, 13.5% and 9.4% against the U.S. dollar in 2003, 2004, 2005 and 2006, respectively, there can be no assurance that the real will not depreciate or be devalued against the U.S. dollar again. As of June 30, 2007, the real-U.S. dollar exchange rate was R$1.926 per US$1.00 and as of October 18, 2007 the real-U.S. dollar exchange rate was R$1.807 per US$1.00. Depreciations of the real relative to the U.S. dollar could create additional inflationary pressures in Brazil and lead to increases in interest rates, which may negatively affect the Brazilian economy as a whole, and the market price of our common shares. In addition, depreciations of the real relative to the U.S. dollar may affect our capacity to service the cost of our debt, and our financial condition and results of operations would be adversely affected.

Developments and the perception of risk in other countries, especially emerging market countries, may adversely affect the market price of Brazilian securities, including our common shares. The market value of securities of Brazilian companies is affected to varying degrees by economic and market conditions in other countries, including other Latin American and emerging market countries. Although economic conditions in these countries may differ significantly from economic conditions in Brazil, investors’ reactions to developments in these other countries may have an adverse effect on the market value of securities of Brazilian issuers. Crises in other emerging market countries could diminish investor interest in securities of Brazilian issuers, including ours. This could adversely affect the market price of our common shares, and could also make it more difficult for us to access the capital markets and finance our operations in the future on acceptable terms or at all.

Risks relating to the clothing retail industry The clothing retail industry is affected by reductions in the purchasing power of lower-income consumers and unfavorable economic cycles. Historically, the clothing retail industry in Brazil has been susceptible to economic downturns that reduced consumer spending. The success of our operations depends largely on factors relating to the maintenance or increase of consumer spending, especially by members of the middle-lower income socioeconomic group. Factors that affect income, such as interest rates, inflation, availability of consumer credit, taxation, employment levels, consumer confidence and salary levels have a significant impact on the lower-income population, which is particularly sensitive to these factors. Since particularly our target customers are from these socioeconomic groups, our results of operations could be adversely affected by unfavorable economic cycles.

18 The impact of economic instability and crises in developing countries negatively affects the whole population. However, this impact is more significant on the female population than on the male one. Recent studies show that women, especially those from lower-income households, suffer financially more than their male counterparts during economic downturns. This is especially true of women’s incomes in the informal or housework sector—sectors that are almost exclusively the preserve of lower-income women.

In light of the disproportionate impact an economic crisis could have on our target market and the fact that clothing purchases are likely to be considered superfluous during periods of household-spending adjustment, an economic downturn could discourage customers from making purchases or limit their ability to finance their purchases. A reduction in the demand for our products could adversely and materially affect us and the market value of our common shares.

The clothing retail industry in Brazil is characterized by intense and increasing competition. The clothing retail industry in Brazil is highly competitive. Competition is characterized in several ways, including product variety and quality, the number and location of stores, advertising, prices and discounts, customer service, reputation and the availability of consumer credit. We have many different regional, national and international competitors, including other department stores, specialty stores and discount stores. We also face competition from retailers who are located in neighborhoods where the majority of the residents belong to the middle-lower income socioeconomic group. These retailers often take advantage of the inefficiency of the tax and legal systems in Brazil and the authorities’ failure to enforce compliance with the law, especially tax, labor and social security laws. We also compete with other retailers, especially in shopping centers. If we are unable to surpass our competitors in this competition, we could be materially and adversely affected.

Our sales are affected by seasonal fluctuations. Seasonal fluctuations affect our clothing sales. Prolonged periods of high temperatures during the winter or cold conditions during the summer may adversely affect our ability to sell our store inventory. These unforeseen events may force us to sell excess inventory at discounted prices, a measure that could materially and adversely affect us.

Furthermore, our sales peak during the weeks before Mother’s Day (the second Sunday in May) and during the weeks leading up to and right after Christmas. We increase our inventory during these periods to meet the increased demand for our products. If there is an economic downturn that reduces demand for non-essential goods, such as clothing, or if we incorrectly estimate demand for our products during these periods, we could be forced to sell the excess inventory at significantly lower prices than those initially established. This would have a material adverse effect on us and the market value of our common shares.

Risks relating to our business We may not successfully launch new stores. Our growth strategy is based on our ability to successfully open new stores. However, our ability to launch and run new stores depends on various factors we may not control. For example, our competitors may grow, thus increasing the competition for strategic points of sale. In addition, it may also be difficult for us to find appropriate locations to open new stores where there is sufficient demand for our goods and which have attractive demographic and market characteristics. If we are not able to successfully launch new stores we may be materially and adversely affected.

We are exposed to risks associated with the concession of credit. Purchases paid for in installments represent a significant percentage of the income of clothing retail companies in Brazil. We intend to increase the percentage of our sales paid for in installments by stimulating our customers’ use of the Marisa Card. The Marisa Card allows our costumers to choose among installment payment plans that permit them to pay for purchases in up to five monthly payments without interest (so long as payments

19 are made on the respective due dates) or in up to eight installments with interest. During the first half of 2007, 66.2% of our sales were paid by customers using the Marisa Card. As of June 30, 2007, our Marisa Card’s payment default rate was 7.0% of our receivables portfolio. Because of the increase in the number of Marisa Cards we have issued since June 30, 2007 and due to the increased availability of consumer credit in Brazil since 2006, we believe that on December 31, 2007, the Marisa Card’s payment default rate may be as high as 14.8% of the sales paid with the Marisa Card. Additionally, adverse changes in Brazilian economic conditions could lead to an increase in losses and provisions for doubtful allowances as well as customer credit analysis failures and not executing an effective and quick collection of doubtful allowances. If Brazil’s economic conditions worsen, due to reduction in the level of economic activity, devaluation of the Brazilian real, inflation, increases in domestic interest rates or an increase in unemployment rates, a higher percentage of our customers may default in payment which could adversely affect us. Moreover, if we fail to (i) analyze thoroughly our customer credit risks (ii) mitigate our losses; or (iii) quickly and adequately collect payments from defaulting customers, we may have an increase in our doubtful accounts which may exceed our current doubtful account reserves. In addition, we could be adversely affected if demand for consumer credit decreases or if changes in government policy restricts the granting of consumer credit.

We may not react efficiently to changes in fashion trends and consumer preferences. We compete with other clothing retail chains based on price, quality, the variety of our collections, customer service, promotions, location and store layout. We believe that providing our customers with a wide choice of products and superior customer service are our two major challenges. Consumer preferences and fashion trends are volatile and tend to change quickly, especially in relation to women’s clothing. Our financial performance depends on our ability to anticipate and respond quickly to changes in fashion trends and customer preferences. If our products do not reflect customer preferences, the number of our products stored in inventory may increase and we may not be able to sell them at a profitable price. Any significant failure to anticipate, identify and respond to changes in fashion trends could adversely affect our customers’ acceptance of the products we offer and would materially and adversely affect us.

We depend on the continued service of our senior executive officers. Our success depends upon the continued service of our senior executive officers. If we lose the services of one or more of our executive officers, or if one or more of them decide to join a competitor or otherwise compete directly or indirectly with us, our business, results of operations and financial condition could be materially and adversely affected. Additionally, if we lose one or more of our senior executive officers, we will have to attract new, highly qualified professionals. If we are not able to attract or retain qualified professionals, we may not be able to conduct our business successfully.

Our data protection technology systems may be considered outdated when compared to those used by large American or European clothing retail companies. Our information technology systems are not as advanced as those used by large American and European clothing retail companies for data protection and storage. Therefore, we may face greater stability and reliability risks related to data security than those faced by large American and European clothing retail companies. Furthermore, our contingency plans do not guarantee that our activities can be completely or immediately restored in the event of a system failure. If we encounter problems due to the lack of appropriate protection and storage or a comprehensive contingency plan, we could be materially and adversely affected.

Our management is strongly influenced by our controlling shareholder. Our controlling shareholder, Begoldi, leads discussions related to our business strategy. Begoldi is currently owned and controlled by Décio Goldfarb, Marcio Goldfarb and Denise Goldfarb Terpins, who are also part of our senior management. As a result, our controlling shareholder exerts considerable influence over our policies and operations. Begoldi may require us to take certain actions designed to promote its own interests—actions that

20 are not exclusively intended to enhance our business and results of operations. The eventual implementation of such actions may be contrary to our interests and to the interests of our other shareholders and may have a material and adverse effect on us.

Risks related to our common shares Volatility and lack of liquidity in the Brazilian securities markets may substantially limit your ability to sell our common shares at the price and time you desire. Investing in securities that trade in emerging markets, such as Brazil, often involves greater risk than investing in securities of issuers in other countries, and these investments are generally considered to be more speculative in nature. The Brazilian securities market is substantially smaller, less liquid, more concentrated and can be more volatile than major securities markets. For example, the ten largest companies listed on BOVESPA in terms of market capitalization represented approximately 42% of the total market capitalization of all companies listed on BOVESPA as of June 30, 2007. The top ten stocks in terms of trading volume accounted for approximately 50%, 51% and 46% of all stocks traded on BOVESPA in 2004, 2005 and 2006, respectively. We cannot assure you that an active, liquid public trading market for our common shares will develop or be sustained. These factors may limit your ability to sell our common shares at the price and time desired. In addition, the initial offering price per common share determined upon completion of the bookbuilding process may differ from the price per common share after the closing of this offering.

An active and liquid market for our common shares may not develop. There is currently no active and liquid market for our common shares in Brazil. Furthermore, we cannot assure you that a liquid and active market for our common shares will develop or be maintained after this offering. Liquid and active trading markets generally result in lower price volatility and higher efficiency in the performance of sale and purchase orders from persons who have no relationship to the issuer. The liquidity of a securities market is frequently determined by the volume of outstanding shares. The Brazilian capital market is substantially smaller, less liquid, more volatile and concentrated when compared to the main international capital markets. For example, as of June 30, 2007, BOVESPA presented market capitalization of approximately US$1.02 trillion (or R$1.98 trillion), and an average daily trading volume of US$16.07 billion (R$32.64 billion) during the first half of 2007. As a result, holders of our common shares may not be able to sell our common shares at the price and time desired.

Actual or anticipated sales of a substantial number of our common shares after this offering could cause the price of our common shares to decrease. Actual or anticipated sales of a substantial number of our common shares after the completion of this offering could negatively affect the market prices of our common shares. In order to avoid this, we, our controlling shareholder, our shareholders, directors and officers signed lock-up agreements in which they have agreed, subject to certain exceptions, not to issue, transfer, lend, encumber, pledge, or exchange any of our shares, warrants or options, rights, or any securities convertible into, or exercisable or exchangeable for our shares, for 180 days after the date of the offering circular. The exceptions applying to these lock up agreements are related to private transactions carried out under specific circumstances, including transactions involving (1) family members or fiduciary agents, in any event provided the new holder adheres to these lock-up agreements, and (2) the granting and exercise of stock options under our stock option plan. Following termination of these lock-up agreements, our common shares may be freely traded on the stock exchange. The market price of our common shares could drop significantly if we, our controlling shareholder, director or officers decide to sell them or if the market perceives that either we or any of these persons intend to sell them.

We, our board members, executive officers, Marcio Luiz Goldfarb, Décio Goldfarb, Denise Goldfarb Terpins and other shareholders have agreed that, pursuant to the lock-up agreement to be signed on the closing date of this offering and the rules of the Novo Mercado segment of BOVESPA, with certain exceptions, we will not issue, sell, or offer to sell, within an additional period of 180 days following the date of this initial offering

21 and the execution of our lock-up agreement for participation in the Novo Mercado, any of our shares or derivatives underlying these shares. Moreover, under this additional period of lock-up, we and the individuals identified above have agreed not to issue, sell, or offer to sell more than 40.0% of our shares or derivatives underlying these shares. After these lock-up terms expire, the individuals identified above will be able to sell their shares to the public.

We may need additional capital and may elect to obtain it through the issue of securities. This decision may affect the market price of our common shares and result in a dilution of your holdings in our common shares. We may need to obtain additional financial resources in the future through a public or private issue of shares or debt securities, or, if our shareholders so decide, we may obtain additional resources by means of capital increases. Any additional capital obtained by means of a sale of our common shares or an increase in our capital stock may dilute your interest in our common shares. In addition, any additional financing we may need may not be available to us at favorable terms or at all.

There will be a dilution of the book value of our shareholders’ investment. The offering price per share will exceed the book value of our common shares after this offering. Consequently, investors who subscribe for our common shares in this offering will suffer the immediate reduction and substantial dilution in the value of their investment. In addition, to the extent that future stock option plans are exercised, or subscription warrants, debentures convertible into shares and any other securities convertible into, or exchangeable for, our common shares are issued, there may be additional dilution of the value per common share. See “Dilution.”

Our bylaws contain provisions that protect us against hostile takeovers. These provisions may prevent or delay transactions that may be of interest to you. Under certain circumstances, amending our bylaws to eliminate these provisions may also be contrary to the interests of investors. Our bylaws contain provisions that aim to provide protection against hostile takeovers. These provisions require a shareholder (as defined in our bylaws) who holds 15.0% or more of our capital stock (not including involuntary interest increments specified in our bylaws) to conduct a tender offer to purchase all our shares for their fair value within 60 days after the date of purchase or other event leading to the acquisition of the relevant equity interest. The price and conditions under which this tender offer would have to be conducted are set forth in Brazilian Corporate Law, the applicable regulation and our bylaws. These bylaw provisions may prevent or delay takeover attempts and may discourage, delay or prevent mergers or acquisitions that our controlling shareholder would oppose, including those through which our investors would receive a premium. Because these provisions are set forth in our bylaws, they may be eliminated by a decision of shareholders representing a minimum of two-thirds of our voting shares at a meeting convened on the first call and if the meeting is convened on a second call with any number of attending shareholders, any decision in this regard may be taken by shareholders representing a simple majority of our voting shares. In any event, dissenting shareholders would be reimbursed for the value of their common shares and, furthermore, neither we, our controlling shareholder nor the shareholders voting to eliminate these provisions from our bylaws, would be required to conduct a tender offer to purchase the common shares of other holders.

We will continue to be controlled by Begoldi after the completion of this offering, which might mitigate investors’ ability to influence corporate decisions. Following the closing of this offering, Begoldi will hold approximately 54.0% of our voting capital stock and will therefore retain control over us. Thus, according to our bylaws and Brazilian Corporate Law, our controlling shareholder will have the power to control several important corporate matters, including the power to determine the outcome of any action requiring shareholders’ approval and to elect the majority of the members of our board of directors. This control will limit our minority shareholders’ ability to influence corporate decisions. Our controlling shareholder may be interested in pursuing matters or taking actions that could conflict with the interests of our minority shareholders.

22 USE OF PROCEEDS

Based on the initial offering price per share of R$10.00, our net proceeds from the primary offering will be approximately R$422.2 million, assuming no exercise of the over-allotment option, and R$486.3 million, assuming the full exercise of the over-allotment option, in either case after deducting discounts, commissions and estimated offering expenses payable by us. We intend to use our net proceeds for the expansion of the number of our stores, increasing the availability of financing to Marisa Card holders, the modernization of existing stores, sales area expansion, investments in information technology and in our distribution centers.

With regard to the expansion of our stores, expansion of sales area and modernization of our existing stores, 61% of our new stores will be inaugurated in the Brazilian areas in which we already have operations and 39% of the stores we intend to open in 2007 will be opened in places where we are not yet present. During the second half of 2007, we plan on inaugurating 24 new stores and expanding the sales area of 16 existing stores. These changes will result in 37,500 m2 in additional sales area, of which 12,900 m2 will be in street stores and 24,700 m2 in shopping centers. In 2008, we plan on inaugurating three new stores, totaling 4,000 m2 in additional sales area. We believe that the expansion of the sales area and the modernization of our existing stores will increase our product sales revenue.

If the over-allotment option is not exercised, in order to implement our proposed investments, we intend to use the proceeds resulting from our operations, and if these are insufficient, we may resort to incurring debt in order to finance our expenditure plans. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and capital resources,” and “Risk Factors—Risks related to our common shares—We may need additional capital, and may elect to obtain it through the issue of securities. This decision may affect the market price of our common shares and result in a dilution of your holdings in our common shares.”

For more information on how this offering will impact our shareholders’ equity, see “Capitalization” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

23 EXCHANGE RATES

Until March 14, 2005, there were two foreign exchange markets in Brazil, the commercial rate exchange market and the floating rate exchange market. On March 4, 2005, the CMN enacted Resolution No. 3,265, pursuant to which the floating rate market and the commercial market were unified under the denomination “exchange market” as of March 14, 2005. However, as of the date of this offering circular, the Central Bank continues to publish different exchange rates under the denominations preceding the CMN Resolution. The new CMN regulation allows the purchase and sale of foreign currency and the international transfer of reais by any person or legal entity, regardless of the amount, provided, however, the transaction is legal and subject to certain regulatory procedures.

Since 1999, the Central Bank has allowed the real-U.S. dollar exchange rate to float freely, and, since then, the real-U.S. dollar exchange rate has fluctuated considerably. The Brazilian exchange market has been increasingly volatile since the beginning of 2001, and, until early 2003, the value of the real declined relative to the U.S. dollar. The real then appreciated against the U.S. dollar in 2003, 2004, 2005 and 2006. As of December 31, 2006, the exchange rate for U.S. dollars was R$2.138 per US$1.00 and as of June 30, 2007, it was R$1.926 per US$1.00. In the past, the Central Bank intervened occasionally to control movements in foreign exchange rates. We cannot predict whether the Central Bank or the Brazilian government will continue to let the real float freely or will intervene in the exchange rate market by re-imposing a currency band system or other kinds of restrictions. The real may substantially depreciate or appreciate against the U.S. dollar in the future. For more information on these risks, see “Risk Factors—Risks Relating to Brazil.”

The following tables set forth the commercial selling rate, expressed in reais per U.S. dollar (R$/US$), for the periods indicated.

Yearly Year Year-end Average(1) Low High (reais per U.S. dollar) 2002...... 3.533 2.930 2.270 3.955 2003...... 2.889 3.072 2.821 3.662 2004...... 2.654 2.926 2.654 3.205 2005...... 2.341 2.434 2.163 2.762 2006...... 2.138 2.177 2.059 2.371

Monthly Month Period-end Average(2) Low High (reais per U.S. dollar) January 2007 ...... 2.125 2.138 2.125 2.156 February 2007 ...... 2.118 2.097 2.077 2.118 March 2007 ...... 2.050 2.095 2.050 2.139 April 2007 ...... 2.034 2.032 2.023 2.048 May 2007 ...... 1.929 1.982 1.929 2.031 June 2007 ...... 1.926 1.932 1.905 1.964 July 2007 ...... 1.877 1.882 1.844 1.917 August 2007 ...... 1.962 1.993 1.873 2.112 September 2007 ...... 1.839 1.899 1.839 1.964 October (through October 18) ...... 1.807 1.814 1.792 1.828 Source: Central Bank (1) Represents the average of the exchange rates of each trading date. (2) Represents the average of the lowest and highest rates in the month.

Exchange rate fluctuations will affect the U.S. dollar equivalent of the real price of the common shares on BOVESPA as well as the U.S. dollar equivalent of any distributions we make in reais with respect to our common shares.

24 MARKET INFORMATION

General No market existed for our common shares prior to this offering. Nor did any stock market or organized over-the-counter market exist for our common shares prior to this offering. We have not issued or distributed any securities to the public, nor made a public offer for the acquisition of securities of another company.

After the completion of this offering, our common shares will be traded on the BOVESPA. On September 19, 2007, we entered into an agreement to participate in the Novo Mercado segment of the BOVESPA. This agreement will be effective as of the date our shares start trading on the BOVESPA. On this date, we will be deemed to be registered with the Novo Mercado segment of the BOVESPA. Our common shares will be traded under the code “MARI3.” We have not issued any other securities except for the common shares described in the offering circular.

On June 13, 2007, the CVM accepted our registration as a publicly traded company under number 02076-1.

Regulation of the Brazilian securities markets The Brazilian securities markets are principally governed by Law No. 6,385, dated December 7, 1976, by Brazilian Corporate Law, each as amended and supplemented, and by regulations issued by the CVM. The CVM has authority over stock exchanges and the securities markets generally, the CMN and the Central Bank, which has, among other powers, licensing authority over brokerage firms and regulates foreign investment and foreign exchange transactions. These laws and regulations, among others, provide for licensing and oversight of brokerage firms, governance of the Brazilian stock exchanges, disclosure requirements applicable to issuers of traded securities, restrictions on price manipulation and protection of minority shareholders. They also provide for restrictions on insider trading. However, the Brazilian securities markets are not as highly regulated and supervised as the U.S. securities markets or securities markets in some other jurisdictions. Accordingly, any trades or transfers of our equity securities by our officers and directors, our controlling shareholder or any of the officers and directors of our controlling shareholder must comply with the regulations issued by the CVM. See “Description of capital stock—Reporting requirements.”

Under Brazilian Corporate Law, a corporation is either publicly held (companhia aberta), as we are, or closely held (companhia fechada). All publicly held companies are registered with the CVM and are subject to reporting requirements. A publicly held company may have its shares traded on a stock exchange or the over-the-counter market. Shares may also be traded privately, however, abiding by certain limitations.

The Brazilian over-the-counter market consists of direct trades between individuals in which a financial institution registered with the CVM serves as intermediary and might be: (1) organized–with supervision of entities duly authorized by the CVM; or (2) non-organized–without supervision of these entities. No special application, other than registration with the CVM, is necessary for securities of a public company to be traded in this market. The CVM requires that it be given notice of all trades carried out in the Brazilian over-the-counter market by the respective intermediaries.

We have the option to ask that trading in securities on the BOVESPA be suspended in anticipation of a material announcement. Trading may also be suspended on the initiative of the BOVESPA or the CVM, based on or due to, among other reasons, a belief that a company has provided inadequate information regarding a material event or has provided inadequate responses to inquiries by the CVM or the BOVESPA.

Trading in the Brazilian stock markets by non residents of Brazil is subject to certain restrictions under Brazilian law. See “—Investment in our common shares by non residents of Brazil.”

25 Trading on BOVESPA In 2000, the BOVESPA was reorganized through the execution of memoranda of understandings among the Brazilian stock exchanges. The reorganization aimed to increase the competition and liquidity in the Brazilian securities markets, as well as in the regional stock exchanges. Under the memoranda, all securities are now traded only on the BOVESPA.

The BOVESPA has trading sessions conducted from 10:00 a.m. to 5:00 p.m., or from 11:00 a.m. to 6:00 p.m. during daylight savings time in Brazil, in an automated system known as Megabolsa. The BOVESPA also permits trading from 5:45 p.m. to 7:00 p.m., or from 6:45 p.m. to 7:30 p.m. during daylight savings time in Brazil, in an online system known as “after market,” which is connected to traditional and internet brokers. After market trading is subject to regulatory limits on price volatility and on the volume of shares transacted through internet brokers.

Trading on the BOVESPA is significantly less liquid than trading on the New York Stock Exchange or other major exchanges in the world. Although any of the outstanding shares of a listed company may trade on the BOVESPA, in most cases, fewer than half of the listed shares are actually available for trading by the public, the remainder being held by a group, by small groups of controlling persons or by governmental entities. As of June 30, 2007, the total market capitalization of the top ten listed companies represented 42.4% of the total market capitalization of the BOVESPA.

The settlement of transactions involving the trading of securities on the BOVESPA should occur within three business days after the trading date, incurring no adjustments for inflation. As a general rule, the seller should deliver the common shares to the BOVESPA on the second business day after the trading date. The delivery and the payment for common shares are made through the BOVESPA’s independent clearing house, the CBLC.

For a more efficient control of volatility, the BOVESPA adopted a circuit breaker system that suspends trading for 30 minutes to one hour if the BOVESPA indexes should fall below the limits of 10.0% and 15.0%, respectively, vis-à-vis the close of trading on the preceding trading session.

Investment in our common shares by non residents of Brazil Non-Brazilian investors must register their investment in our common shares under Law No. 4,131, dated September 3, 1962, or the CMN No. 2,689 and CVM Instruction No. 325, both as amended. The CMN No. 2,689 affords favorable tax treatment to non-Brazilian investors who are not residents in a tax haven jurisdiction (i.e., countries that do not impose income tax or where the maximum income tax rate is lower than 20.0% or where the laws of that country impose limitations on the disclosure of shareholding composition or the ownership of the investment), as defined by Brazilian tax laws. See “Taxation” for further description of tax benefits extended to non-Brazilian holders who qualify under CMN Resolution No. 2,689.

Under the CMN Resolution No. 2,689, non-Brazilian investors may invest in almost all financial assets and engage in almost all transactions available in the Brazilian financial and capital markets, provided that certain requirements are met. In accordance with the CMN Resolution No. 2,689, the definition of non-Brazilian investor includes individuals, companies, mutual funds and other collective investment entities domiciled or headquartered abroad.

Under the CMN No. 2,689, a non-Brazilian investor must: • appoint at least one representative in Brazil, with powers to perform actions relating to its investment; • appoint an authorized custodian in Brazil for its investment, which must be a financial institution duly authorized by the Central Bank and CVM; • through its representative, register as a non-Brazilian investor with the CVM; and

26 • register its foreign investment with the Central Bank.

Additionally, an investor operating under the provisions of the CMN Resolution No. 2,689 must be registered with the Brazilian internal revenue service pursuant to its Regulatory Instruction of the Brazilian Internal Revenue Service No. 748/07 if an entity, or Regulatory Instruction 461/04, if an individual. This registration process is undertaken by the investor’s legal representative in Brazil.

Securities and other financial assets held by non-Brazilian investors pursuant to the CMN No. 2,689 must be registered or maintained in deposit accounts or under the custody of an entity duly licensed by the Central Bank or the CVM. In addition, securities trading is restricted to transactions carried out in the stock exchanges or through organized over-the-counter markets licensed by the CVM, except for transfers resulting from a corporate restructuring, or occurring upon the death of an investor by operation of law or will.

Corporate governance practices In 2000, the BOVESPA introduced three special trading segments, the Nível 1, Nível 2 and the Novo Mercado segments. Companies that register their shares under these segments agree to follow stricter corporate governance rules and abide by additional reporting requirements than those required by the regulation applicable to the registered companies with the BOVESPA and not registered under Nível 1, Nível 2 and the Novo Mercado segments.

The Novo Mercado segment The Novo Mercado is a special trading segment of the BOVESPA exclusively intended for companies meeting certain requirements and agreeing to adhere to stricter corporate governance rules. Below is a summary of the key points characterizing the Novo Mercado as they apply to us: • the capital stock must be exclusively composed of common shares and the issuance or maintenance of so called founder’s shares is prohibited; • the public float of shares must represent at least 25.0% of the capital stock; • in the event of transfer of control, even if through a series of successive sales, the transfer must be subject to the minority shareholders being granted the same conditions offered to the controlling shareholder, including the same price (tag along), through a tender offer for the acquisition of shares; • the board of directors must be composed of at least five members, of which at least 20.0% should be independent directors elected during the shareholders’ meeting for a term of up to one year, with re-election permitted; • new members of the board of directors and the executive officers must sign an agreement, the Termo de Anuência dos Administradores, before assuming their positions on the board or executive board in which the new directors and executive officers of the company agree to act in accordance with the listing agreement with the Novo Mercado, the Novo Mercado Arbitration Chamber regulations and the Novo Mercado regulations; • a statement of cash flow (both the company’s and consolidated) must be included in the quarterly financial reports and annual financial statements; • all financial statements, related notes and management reports, are disclosed in English and prepared according to Brazilian GAAP and accompanied by additional notes demonstrating the reconciliation of the balance sheet and income statement under Brazilian GAAP with IFRS or U.S. GAAP, respectively, outlining the main differences between each of these accounting principles from the point of view of an independent auditor; • as of the second year after listing the shares on the Novo Mercado, the disclosure of financial statements in English, prepared in accordance with Brazilian GAAP, with a reconciliation note concerning the year-end results and the shareholders’ net equity with U.S. GAAP or IFRS becomes mandatory;

27 • the schedule of corporate events as well as any related amendments should be disclosed annually to the shareholders, by the end of the month of January; • delisting from the Novo Mercado, as well as the decision to cancel the registration as a public company, should be subject to the controlling shareholder’s public tender offer for the acquisition of all of the company’s outstanding shares for a price determined in a valuation report prepared by a specialized institution or company with recognized experience and independent from persons with the power to make decisions within a company, such as directors or the controlling shareholder, in addition to meeting the requirements set forth in Article 1, paragraphs 6 and 8 of Brazilian Corporate Law; and • the company, its controlling shareholder, management and members of the fiscal council should refer to the Novo Mercado Arbitration Chamber to resolve any dispute or controversies that may arise, related to and resulting from the application, validity, effectiveness, interpretation or violation of Brazilian Corporate Law, our bylaws, the rules and regulations of the CMN, the Central Bank, and the CVM, as well as additional rules and regulations applicable to the capital markets, Novo Mercado regulations, the Novo Mercado Arbitration Chamber regulations and the listing agreement with the Novo Mercado.

See “Description of Capital Stock—Reporting requirements” and “Description of Capital Stock—Delisting from the Novo Mercado.”

28 CAPITALIZATION

The table below sets forth our short- and long-term indebtedness, our shareholders’ equity and total capitalization as of June 30, 2007 on an actual historical basis in reais and as adjusted to reflect the receipt of approximately R$422.2 million in net proceeds resulting from this offering (based on an initial offering price of R$10.00 per common share) after deducting discounts, commissions and estimated offering expenses payable by us, assuming no exercise of the over-allotment option.

You should read the table below in conjunction with the information in “Selected Financial and Operating Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our combined financial statements and related notes, included elsewhere in this offering circular. Except as indicated in the table below, since June 30, 2007, there was no material change in our capitalization.

Solely for your convenience, the Brazilian real amounts below have been translated into U.S. dollars at the exchange rate as reported by the Central Bank, on June 30, 2007, of R$1.926 per US$1.00. The U.S. dollar equivalent information should not be construed to imply that the Brazilian real amounts represent, or could have been or could in the future be converted into, U.S. dollars at such rates or at any other rate. See “Presentation of Financial and Certain Other Information” and “Exchange Rates.”

Actual Adjusted(1) R$ US$ R$ US$ (in millions, except as otherwise indicated) Intercompany payables ...... 2.3 1.2 2.3 1.2 Dividends payable ...... 35.5 18.4 35.5 18.4 Short-term loans and financing ...... 491.3 255.1 491.3 255.1 Long-term loans and financing ...... 223.5 122.3 223.5 116.0 Total indebtedness ...... 752.6 390.8 752.6 390.7 Total shareholders’ equity...... 46.5 24.1 468.7 243.3 Total capitalization ...... 799.1 414.9 1,221.4 634.1

(1) As adjusted to reflect the receipt in net proceeds, assuming no exercise of the over-allotment option, and after deducting discounts, commissions and estimated offering expenses payable by us.

29 DILUTION

As of June 30, 2007, our shareholders’ equity was R$46.5 million and our shareholders’ equity per common share was approximately R$0.35. Shareholders’ equity per share represents the total book value of our shareholders’ equity divided by the total number of our issued and outstanding common shares as of June 30, 2007.

After giving effect to the issue of 44,000,000 common shares by us in this offering, assuming no exercise of the over-allotment option, at an initial offering price of R$10.00 per common share, and after deducting discounts, commissions and estimated offering expenses payable by us, our estimated total shareholders’ equity as of June 30, 2007 would be approximately R$468.7 million, or R$2.63 per common share. Assuming the above offering price per common share, this offering would represent, to existing shareholders, an immediate increase in the book value of our shareholders’ equity per common share of R$2.29, whereas to new shareholders it would represent an immediate dilution in the book value of our shareholders’ equity as of June 30, 2007, of R$7.37 per common share. Dilution for this purpose represents the difference between the price per common share paid by investors in this offering and the shareholders’ equity per common share immediately upon completion of this offering.

The price per common share to be paid by investors in this offering is not related to our shareholders’ equity and has been determined during the bookbuilding procedure.

The table set forth below illustrates this dilution:

As of June 30, 2007 Price per share...... R$ 10.0 Shareholders’ equity per share (approximate value) ...... R$ 0.35 Increase in shareholders’ equity per share attributed to new shareholders ...... R$ 2.29 Shareholders’ equity after this offering ...... R$ 2.63 Dilution in net book value per share to new shareholders...... R$ 7.37 Percentage of dilution per share to new shareholders(1)...... 73.65%

(1) Proportionate dilution to new shareholders obtained by means of the division of dilution in net book value per share to new shareholders by the initial offering price per share.

The table set forth above assumes no stock option granted to our employees and management has been exercised as of the date of this offering circular. On April 25, 2007, our board of directors established a stock option plan for our executives and widely-known consultants we hire that provide services to us or our subsidiaries with the purpose of aligning the interests and goals of our executives with our strategies. Under the stock option plan, a stock option may be exercised fully or partially for a specified period of time during the period in which the plan is in effect. Moreover, pursuant to the stock option plan, as of April 25, 2007, our management was authorized to grant options in respect of a total of 892,688 common shares issued by us, or a maximum of 2.0% of our issued shares, within the authorized limit of our capital stock. Moreover, the stock option plan has an indeterminate term of validity, which can be revoked by the shareholders at any time. Any stock acquired under the stock option plan will have the same rights and advantages of the other existing shares.

Additionally, the price for which a stock option may be exercised will correspond to the average market price of our common shares, as determined based on the five BOVESPA trading sessions that precede the date of the stock option agreement, provided that our board of directors, at its discretion and on a case-by-case basis, may agree to a discount of up to 20.0% on the stock option exercise price. The price set under the stock option agreements will be subject to adjustments for inflation calculated according to the variation of the Extended Consumer Price Index (Índice de Preços ao Consumidor Amplo), or IPCA index, accruing between the date of the agreement and the date on which an option is exercised.

30 As of the date of this offering circular, we had not granted stock options, convertible securities or other rights other than the options included in our stock option plan described above, nor had any option to purchase shares, options, convertible securities or other rights other than the options included in our stock option plan been exercised in respect of our shares. As a result, no corresponding adjustment has to be made in our financial statements and neither in shareholders’ equity. See “Management—Stock option plan.”

The exercise of the totality of the options we have extended would represent a maximum dilution of 2.0% of our capital stock.

The table below sets forth two hypothetical scenarios, bond on our financial statement as of June 30, 2007, on the maximum discount on the price per share that our board of directors may concede under the stock option plan, if implemented, considering the average market price of our common shares based on the initial offering price:

Considering price per share printed in the cover of this Shareholders’ equity offering circular (in million, except as otherwise indicated) Corporate capital ...... R$44,634,410.00 Legal reserve ...... R$ 1,866,591.00 R$46,501,001.00 Common shares issued by us as of the date of this offering circular ...... 133,903,230 Shareholders’s equity value per share ...... R$ 0.35 Total number of option shares...... 2,678,064 Option exercise price ...... R$ 10.00 New shareholders’ equity...... R$73,821,641.00 New shareholders’ equity value per share(1) ...... R$ 0.54 New investor’s estimated dilution in the shareholders’ equity value per share ...... R$ 9.46 % of dilution for new investors(2) ...... 94.6% (1) Based on the initial offering price showed in the cover page of this offering circular. (2) Calculated by the division of new investor’s dilution in the shareholders’ equity value per share by the option exercise price.

For further information on our stock option plan, see “Management—Stock option plan.”

31 Comparative description of price per share with price paid by management, controlling shareholders or holders of options of our shares.

The table below sets forth the subscription events and/or acquisition of our shares by our management, controlling shareholder or holder of options, since the date of our incorporation on August 15, 2006, as well as the price paid per share in these events:

Amount negotiated Event Date per share Subscription of shares at the date of incorporation ...... August 15, 2006 R$1.00 Quota contribution – contribution of quotas representing 99.99% of Marisa Lojas’ corporate capital, 99.99% of Due Mille’s corporate capital and 95.59% of Fix’s corporate capital by Begoldi in exchange for 99.99% of our corporate capital...... December 31, 2006 R$1.00 Capital increase by Begoldi and corporate capital increase paid by the indirect controlling shareholders of Marisa S.A. with 4.41% of Fix quotas ...... March 2, 2007 R$1.00 Corporate capital reduction of Begoldi in the total amount of R$8,882,784.00. Return of capital paid with 8,882,784 shares of our issuance to Marcio Luiz Goldfarb, Denise Goldfarb Terpins and Décio Goldfarb ...... March 27, 2007 R$1.00 Flin’s corporate capital increase paid with contribution of 8,652,777 shares of our issuance held by the indirect controlling shareholders of Marisa S.A...... June 29, 2007 R$1.00

For further information on our recent corporate restructuring, see “Business—Corporate restructuring.”

32 SELECTED FINANCIAL AND OPERATING INFORMATION

This Section contains information regarding our financial statements and other information as of and for the periods indicated. You should read and analyze the information below in conjunction with our combined and consolidated financial statements and accompanying notes included elsewhere in this offering circular, and with “Presentation of Financial and Certain Other Information,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Combined and consolidated financial information Our combined financial information related to our balance sheets and income statements as of and for the years ended December 31, 2004, 2005 and 2006 and six-month period ended June 30, 2006, and our consolidated financial information related to our balance sheet and income statements as of and for the six-month period ended June 30, 2007, derive from our financial statements, which were prepared in accordance with Brazilian GAAP. Our combined financial information for the years ended December 31, 2004, 2005, and 2006 was audited by Deloitte Touche Tohmatsu Auditores Independentes and our combined and consolidated financial statements for the six-month period ended June 30, 2006 and 2007 were specially reviewed by Deloitte Touche Tohmatsu Auditores Independentes.

In order to make the financial figures related to years ended December 31, 2004, 2005 and 2006, as well as the six-month periods ended June 30, 2006 and 2007 comparable to each other, we prepared our consolidated and combined financial statements included elsewhere in this offering circular according to the following guidelines: • our combined audited financial statements as of and for the years ended December 31, 2004, 2005 and 2006 were prepared as if the following companies had been our subsidiaries since January 1, 2004: Due Mille, Marisa Lojas, FIX, Credi-21, TEF, TCM and Primos; • our combined audited financial statements as of and for the years ended December 31, 2004, 2005 and 2006, were prepared as if the following special purpose entities or SPEs had been owned by us since January 1, 2004: Athol, Lógica, Racional, FAX, Ativa, Transfer and Actio; • our combined financial information as of and for the six-month period ended June 30, 2006 was subject to special review (performed to the extent described in the independent accountants’ review report, in accordance with specific rules established by IBRACON together with CFC) by Deloitte Touche Tohmatsu Auditores Independentes and was compiled as if the abovementioned subsidiaries and SPEs had been our subsidiaries since January 1, 2004; • our consolidated financial information as of and for the six-month period ended June 30, 2007 was subject to special review (performed to the extent described in the independent accountants’ review report, in accordance with specific rules established by IBRACON together with CFC) by Deloitte Touche Tohmatsu Auditores Independentes and was compiled based on our current corporate structure which is described in “Management’s Discussion and Analysis of Financial Condition and Result of Operations”; and • our combined financial statements include our financial statements, the financial statements of our direct and indirect subsidiaries, as well as our SPEs, which are explained in greater detail below. Our consolidated financial statements do not include our SPEs because beginning on January 1, 2007 the operations of the SPEs were fully transferred to Marisa Lojas, except for Actio which was transferred to Credi-21 as of March 1, 2007. Although we have not liquidated these SPEs yet, they are not in operation. For further information on the combination of financial statements of our subsidiaries and SPEs, see “Business—Corporate restructuring.”

33 The financial statements of the subsidiaries listed below are accounted for in our consolidated and combined financial statements in accordance with the following percentages:

Equity Interest (%) Marisa Lojas Varejistas Ltda...... 99.9 Due Mille Participações Ltda...... 99.9 Fix Participações Ltda...... 99.9 Credi-21 Participações Ltda.(1)...... 99.9 Primos Participações Ltda.(1) ...... 96.1 TCM Participações Ltda.(1)...... 99.4 TEF Serviços de Processamento de Dados Ltda.(1) ...... 94.3 (1) Indirect subsidiaries.

The operations of the SPEs described below were transferred to Marisa Lojas as of January 1, 2007, except for the operations of Actio, which were transferred to Credi-21 as of March 1, 2007. The SPEs have not yet been dissolved. We intend to wind them up in the future. The SPEs were mainly used to carry out our clothing wholesale activities. The SPEs’ shareholders’ equity described in our combined financial statements were recorded as accounts payable in Begoldi’s financial statements for the years ended December 31, 2004, 2005 and 2006, given that prior to the corporate restructuring we held no direct interest in these SPEs. After the transfer of the operations of the SPEs to Marisa Lojas and of January 1, 2007, the interest in these SPEs (except for Actio) could be recorded as equity in our financial statements. The financial statements of the SPEs were included in our combined financial statements as provided for in CVM Instruction No. 408/04, because that the results of their activities are directly influenced by Marisa Lojas and they were incorporated for the sole purpose of providing services to Marisa Lojas. Currently, the financial statements of the SPEs below are accounted for in our combined financial statements as follows:

Our investments are proportionally offset by equity stakes, results, balances of assets and liabilities, unrealized revenue, expenses and results, net of income and social contribution taxes of our subsidiaries and SPEs, arising from intercompany transactions. See “Related Party Transactions.”

Accordingly, these financial statements are referred to as combined financial statements, and were prepared for purposes of increasing comparability between us and all subsidiaries (direct and indirect) and SPEs. Furthermore, our combined financial statements allow investors to interpret the results as if our subsidiaries (direct and indirect) and SPEs had been under our control since December 31, 2004.

34 consolidated and combined financial statements for purpose of calculating of dividends, taxes, or any other purpose provided by Corporate Law. Our combined and consolidated financial statements do not represent the financial statements of any of our subsidiaries or SPEs individually.

Income statement data

35 Year ended December 31, Six-month period ended June 30, Combined Combined Combined Combined Combined Consolidated Consolidated 2004 2005 2006 2006 2006 2007 2007 (in millions, except as otherwise indicated) R$ R$ R$ US$ R$ R$ US$ Net income (loss) before minority interest, depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property ...... (19.2) 27.6 (7.4) (3.9) (10.0) 37.9 19.7 Minority interest in net income before depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property ...... (0.3) (18.4) (56.4) (29.2) (18.8) (0.5) (0.3) Net income (loss) before depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property ...... (19.5) 9.0 (63.8) (33.1) (28.8) 37.3 19.4 Equity in real estate companies ...... (18.5) 5.7 6.2 3.2 2.1 — — Depreciation of spun-off property and equipment ...... (3.4) (2.7) (1.6) (0.8) (1.3) — — Revenue from rental of spun-off property ...... 1.4 1.6 1.7 0.9 0.9 — — Net income (loss) after depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property ...... (40.0) 13.8 (57.5) (29.8) (27.1) 37.3 19.4

36 Balance sheet data At December 31, At June 30, Combined Combined Combined Combined Combined Consolidated Consolidated

2004 2005 2006 2006 2006 2007 2007 (in millions, except as otherwise indicated) R$ R$ R$ US$ R$ R$ US$ Assets Current Assets Cash and cash equivalents...... 33.8 60.6 186.1 96.6 79.6 162.3 84.3 Securities ...... 1.2 3.4 81.9 42.5 76.2 81.8 42.5 Trade accounts receivable...... 153.7 241.8 388.3 201.6 240.6 431.5 224.0 Inventories ...... 43.5 74.6 92.8 48.2 93.8 135.2 70.2 Recoverable taxes...... 1.5 11.1 16.1 8.4 10.3 18.6 9.7 Dividends receivable ...... — 1.2 — — — — — Deferred income and social contribution taxes ...... — — 6.6 3.4 — 24.7 12.8 Other receivables ...... 6.2 6.7 10.2 5.3 21.3 11.7 6.1 Total current assets...... 239.9 399.4 782.0 406.0 521.8 865.8 449.6 Non-current assets Intercompany receivables ...... 11.7 41.1 9.2 4.8 14.8 1.9 1.0 Deferred income and social contribution taxes ...... 20.3 23.6 38.7 20.1 44.9 48.5 25.2 Other receivables ...... 0.4 1.7 4.0 2.1 2.1 9.8 5.1 Property and equipment, net (except spun-off portion) 37.9 52.6 144.3 74.9 82.4 160.6 83.3 Intangible assets ...... 3.2 9.7 16.0 8.3 12.5 15.0 7.8 Deferred charges...... 0.3 0.7 1.5 .8 0.7 5.0 2.6 Total noncurrent assets ...... 73.8 129.4 213.7 111.0 157.4 240.8 125.0 Investments in real estate companies .... 54.7 60.2 13.1 6.8 60.7 — — Property and equipment, net (spun-off) . . 43.3 39.2 16.4 8.5 38.0 — — Total assets 411.7 628.2 1,025.2 532.3 777.9 1,106.6 574.6 Liabilities and shareholders’ equity Current liabilities Trade accounts payable ...... 62.4 106.2 156.6 81.3 97.8 150.9 78.4 Intercompany payables ...... — 19.4 97.1 50.4 17.4 2.3 1.2 Loans and financing ...... 55.8 120.2 341.6 177.4 310.4 491.2 255.1 Accrued payroll and related charges ..... 9.0 11.1 18.8 9.8 12.3 19.6 10.2 Taxes payable ...... 35.4 60.8 72.8 37.8 27.1 35.4 18.4 Dividends payable ...... — 3.7 25.9 13.4 0.7 35.5 18.4 Other payables...... 4.2 6.9 11.4 5.9 7.1 11.1 5.7 Total current liabilities...... 166.8 328.3 724.2 376.0 472.8 746.0 387.4 Non-current liabilities Loans and financing ...... 4.1 5.4 176.5 91.6 9.5 223.5 116.1 Reserve for contingencies ...... 40.8 50.4 76.6 39.8 78.0 78.8 40.9 Taxes in installments ...... 2.7 2.9 11.8 6.1 2.8 10.7 5.5 Total noncurrent liabilities ...... 47.6 58.7 264.9 137.5 90.3 313.0 162.5 Minority interest 0.1 0.1 1.0 0.6 0.4 1.1 0.6 Shareholders’ Equity Capital ...... 207.6 207.6 41.3 21.4 244.4 44.6 23.1 Treasury shares ...... (2.7) (2.7) — — — — — Legal reserve ...... — 0.1 — — 0.1 1.9 1.0 Accumulated deficit ...... (7.7) (3.4) (6.2) (3.2) (30.0) — — Total shareholders’ equity...... 197.2 201.7 35.1 18.2 214.4 46.5 24.1 Funds for capital increase ...... — 39.4 — — — — — Total shareholders’ equity and funds for capital increase ...... 197.2 241.1 35.1 18.2 214.4 46.5 24.1 Total liabilities and shareholders’ equity...... 411.7 628.2 1,025.2 532.3 777.9 1,106.6 574.6

37 Other financial data

Year ended December 31, Six-month period ended June 30, Combined Combined Combined Combined Combined Consolidated Consolidated 2004 2005 2006 2006 2006 2007 2007 (in millions, except as otherwise indicated) R$ R$ R$ US$ R$ R$ US$ Net operating revenue..... 500.3 667.6 875.4 454.5 338.6 510.8 265.2 Net income (loss) for the year ...... (40.0) 13.8 (57.5) (29.8) (27.1) 37.3 19.4 Income and social contribution taxes – Deferred...... (5.3) (3.5) (22.0) (11.4) (20.8) (27.8) (14.5) Income and social contribution taxes – Current ...... 10.2 22.8 18.4 9.6 10.1 5.3 2.7 Financial result, net ...... 4.9 9.3 63.1 32.8 42.5 22.8 11.8 EBIT(1) ...... (30.2) 42.4 2.0 1.1 4.7 37.6 19.4 Depreciation and amortization ...... 9.5 12.1 21.2 11.0 9.7 16.9 8.8 EBITDA(2)...... (20.7) 54.5 23.2 12.1 14.4 54.5 28.2 Expenses from depreciation of spun-off property and equipment ...... 3.4 2.7 1.6 0.8 1.3 — — Income (loss) from the equity method of accounting interest in real estate companies(3) ...... 18.5 (5.7) (6.2) (3.2) (2.1) — — Revenues from rental of spun-off property ...... (1.4) (1.6) (1.7) (0.9) (0.9) — — Minority interest ...... 0.3 18.4 56.4 29.3 18.8 0.5 0.3 Non-operating result, net.... 8.6 (5.3) (5.4) (2.8) (4.2) 0.3 0.2 Adjusted EBITDA(4) ...... 8.7 63.0 67.9 35.3 27.3 55.3 28.7 Adjusted EBITDA Margin(5) ...... 1.7% 9.4% 7.8% 7.8% 8.1% 10.8% 10.8% (1) Pursuant to CVM Circular Notice No. 01/2007, EBIT is profit before deduction of net financial expenses, income and social contribution taxes. (2) Pursuant to CVM Circular Notice No. 01/2007, EBITDA is profit before deduction of net financial expenses, income and social contribution taxes, depreciation and amortization. (3) For further information on our corporate restructuring, real estate companies and organization of our activities, see “Business—Corporate restructuring” and notes Nos. 1, 4 and 11 to our financial statements, included elsewhere in this offering circular. (4) Adjusted EBITDA information provides a measure of our operating economic performance. Adjusted EBITDA is not a measure of financial performance under Brazilian GAAP, and should not be considered individually as a measure of our economic performance or as an indicator of liquidity. Our Adjusted EBITDA consists of EBITDA plus or minus the result from the equity method of accounting interest in real estate companies, revenue from the rental of spun-off property, net non-operating result and minority interests. There is no standard formula for calculating Adjusted EBITDA. Our Adjusted EBITDA and how we calculate it may not be similar to the definition or calculation method of Adjusted EBITDA used by other companies. For more information on Adjusted EBITDA, see “Presentation of Financial and Certain Other Information,” “Selected Financial and Operating Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” (5) Adjusted EBITDA margin is Adjusted EBITDA divided by net operating revenue.

38 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following analysis should be read in conjunction with our combined and consolidated financial statements and accompanying notes included elsewhere in this offering circular, as well as with the financial and operating information presented in the sections “Presentation of Financial and Certain Other Information,” “Summary of Financial and Operating Information” and “Selected Financial and Operating Information.” Our combined and consolidated financial statements were prepared in accordance with Brazilian GAAP which differs in certain significant respects from U.S. GAAP and were audited or subject to special review by Deloitte Touche Tohmatsu Auditores Independentes.

The financial statements used in preparation of this section were prepared using estimates and judgments that affect the reported amounts of our assets, liabilities, revenues and expenses as of and for the years indicated. Our actual results may differ in material respects from those discussed in these estimates as a result of various factors affecting our business, including, without limitation, those set forth in “Forward-Looking Statements,” and “Risk Factors.”

Overview We are the largest Brazilian department store chain specialized in women’s clothing based on the number of stores published by our major competitors on their websites. Our business strategy and operations focus primarily on middle-lower income women between the ages of 20 and 35 who shop at our stores both for themselves and their families. Our target customers are members of the largest socioeconomic group in Brazil, according to ABEP. We design and sell at competitive prices a wide variety of merchandise that reflects current national and international fashion trends. Our products are sold primarily under our brands “Marisa” and are displayed in our stores according to “lifestyle” categories.

Our major source of revenue is the sale of women’s, children’s and men’s clothing as well as bed, bath and table linens. Our gross operating revenue as of June 30, 2007 was R$743.6 million, R$713.4 million of which, or 95.9%, represents product sales. We also earn revenue from fees and services related to (a) the Marisa Card, such as billing and late payment fees as well as the sale of insurance and (b) logistics provided by Due Mille to Marisa Lojas with regard to clothes hangers. Our gross operating revenue related to services and fees was R$30.2 million as of June 30, 2007, or 4.1% of our gross operating revenue.

We display our products according to the concept of “lifestyle” categories. For example, we classify women’s clothing as young, contemporary, classic, surf, sporting or beach wear. Women’s lingerie is presented as young, contemporary, sensual or classic. We classify men’s clothing as young, contemporary, casual or business casual. Children’s clothing is presented according to age group, from one to three, four to eight and ten to sixteen years of age.

Furthermore, we have invested in visual merchandising to stimulate purchases of complementary products and adopted the concept of “freshness,” which aims at constantly attracting customers to our stores. Our clothing design department is prepared to produce new additions to our collections and our supply chain is prepared to distribute clothing to our stores via regular deliveries every two weeks. This design and distribution system allows our stores to constantly have new and “fresh” products, thereby continuously attracting customers to our stores.

As of December 31, 2004, we had 148 stores, with a total area of approximately 94,700 m2.By December 31, 2006, we had 166 stores, with a total area of approximately 152,400 m2, representing an increase in our total sales area of approximately 57,700 m2. In 2006, our net revenue increased 32.3% from R$500.3 million on December 31, 2004 to R$875.4 million on December 31, 2006.

39 The table below sets forth our principal consolidated financial and operating data for the periods indicated: Year ended December 31, Six-month period ended June 30, 2004 2005 2006 2006 2006 2007 2007 (in millions, except as otherwise indicated) R$ R$ R$ US$ R$ R$ US$ Gross operating revenue ...... 721.3 977.7 1.299.4 674.7 497.1 743.6 386.1 Net operating revenue ...... 500.3 667.6 875.4 454.5 338.6 510.8 265.2 Income (loss) from operations before financial earnings, depreciation of spun-off property and equipment, results from the equity method of accounting interest in real estate companies and revenue from lease of spun-off real property(1) ...... (0.8) 50.9 46.7 24.3 17.6 38.4 19.9 Net income (loss) from operations before minority interests, depreciation of spun-off property and equipment, results from the equity method of accounting interest in real estate companies and revenue from lease of spun-off real property ...... (19.2) 27.6 (7.4) (3.8) (10.0) 37.9 19.7 Net income (loss) from operations after depreciation of spun-off property and equipment, results from the equity method of accounting interest in real estate companies and revenue from lease of spun-off real property...... (40.0) 13.8 (57.5) (29.8) (27.1) 37.3 19.4 Adjusted EBITDA(2) ...... 8.7 63.0 67.9 35.3 27.3 55.3 28.7 Gross margin (%)(3) ...... 43.5% 49.4% 49.8% 49.8% 48.4% 48.5% 48.5% Adjusted EBITDA margin (%)(4)...... 1.7% 9.4% 7.8% 7.8% 8.1% 10.8% 10.8% Short-term Indebtedness ...... 55.8 120.2 341.6 177.3 310.4 491.2 255.1 Long-term Indebtedness ...... 4.1 5.3 176.5 91.6 9.5 223.5 116.1 Number of stores ...... 148 149 166 166 152 175 175 Total sales area (m2) ...... 94,696 107,057 152,412 152,412 116,728 167,047 167,047 Average sales area (m2)...... 639.8 718.5 918.1 918.1 767.9 954.6 954.6 Average sales in installments ticket includinginterest...... 112.1 127.4 119.9 62.2 121.6 110.2 57.2 Average sales in installments ticket excluding interest...... 87.8 91.0 90.1 46.8 82.7 89.8 46.6 (1) For further information on our corporate restructuring, real estate companies and organization of our activities, see “Business—Corporate restructuring” and notes Nos. 1, 4 and 11 to our financial statements, included elsewhere in this offering circular. (2) Adjusted EBITDA is a measure of our operating economic performance. Adjusted EBITDA is not a measure of financial performance under Brazilian GAAP and should not be considered individually as a measure of our economic performance or as an indicator of liquidity. Our Adjusted EBITDA consists of EBITDA plus or minus the result from the equity method of accounting interest in real estate companies, revenue from the lease of spun-off property, net non-operating result and minority interests. There is no standard formula for calculating Adjusted EBITDA. Our Adjusted EBITDA may not be similar to the definition or calculation method of Adjusted EBITDA used by other companies. See “Presentation of Financial and Certain Other Information,” “Summary Financial Information” and “Selected Financial and Operating Information.”

40 (3) Gross margin is gross income divided by net operating income. (4) Adjusted EBITDA margin is adjusted EBITDA divided by our net operating revenue.

Recent corporate restructuring In preparation for this offering, we underwent a corporate restructuring to: • form a new holding company held by Begoldi that would centralize our clothing retail activities and the management of the Marisa Card; • simplify our organizational structure; and • transfer all assets not related to our core business (clothing retail and the Marisa Card) to a subsidiary held by Begoldi and the indirect controlling shareholders of Marisa S.A. This was accomplished by transferring the real estate activities that were overseen by Marisa Lojas to Credi-21.

Set forth below is a diagram of our organizational structure prior to our corporate restructuring and this offering:

R.T.M PARTICIPAÇÕES TWISTER PARTICIPAÇÕES M.G. PARTICIPAÇÕES LTDA. LTDA. LTDA.

33.3%(1) 33.3%(1) 33.3%(1)

BEGOLDI COMÉRCIO PARTICIPAÇÃO E ADM. S.A. 99.9%

DUE MILLE FIX PARTICIPAÇÕES ATHOL MARISA LOJAS COM. ATAC. ART. VEST PARTICIPAÇÕES LTDA. VEREJISTAS LTDA. LTDA. E COMPLEM. LTDA.

99.9% 99.9% LÓGICA TEF SERVIÇOS DE COM. ATAC. ART. VEST COMPAR MAREASA CREDI-21 PROCESSAMENTO DE E COMPLEM. LTDA. PARTICIPAÇÕES PARTICIPAÇÕES PARTICIPAÇÕES LTDA. LTDA. LTDA. DADOS LTDA.

RACIONAL PENSE ACTIO COM. ATAC. ART. VEST PARTICIPAÇÕES LTDA. PRIMOS PARTICIPAÇÕES TCM PARTICIPAÇÕES PARTICIPAÇÕES E COMPLEM. LTDA. LTDA. LTDA. LTDA.

FAX TRADITIO COM. ATAC. ART. VEST PARTICIPAÇÕES LTDA. E COMPLEM. LTDA.

ATIVA NIX COM. ATAC. ART. VEST PARTICIPAÇÕES LTDA. E COMPLEM. LTDA.

TRANSFER COM. ATAC. ART. VEST NOVAY E COMPLEM. LTDA. PARTICIPAÇÕES LTDA.

(1) These companies are controlled by Denise Goldfarb Terpins, Décio Goldfarb and Marcio Luiz Goldfarb as individuals.

Marisa S.A. was incorporated on August 15, 2006, as a holding company directly held by Begoldi and indirectly held by Denise Goldfarb Terpins, Décio Goldfarb and Marcio Luiz Goldfarb. Marisa S.A. was created to hold the investments of our subsidiaries related to our clothing retail operations. Before the incorporation of Marisa S.A., our clothing retail activities were carried out directly by Begoldi, which also held equity interest in our subsidiaries active in the real estate business.

On December 30, 2006, the capital stock of Marisa Lojas was reduced by R$137,140,102.00. The real estate activities were spun off from other activities and transferred to Flin Participações Ltda., or Flin, a holding company held by Denise Goldfarb Terpins, Décio Goldfarb and Marcio Luiz Goldfarb. The equity interest that Marisa Lojas held in Compar Participações Ltda., Mareasa Participações Ltda. and Actio Participações Ltda., which are real estate companies, was transferred to Begoldi.

41 On December 31, 2006, Begoldi increased our capital stock to R$41.3 million. Begoldi paid the capital increase with shares representing 99.99% of the capital stock of Marisa Lojas, 99.99% of Due Mille and 95.59% of FIX. As a result, Begoldi currently holds 99.9% of our capital stock. In addition, Marisa Lojas, Due Mille and FIX were transferred to us.

On December 31, 2006, we transferred the operating activities of the SPEs described below to our subsidiary Marisa Lojas: • Athol; • Lógica; • Racional; • Ativa; • FAX; and • Transfer

On March 2, 2007, we increased our capital stock. Begoldi contributed R$1,000,000.00 in cash and the indirect controlling shareholders of Marisa S.A. contributed their equity interests in FIX, which totaled 4.41% of its total shares. Also, in March 2007, our controlling shareholder reduced our capital stock by R$8,882,784.00 and paid our shareholders Marcio Luiz Goldfarb, Denise Goldfarb Terpins and Décio Goldfarb with shares issued by us. As a result, the indirect controlling shareholders of Marisa S.A. hold 25.2% of our capital stock and Begoldi holds the remaining 74.8% equity interest as of the date of this offering.

Flin became our shareholder on June 29, 2007, pursuant to a transaction whereby the indirect controlling shareholders of Marisa S.A. subscribed to shares issued by Flin. As consideration for the shares issued by Flin, the indirect controlling shareholders of Marisa S.A. transferred 8,652,777 common shares issued by us to Flin. These 8,652,777 shares corresponded to 19.4% of our capital stock.

On September 20, 2007 our shareholders approved in a special general meeting a 1 to 3 split of our shares. As of that date, we have 133,903,230 issued shares.

We currently hold equity interest in the following companies: • Marisa Lojas: The business purpose of Marisa Lojas is the retail of clothing in general and other items that are commonly found in department stores. Marisa Lojas also imports lingerie, trousers, sweaters, jackets and shirts mainly from Vietnam, China and Bangladesh to Brazil and sells products in Brazil (through the website) and outside Brazil. • Due Mille: Due Mille oversees our logistics related to the transport and distribution of the items we sell at our stores and the clothes hangers used by us. • FIX: FIX operates as a holding company that invests in companies that manage the Marisa Card. The following are currently direct and indirect subsidiaries of FIX: • Credi-21: The main corporate purposes of Credi-21 are the management of the Marisa Card and the holding of equity interest in other companies. • Primos: The main corporate purpose of Primos is to act as an intermediate between customers and insurance companies in the sale of insurance to Marisa Card holders. These insurance companies offer our cardholders life, home and unemployment insurance products. • TCM: TCM gathers data from customers and performs credit analysis for the Marisa Card. • TEF: TEF prints and distributes the Marisa Card monthly bills.

42 The organizational chart set forth below describes our current corporate structure. Percentages represent our interest in the total voting capital of the companies identified below:

R.T.M PARTICIPAÇÕES TWISTER PARTICIPAÇÕES M.G. PARTICIPAÇÕES LTDA. LTDA. LTDA.

33.3% 33.3% 33.3% Décio, Marcio e Denise

BEGOLDI COMÉRCIO FLIN PART. LTDA. PARTICIPAÇÃO E ADM. S.A. (1) 19.4%

74.8%(1)

MARISA S/A

99.9%(2)

(3)

MARISA LOJAS DUE MILLE FIX PARTICIPAÇÕES MAX PARTICIPAÇÕES VAREJISTAS PARTICIPAÇÕES LTDA. LTDA. LTDA. LTDA. (2) 99.9% 100%

CREDI-21 SAX S.A. PARTICIPAÇÕES LTDA. CRÉDITO, FINANCIAMENTO E INVESTIMENTO (2) 99.9%

TEF SERVIÇOS DE PRIMOS PARTICIPAÇÕES TCM PARTICIPAÇÕES PROCESSAMENTO DE LTDA. LTDA. DADOS LTDA.

(1) Décio Goldfarb, Marcio Luiz Goldfarb and Denise Goldfarb Terpins, as individuals, together hold 5.8% of our capital stock. Begoldi and Flin own the remainder of our capital stock. (2) Begoldi holds 0.01% of Marisa Lojas’, Due Mille’s and FIX’s capital stock. (3) Transfer of MAX and SAX to us is subject to prior approval from the Central Bank. We do not expect approval from the Central Bank before the date of this offering circular. See “Business—Corporate Restructuring.”

As a result of our corporate restructuring, we will incur additional expenses of R$2.4 million per year due to an increase in personnel-related expenses in connection with our investor relations department, publishing of corporate documents and other corporate information, and the services of Deloitte Touche Tohmatsu Auditores Independentes, our independent auditors.

Recent events During the fourth quarter of 2006, we undertook some actions in order to increase the number of Marisa Card holders, including liberalizing our credit approach and enrollment by gathering less personal information on the new card holders and contracted third parties for the enrollment of new card holders. Credit was granted to a significant number of additional customers with higher levels of credit risk than the average credit history of our historical enrolled card holders.

We do not have not sufficient personnel to address the additional requirements created by the higher volume of the new card holders which resulted in a higher number of defaults compared to the previous periods. We believe that our credit origination policy may result in additional future losses that may adversely affect our financial condition and our results of operations. We expect to report a loss of approximately R$57.1 million

43 (considering clients that are in default for more than 180 days) or approximately R$58.0 million (considering our doubtful account) for the quarter ended September 30, 2007. For information on Marisa Card and collection policies, please see “Business—The Marisa Card” and “Summary.”

We recently undertook some actions in order to solve the default, financial and operational issues by (i) eliminating the use of minimum data record of our Marisa Card holders; (ii) sharing with the stores the responsibility on any problems with the new Marisa Card holders, (iii) increasing the number of credit collection posts from 72 to 162, (iv) using third party service providers for the gathering of new Marisa Card holders only in the opening of new stores, provided they have the supervision of our Marisa Card coordinators (our employees) and internal auditors, (v) adjusting credit scores and (vi) enhancing auditing actions in stores’ Marisa Card enrollments.

Brazilian macroeconomic environment President Luiz Inácio Lula da Silva took office on January 1, 2003 and was re-elected in October 29, 2006. During his presidency, he has continued to implement the macroeconomic policies put into place by Fernando Henrique Cardoso. He has also implemented fiscal responsibility reforms. As a result, the Brazilian economy has become increasingly stable.

The Brazilian economy improved significantly in 2004. Gross Domestic Product, or GDP, grew by 5.7% compared to 2003 and the average unemployment rate dropped from 12.3% to 11.5% in the main metropolitan regions of the country according to the IBGE. Brazil achieved a public sector primary surplus of 4.2% of the GDP (this figure reflects the new GDP calculation method adopted by the IBGE since March 2007) and a trade surplus of US$34.0 billion in 2004. Average inflation, as measured by the IPCA, was 7.6% and the average Brazilian long-term interest rate (Taxa de Juros de Longo Prazo), or TJLP rate, was 9.8% in 2004. In this same year, the real appreciated by 8.1% against the U.S. dollar. However, the increase in economic activity led to concerns that inflation rates would increase. Therefore the government maintained high interest rates. In addition, the tax burden increased from 32.0% to 32.7% of Brazil’s GDP, according to the Brazilian Internal Revenue Service.

The year 2005 was characterized by accusations of corruption against members of the executive and legislative branches of the Brazilian government and by the Central Bank’s effort to reach the annual inflation target of 4.5%. In order to reach this target, the Central Bank kept interest rates at high levels throughout the year. However, in November 2005 the economic slowdown led the government to reduce the basic interest rate in an attempt to stimulate economic growth. On December 31, 2005, the SELIC was 18.0% per year. The real appreciated by 12.1% against the U.S. dollar. Despite this appreciation, Brazil achieved a trade surplus of US$44.8 billion. The average unemployment rate decreased from 11.5% to 9.8% in the main metropolitan regions of Brazil and the GDP grew 2.9% in 2005 according to the IBGE. Inflation, as measured by the IPCA, was 5.7% and the average TJLP interest rate was 9.8%.

In 2006, the presidential elections did not disturb the macroeconomic environment in Brazil. Despite continuing accusations of corruption against government officials and the resignation of the Minister of Finance, Antônio Pallocci, the real remained strong and appreciated 8.6% against the U.S. dollar. This appreciation did not prevent Brazil from reaching its highest trade surplus ever, in the amount of US$46.1 billion in 2006. Country risk, as measured by the EMBI+ index (Emerging Markets Bond Index Plus), closed the year at 192 points. The average unemployment rate increased from 9.8% in 2005 to 10.0% in 2006 in the main metropolitan regions of Brazil and the GDP grew 3.7% in 2006, according to the IBGE. Inflation, as measured by the IPCA, averaged 3.1% during the year, below the 4.5% target established by the government, and the average TJLP interest rate was 7.9% for the same period.

During the first half of 2007, the rate of economic growth and monetary stability in Brazil increased. During this period, Brazil’s international reserves surpassed the historical mark of US$147.1 billion. Economic growth

44 continued accelerating, supported by further reductions in the SELIC rate, which on June 30, 2007 was 12.0%, and an increase in credit availability. The average unemployment rate decreased from 10.4% on June 30, 2006 to 9.7% on June 30, 2007 in the main metropolitan regions of Brazil, according to the IBGE. Inflation, as measured by the IPCA, closed the six-month period ended June 30, 2007 at 2.1%, and the average TJLP interest rate was 6.5% for the same period.

The table below sets forth GDP growth, inflation, interest rates and the U.S. dollar exchange rate for the periods indicated.

Six-month period Year ended December 31, ended June 30, 2004 2005 2006 2007 GDP growth ...... 5.7% 2.9% 3.7% — Inflation (IGP-M)(1) ...... 12.4% 1.2% 3.8% 1.5% Inflation (IPCA)(2) ...... 7.6% 5.7% 3.1% 2.1% INPC(3) ...... 6.1% 5.1% 2.8% 2.2% CDI(4) ...... 16.2% 19.1% 15.2% 6.0% TJLP(5) ...... 9.8% 9.8% 7.9% 6.5% Appreciation (devaluation) of the real vs. the U.S. dollar in the given one-year period...... 8.1% 12.1% 8.6% 9.7% Exchange rate at year end — US$1.00 ...... R$2.7 R$2.3 R$2.1 R$1.9 Average exchange rate — US$1.00(6) ...... R$2.9 R$2.4 R$2.2 R$2.0 Sources: Fundação Getulio Vargas, Institute for Applicable Economic Research (Instituto de Pesquisa Econômica Aplicada), Central Bank and Bloomberg. (1) Inflation (IGP-M) is the general market price index measured by the Fundação Getulio Vargas. (2) Inflation (IPCA) is the broad consumer price index as measured by the IBGE. (3) The National Consumer Price Index (In´dice Nacional de Preços as Consumidor), or INPC, is disclosed by the IBGE and measures inflation rates for families with a household income between one and eight times the minimum wage in the nine largest metropolitan areas of Brazil, as well as in the capital of Brazil, Brasília, and the city of Goiânia, in the midwestern region of Brazil. As of June 30, 2007, the minimum wage was R$380,000. (4) The certificate of interbank deposit (extra group) (Certificado de Depósito Interbancário extragrupo), or CDI rate, is the average of the fixed rates of interbank deposits for one business day as registered with and settled by the Custody and Settlement Chamber (Câmera de Custódia e Liquidação), or CETIP system. (5) The TJLP is the long-term interest rate published every quarter by the Central Bank. It is an average of the long-term interest rate in the period indicated. (6) Average exchange rate for the period indicated.

Critical accounting policies The preparation of financial statements in accordance with Brazilian GAAP requires our management to use its judgment in determining and recording estimates relating to certain assets, liabilities and other transactions. Our financial statements therefore include various estimates relating to the determination of net income, provisions for doubtful accounts, the residual value of fixed assets, equipment and intangible assets, provision for contingencies and tax losses.

Net income Revenue and expenses are recognized based on the accrual method of accounting. Revenue from sales and the costs related to sales are recorded at the time of sale. Revenue from Marisa Card fees are recorded at the time a customer makes a purchase in one of our stores or online using the Marisa Card. Revenue from other services provided such as rentals is recognized in our net income at the time the rent is due.

45 Provision for doubtful accounts We record provisions for doubtful accounts on the basis of an analysis made by our management of the risks we run with regard to sales receivables (sales’ installment payments), taking into account the history of losses and our sales promotion campaigns, in which we grant our cardholders a longer period of time to pay their Marisa Card bills. These campaigns, in general, allow cardholders to pay for purchases in up to 6-8 monthly installments. Payments that are not due in installments nor under the terms of our campaigns and which are overdue and unpaid for more than 180 days are recorded as losses. We believe that our provisions are sufficient to cover losses related to doubtful accounts. In case this amount is different from the amount of the actual loss, we may need to increase the amounts of our provisions.

Property, equipment and intangible assets Under Brazilian GAAP, the value of property and intangible assets is recorded as the cost of acquisition, formation or construction, net of accumulated depreciation. Depreciation is calculated according to the straight- line method, taking into consideration the estimated useful life of our assets. These calculations are periodically revised in light of new facts and circumstances. The useful life of our property and equipment is also determined according to the useful life period, that is, if our property and equipment are used for more than one period, they must be subject to accelerated depreciation. If we are required to adjust our original assumptions, our expenses regarding depreciation, write-offs due to our obsolescence and the net book value of our property and equipment may be significantly different from each other.

Provisions for contingencies We record provisions for contingencies in our balance sheet in the amount of the probable loss, as estimated by our external counsel, with regard to labor, tax and civil cases. We constantly review the estimates and assumptions underlying our provisions for contingencies based on relevant facts and the circumstances that could have a potential material effect on our results of operations and shareholders’ equity. Although our management believes that our current provisions for contingencies are adequate, the settlement of judicial proceedings may involve amounts that differ from the amounts recorded under provisions for contingencies.

Tax loss Under Brazilian GAAP, the recognition of deferred tax assets arising from tax loss, changes in the tax base for social contribution and temporary differences is based on our history of profitability, on our expected generation of taxable income in the future, and on a technical feasibility study approved by our management. This recognition process involves estimates, which could result in actual different amounts for deferred income and social contribution taxes, since their determination is an inherently inaccurate process.

Main factors that may affect our results of operations and financial condition

Inflation and governmental measures designed to curb inflation Our results of operations and financial performance are influenced by inflation. Most of our costs and expenses are denominated in reais. All of our suppliers and service providers typically increase their prices according to inflation indicators such as the IPCA or IGP-M. In order to preserve our margin, we try to pass on to our customers a part of our costs and expenses through price increases. However, we cannot guarantee that we will be able to pass on to our customers all price increases.

Interest rates Interest rate variations in Brazil may influence our results of operations given that our financial obligations are pegged to variable indicators, such as the CDI and TJLP rates. Any increase in interest rates will result in an increase in our financial expenses, given that we borrow capital at floating rates. Furthermore, there will be a

46 decrease in our net financial results, given that our financial revenue from operations involving the Marisa Card are pegged to fixed interest rates. Therefore, expenses resulting from increases in floating interest rates applicable to the capital we borrow are not passed on to our customers.

Effects of exchange rates on our results of operations and financial condition Variations in exchange rates have little influence on our business since only 4.9% of our sales derive from imported products. However, exchange rate gains or losses may influence our results, especially with regard to losses that may increase our financial expenses.

Seasonality The clothing retail market is significantly influenced by seasonal fluctuations. As a result, our financial results vary considerably from quarter to quarter. For example, in 2004, 2005 and 2006, our average total gross revenue (faturamento) increase compared to the previous quarter was approximately the following: 16% in the first quarter, 24% in the second quarter (due to Mother’s day), 22% in the third quarter (due to Father’s day) and 38% (due to Christmas) in the fourth quarter. See “Business—Historical seasonality of our sales.”

Description of principal line items Gross operating revenue Our major source of revenue is the sale of women’s, children’s and men’s clothing as well as bed, bath and table linens. We also earn revenue from the following services: • the sale of insurance products, Marisa Card billing fees (Marisa Card holders are charged a billing fee in every invoice), late payment fees related to the Marisa Card and gift card (a prepaid promotional private label card that may be purchased and used at our stores by our customers); and • services provided by Due Mille to our suppliers which include mainly the logistics services related to the delivery and re-use of clothes hangers. Due Mille oversees the return of clothes hangers from our stores to our distribution centers where they are used once again to hold new pieces of clothing. Revenue earned by Due Mille is included (consolidated) in our financial statements.

Our gross operating revenue excludes the value of goods exchanged by our customers, which are recorded under deductions, as described below.

Sales deductions The following taxes are included under the line item “sales deductions”:

Tax on the Circulation of Goods and Services (Imposto sobre Circulação de Mercadorias e Serviços), or ICMS A non-cumulative state tax is levied on the value of the item at each step of the production and sales chain, at rates that vary from 7.0% to 19.0%, depending on the state where the product is sold. According to Brazilian ICMS tax law, any ICMS tax paid in the acquisition of raw material or clothing can be used to offset any due ICMS accrued on Marisa’s sales.

Social Integration Program (Programa de Integração Social), or PIS, and the Contribution for the Financing of Social Security (Contribuição para o Financiamento da Seguridade Social), or COFINS PIS and COFINS taxes are federal non-cumulative taxes assessed on our gross operating revenue. Revenue from the sale of our products and services are subject to the PIS tax, at the rate of 1.65%, and to the COFINS tax,

47 at the rate of 7.6%. Notwithstanding, in relation to the revenue from services provided by Due Mille, TCM, Primos, TEF and Actio, PIS and COFINS taxes are calculated on a cumulative basis at the rates of 0.65% for PIS and 3.00% for COFINS. Cumulative basis means that PIS and COFINS taxes will be charged to Due Mille, TCM, Primos, TEF and Actio revenue, as well.

Tax on Services (Imposto sobre Serviços), or ISS ISS is a municipal tax levied on revenue from services, such as the generation of credit card billings, collection of late payments related to the Marisa Card, insurance and logistics. ISS rates vary from 0.5% to 5%.

Exchange of goods The value of the goods exchanged by our customers are recorded under the line item “sales deductions.”

Net operating revenue Net operating revenue equals gross operating revenue after deductions of taxes levied on gross operating revenue and the exchange of goods.

Cost of goods and services Our cost of goods and services consists of the costs of goods purchased, plus inventory losses, the effects of recording adjustments at present value and discounts for advance payments to suppliers.

The cost of services are related to Credi-21’s activities, such as lease of Credi-21 establishments, expenses with mail, telephone, messenger services, electricity, paper used in printing Marisa Card bills, outsourcing of collection services, marketing, logistics and inquiries to the Consumer Protection Service (Serviço de Proteção ao Consumidor), or SPC. The SPC charges a monthly fee in order to allow us to search consumer credit data.

Gross profit Gross profit equals net operating revenue minus the cost of goods sold and the cost of services.

Operating (expenses) income Our operating (expenses) income consists of:

Selling expenses Selling expenses include: expenses related to employees (payroll, any tax charges and benefits), rental payments, condominium fees and property tax (Imposto Predial Territorial Urbano), or IPTU, marketing (promotion fund, gifts, posters, ornamentation and display window decorating, advertising in newspapers, magazines, radio and TV), utilities (water, telephone, electricity and postal services), miscellaneous services (conservation and maintenance, information technology, cleaning, security, consulting and legal services), freight expenses, materials (packaging, office supplies and others), depreciation and amortization expenses, non-fixed assets, transportation vouchers and transportation of valuable items, vehicle leasing and general expenses (fines, insurance, travel, notary and registry, vehicle and other expenses).

General and administrative expenses General and administrative expenses consist of all expenses related to our head offices, such as: expenses with personnel (salaries, any tax charges, benefits), rental and related expenses (lease payments, condominium fees and property tax), public utilities (water, telephone, electricity and postal services), miscellaneous services (conservation and maintenance, information technology, cleaning, security, consulting and legal services),

48 materials (packaging, office supplies and others), depreciation and amortization expenses, taxes and fees, non-fixed assets, vehicle leasing and general expenses (fines, insurance, travel, court expenses, inventory adjustment, notary and registry, vehicle and other expenses).

Other operating income (expenses) Other operating income (expenses) consists of expenses such as: tax, labor and civil contingencies, discounts granted to Marisa Card holders, provisions for doubtful accounts (net of recovery of credits 180-days past due and related to Marisa Card receivables), and financial charges incurred in the raising of funds in the money market to support our credit operations involving the Marisa Card. Other operating income (expenses) consists of revenue from tax credits (Marisa Lojas is a beneficiary of incentives granted under the Development Program of the State of Pernambuco (Programa de Desenvolvimento do Estado de Pernambuco), granted for an indefinite term, in the form of presumed credits of 3.0% of the total of interstate deliveries by our distribution center located in this state) and revenue from financial services related to the Marisa Card: (a) interest accruing payments in up to eight installments, and (b) interest accrued on the late payment of installments and revolving credit.

Financial income (expenses) Financial income (expenses) equals the difference between financial income and financial expenses. Our financial income results from gains and earnings due to exchange variation, and financial investments. Our financial expenses consist of interest related to loans taken out by us, taxes on financial and exchange transactions, Tax on Financial and Foreign Exchange Transactions (Imposto solve Operaçoes Financeiras e Operaçoes de Cámbio), or IOF/Exchange Tax, and the Provisional Tax on Financial Transactions (Contribuição Provisória sobre Movimentação Financeira), or CPMF, and losses from variable income financial investments.

Income (loss) from operations before depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property Net profit equals the difference between operating income before financial result, depreciation of property and equipment spun-off and method of accounting equity interest in real estate companies and financial result. The net profit for the year excludes results from the equity method of accounting equity interest in real estate companies, expenses from depreciation of spun-off property and equipment and revenue from the lease of spun-off properties. The line item income (loss) from operations before depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property exists only because of the combination of the SPEs and the spun-off properties in order to make this income (loss) from years 2004, 2005 and 2006 comparable to future income (loss).

Non-operating income (expenses), net Non-operating income (expenses), net, consists primarily of gains (losses) from the variation (increase or decrease) of our investments (equity) in our subsidiaries.

Income (loss) before income and social contribution taxes, depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property Represents the difference between (a) operating income before income and social contribution taxes, depreciation of spun-off property and equipment, including results from the method of accounting equity interest in real estate companies, and (b) net non-operating income (expenses).

Income and social contribution taxes – current We recorded a provision for current income tax in accounts related to Marisa Lojas and Credi-21 at a rate of 15.0%, plus an additional 10.0% tax on taxable income exceeding R$240,000 per year. We recorded a provision

49 for current social contribution tax at the rate of 9.0% on our taxable income. Additionally, deferred income and social contribution taxes for tax loss carryforwards are disclosed in note No. 10 to our financial statement for the years ended December 31, 2004, 2005 and 2006.

For the companies FIX, Primos, TCM, TEF, Due Mille, Actio, Athol, Lógica, Racional, Ativa, FAX and Transfer, the basis for the calculation of current income and social contribution taxes is established in applicable tax legislation, in accordance with the presumed profit accounting method, at the average rate of 10.8%.

Income and social contribution taxes – deferred Income and social contribution taxes – deferred represent the application of income and social contribution tax rates on (a) temporary differences, and (b) tax losses and negative base for social contribution to be offset against future taxable income. Pursuant to CVM Resolution 273/98 and CVM Ordinance No. 371/02 the deferred taxes are recorded at book values.

Six-month period ended June 30, 2006 compared to the six-month period ended June 30, 2007 Gross operating revenue Our gross operating revenue increased by 49.6%, or R$246.5 million, from R$497.1 million in the six-month period ended June 30, 2006 to R$743.6 million in the six-month period ended June 30, 2007. This increase was primarily due to the higher sales registered after the renovation and/or expansion of 34 stores and the inauguration of 23 stores, which increased our sales area by approximately 50,300 m2, and increased the average sales ticket by 3.6%. Comparable stores (as defined below) that were renovated and/or expanded recorded a 24.0% increase in their gross operating revenue in the six-month period ended June 30, 2007 compared to the six-month period ended June 30, 2006 while stores that have not yet been renovated and/or expanded recorded a 19.2% increase in their gross operating revenue. The term comparable stores refers to our stores that have been operating for over 13 months. If a comparable store closed during the 13 month period, we disregarded all its operating and financial data.

Product sales revenue Our product sales revenue increased by 48.8%, or R$234.0 million, from R$479.4 million in the six-month period ended June 30, 2006 to R$713.4 million in the six-month period ended June 30, 2007. This increase in our product sales revenue was due to a higher volume of items sold in the six-month period ended June 30, 2007, of 39.9%, as a result of: • the expansion and/or renovation of 34 stores and the inauguration of 23 stores. Expansion, renovation and/or inauguration of new stores led to an increase of approximately 50,300 m2 in our sales area and consequently an increase in the number of products sold; and • a 3.7% increase in the average unit price of our products which we calculate by dividing our total gross operating revenue from sales by the total volume of units sold.

In the six-month period ended June 30, 2007 compared to the six-month period ended June 30, 2006, the product sales revenue of children’s clothing, men’s clothing and bed, bath and table linens increased by 110.0%, 82.0% and 27.0%, respectively. These percentages show that we were able to significantly increase the sales of the products that were added to our mix of products according to the expansion strategy initiated in 1999. As the figures below indicate, we were able to increase our sales of men’s and children’s clothing as well as bed, bath and table linens without significantly our sales of women’s clothing (our main product line). For example, in the six-month period ended June 30, 2006 women’s clothing accounted for 85.3% of our product sales revenues, children’s clothing accounted for 5.9%, men’s clothing accounted for 5.0% while bed, bath and table linens accounted for 3.8% of our product sales revenue. In turn, during the six-month period ended June 30, 2007,

50 women’s clothing accounted for 81.6% of our product sales revenue, children’s clothing accounted for 8.5%, men’s clothing accounted for 6.5% while bed, bath and table linens accounted for 3.3% of our product sales revenue.

Revenue from services Our revenue from services increased by 70.6%, or R$12.5 million, from R$17.7 million in the six-month period ended June 30, 2006 to R$30.2 million in the six-month period ended June 30, 2007. This increase was primarily due to an increase in our sales volume in general and the greater number of purchases made by Marisa Card holders, which, in turn, led to an increase in revenue from Marisa Card billing fees, late payment fees and logistics services provided by Due Mille to our suppliers.

Sales deductions Our sales deductions increased by 46.9%, or R$74.3 million, from R$158.5 million in the six-month period ended June 30, 2006 to R$232.8 million in the six-month period ended June 30, 2007. This increase was primarily due to a 67.2%, or R$21.9 million, increase in the number of goods exchanged by our customers. Deductions as a result of goods exchanged accounted for 6.6% of our gross operating revenue in the six-month period ended June 30, 2006 and increased to 7.7% in the six-month period ended June 30, 2007.

Our sales deductions represented 31.9% of our gross operating revenue for the six-month period ended June 30, 2006 and 31.3% of our gross operating revenue for the six-month period ended June 30, 2007. This decrease was primarily due to a 41.6% increase, or R$52.3 million, in sales taxes paid due to higher gross operating revenue recorded for the period.

Net operating revenue Our net operating revenue increased by 50.6%, or R$172.2 million, from R$338.6 million in the six-month period ended June 30, 2006 to R$510.8 million in the six-month period ended June 30, 2007. This increase was primarily due to the 39.9% increase of sales in the six-month period ended June 30, 2007, mainly because of the expansion of 34 stores and the inauguration of 23 new stores (representing a 50,300 m2 increase of our sales area), the 3.6% increase in the sales ticket average price (calculated by dividing our gross operating revenue (product sales revenue) by our total sales).

Cost of goods and services Our cost of goods and services increased by 50.6%, or R$88.3 million, from R$174.6 to R$262.9 million in the six-month period ended June 30, 2006 to, because: • our cost of goods increased by 47.9%, or R$76.7 million, as a result of our higher sales volume for the period from June 30, 2006 to June 30, 2007; • our cost of goods and services represented 47.3% of our net operating revenue for the period ended June 30, 2006 and 46.4% for the six-month period ended June 30, 2007, as a result of fewer price increases, given the low level of inventories of past collections and cost reductions due to scale gains from increased sales at comparable stores and expansion of our total sales area; and • of our total cost of goods and services for the six-month period ended June 30, 2007, our cost of services accounted for 9.9%, or R$26.1 million, resulting in a 79.9% increase when compared to the six-month period ended June 30, 2006. This increase is due to a 39.0% increase in Marisa Card transactions, a 65.0% increase in number of cards issued, a 53.0% increase in the number of the employees hired to work in connection with the Marisa Card, as well an increase of the number of employees working in the collections department and our adoption of a more aggressive follow up with card holders in default. The latter resulted in higher costs related to the use of SPC’s services, collections staff and customer service personnel.

51 Gross profit Our gross profit increased by 51.3%, or R$84.0 million, from R$163.9 million in the six-month period ended June 30, 2006 to R$247.9 million in the six-month period ended June 30, 2007. This increase was primarily due to an increase in our gross operating revenue increased. Even though sales deductions also increased during the six-month period ended June 30, 2007, sales deductions increased less than our gross operating revenue during the same period. Our gross margin remained relatively stable, increasing from 48.4% in the six-month period ended June 30, 2006 to 48.5% in the six-month period ended June 30, 2007.

Operating (expenses) income Our operating expenses increased by 43.2%, or R$63.2 million, from R$146.4 million in the six-month period ended June 30, 2006 to R$209.5 million in the six-month period ended June 30, 2007. This increase was primarily due to an increase in selling expenses, which was partially offset by other operating income.

Selling expenses Our selling expenses increased by 38.8%, or R$49.9 million, from R$128.7 million in the six-month period ended June 30, 2006 to R$178.6 million in the six-month period ended June 30, 2007. This increase was primarily due to an increase in our sales area, from 116,728 m2 as of June 30, 2006 to 167,047 m2 as of June 30, 2007, and in the volume of goods sold, which increased by 39.9% in the six-month period ended June 30, 2007 compared to the six-month period ended June 30, 2006. The increase in our sales area and in the volume of goods sold resulted in an increase of (a) R$19.8 million in personnel expenses, (b) R$15.7 million in leases and related payments, and (c) R$6.8 million in amortization and depreciation expenses. If the increase in expenses resulting from the expansion and opening of new stores was not taken into consideration, our selling expenses would probably have increased by 23.9%.

Our selling expenses represented 38.0% of our net operating revenue in the six-month period ended June 30, 2006 compared to 35.0% in the six-month period ended June 30, 2007. Our improved margin is due to the expansion and inauguration of new stores, when there is a mismatch between revenue and expenses. Over the past three years we have found that, once a store’s sales area is increased, expenses increased at a faster pace than revenue during approximately one year. Therefore, the decrease in our selling expenses margin from 8.2% on June 30, 2006 to 7.0% on June 30, 2007 shows that our management successfully controlled expenses, even in a period of increased expenditures.

With respect to the increase in selling expenses excluding depreciation and amortization expenses, the 64.3% increase in the selling expenses for the six-month period ended June 30, 2007 compared to the six-month period ended June 30, 2006 is mainly due to the expansion and opening of new stores. Similarly, with respect to total depreciation and amortization expenses, the increase in the six-month period ended June 30, 2007 when compared to the six-month period ended June 30, 2006 was mainly due to the expansion and inauguration of stores.

General and administrative expenses Our general and administrative expenses increased by 28.7%, or R$8.0 million, from R$27.9 million in the six-month period ended June 30, 2006 to R$35.9 million in the six-month period ended June 30, 2007. This increase was primarily a result of payments of legal counsel and consulting fees related to this offering. Our general and administrative expenses, as a percentage of our net operating revenue, decreased from 8.2% in the six-month period ended June 30, 2006 to 7.0% in the six-month period ended June 30, 2007, despite the costs we incurred during the latter period as a result of this offering.

Other operating income (expenses) Our other operating income (expenses) decreased R$5.2 million, from R$10.2 million in the six-month period ended June 30, 2006 to R$5.0 million in the six-month period ended June 30, 2007, primarily as a result

52 of: (a) an increase of R$38.0 million in our provision for doubtful accounts due to a higher volume of purchases made by our customers with the Marisa Card and the higher volume of purchases paid for with a credit card that allows customers to pay in up to eight installments. Interest accrued on this total balance, with respect to which we determined losses in the amount of R$14.6 million from January through June 2006 compared to R$53.4 million in the six-month period ended June 30, 2007; and (b) a R$10.8 million increase in expenses related to the higher number of purchases with the Marisa Card. This increase was partially offset by: • a R$27.3 million increase in our revenue from interest on credit sales to be paid in installments. The revenue increase is due to growth of 8.2% in the six-month period ended June 30, 2006 and 20.3% in the six-month period ended June 30, 2007 in the share of credit sales to be paid in up to eight installments, with interest accruing, in the total revenue of the Marisa Card; • a R$4.4 million increase in collection expenses, due to the more aggressive policies we adopted regarding the collection of amounts not paid by our customers on their Marisa Card; and • a decrease of 57.3%, or R$5.9 million, in other operating income provisions, mainly related to the provision of tax contingencies.

Our other operating income (expenses) represented 3.0% of our net operating revenue for the six-month period ended June 30, 2006 compared to 1.0% in the six-month period ended June 30, 2007.

The table below sets forth the fees related to the Marisa Card:

Six-month period ended June 30, 2006 2007 (in R$ millions) Other operating income Interest on payment installments...... 5.8 33.1 Interest charges...... 24.1 24.3 Fines and default charges ...... 4.6 5.3 Total...... 34.5 62.7 Other operating expenses Provision for doubtful accounts, net...... (15.4) (53.4) Financial expenses...... (4.0) (14.8) Total...... (19.4) (68.2)

Financial income (expenses) Our net financial expenses decreased by 46.4%, or R$19.7 million in the six-month period ended June 30, 2007 compared to the six-month period ended June 30, 2006, from R$42.5 million in the six-month period ended June 30, 2006 to R$22.8 million in the six-month period ended June 30, 2007. This decrease was primarily a result of a 12.0%, or R$10.2 million, decrease in financial expenses, from 84.7 million in the six-month period ended June 30, 2006 to R$74.5 million in the six-month period ended June 30, 2007. This decrease is primarily due to a reduction in losses from U.S. dollar-denominated debt and variable income transactions recorded as of June 30, 2006.

We have not invested in variable income financial investments since December 31, 2006. Our financial income decreased by 1.6%, from R$41.2 million in the six-month period ended June 30, 2006 to R$40.6 million in the six-month period ended June 30, 2007. For further information on our cessation of investments in the equity market, see “—Liquidity and capital resources.” Our net financial income represented 12.6% of our net operating revenue for the six-month period ended June 30, 2006 compared to 4.5% in the six-month period ended June 30, 2007.

53 Income (loss) from operations before depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property

Our income (loss) from operations before depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property increased by R$40.5 million, from a loss of R$24.9 million in the six-month period ended June 30, 2006 to an income of R$15.6 million in the six-month period ended June 30, 2007. This increase was primarily due to an increase in our gross profit and improved financial result in the period.

Non-operating income (expenses), net

Our non-operating income (expenses), net decreased by R$4.5 million, from R$4.2 million in income in the six-month period ended June 30, 2006 to R$0.3 million in expenses in the six-month period ended June 30, 2007. This decrease was primarily due to losses we absorbed when we underwent our recent corporate restructuring in 2006.

Income (loss) before income and social contribution taxes, depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property

Our income (loss) before income and social contribution taxes, depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property increased by R$36.0 million, from a loss of R$20.7 million in the six-month period ended June 30, 2006 to R$15.3 million in the six-month period ended June 30, 2007. This increase was primarily due to an increase in our gross operating revenue, a reduction in operational expenses and a 46.4% decrease in financial expenses in the six-month period ended June 30, 2007.

Income and social contribution taxes – current

Our current income and social contribution taxes decreased by 47.5%, or R$4.8 million, from R$10.1 million in the six-month period ended June 30, 2006 to R$5.3 million in the six-month period ended June 30, 2007. This decrease was primarily due to a decrease in taxable income calculated under the actual profit method (regime do lucro real).

Income and social contribution taxes – deferred

Our deferred income and social contribution taxes increased by 34.0%, or R$7.0 million, from R$20.8 million in the six-month period ended June 30, 2006 to R$27.8 million in the six-month period ended June 30, 2007. This increase was primarily due to the accounting of deferred income tax of Credi-21 in 2007 during this period. We expect to be able to use this deferred income tax to annuitize fiscal loans and any eventual negative results.

Income (loss) after depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property

Our income (loss) after depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property increased by R$64.4 million, from a loss of R$27.1 million in the six-month period ended June 30, 2006 to income in the amount of R$37.3 million in the six-month period ended June 30, 2007. This increase was primarily a result of an increase in our gross operating revenue, reduction of operating expenses, decrease of financial expenses, a 47.5% increase of tax payments on actual profit, and a 33.7% increase in deferred taxes.

54 Year ended December 31, 2005 compared with year ended December 31, 2006 Gross operating revenue Our gross operating revenue increased by 32.9%, or R$321.7 million, from R$977.7 million in 2005 to R$1,299.4 million in the year ended December 31, 2006. This increase was primarily due to the higher sales registered after the renovation and/or expansion of our stores.

Product sales revenue Our product sales revenue increased by 32.8%, or R$310.9 million, from R$948.1 million in the year ended December 31, 2005 to R$1,259.0 million in the year ended December 31, 2006. This increase in our product sales revenue was due to an increase in the volume of items sold in the year ended December 31, 2006 of 29.0%, as a result of: • expansion and/or renovation of 36 stores and the inauguration of 18 stores. Expansion, renovation and/or inauguration of stores led to an increase of 45,400 m² in our sales area; and • a 1.9% increase in the average unit price of our products which we calculate by dividing our total gross operating revenue from sales by the total volume of units sold.

In the year ended December 31, 2005 compared to the year ended December 31, 2006, the product sales revenue of children’s clothing, men’s clothing and bed, bath and table linens increased by 95.2%, 82.3% and 57.3%, respectively. These percentages show that we were able to significantly increase the sales of the products that were added to our mix of products as a result of the expansion strategy initiated in 1999. In the year ended December 31, 2006, women’s clothing accounted for 82.0% of our product sales revenue, children’s clothing accounted for 8.1%, men’s clothing accounted for 6.3%, while bed, bath and table linens accounted for 3.6% of our product sales revenue. In turn, during the year ended December 31, 2005, women’s clothing accounted for 86.5% of our product sales revenue, children’s clothing accounted for 6.1%, men’s clothing accounted for 4.3%, while bed, bath and table linens accounted for 3.1% of our product sales revenue.

Revenue from services Our revenue from services increased by 36.6%, or R$10.8 million, from R$29.6 million in the year ended December 31, 2005 to R$40.4 million in the year ended December 31, 2006. This increase was primarily due to an increase in sales, which, in turn, led to an increase in revenue related to the Marisa Card such as billing fees and logistics services provided by Due Mille to our suppliers. Our revenue from services accounted for 3.1% of our total gross operating revenue in the year ended December 31, 2006.

Sales deductions Our sales deductions increased by 36.7%, or R$113.9 million, from R$310.2 million in the year ended December 31, 2005 to R$424.0 million in the year ended December 31, 2006. To some extent, this increase was due to a 33.1%, or R$21.6 million, increase in the number of in goods exchanged by our customers. Deductions as a result of goods exchanged accounted for 6.7% of our gross operating revenue in the year ended December 31, 2006.

Our sales deductions represented 31.7% of our gross operating revenue in the year ended December 31, 2005 and 32.6% of our gross operating revenue in the year ended December 31, 2006. This increase was primarily due to 37.7% increase, or R$92.3 million, in sales taxes paid due to the higher gross operating revenue recorded for the period.

Net operating revenue Our net operating revenue increased by 31.1%, or R$207.9 million, from R$667.5 million in the year ended December 31, 2005 to R$875.4 million in the year ended December 31, 2006, primarily due to an increase in sales and in our average sales ticket.

55 Cost of goods and services Our cost of goods and services increased by 30.2%, or R$101.9 million, from R$337.7 million in the year ended December 31, 2005 to R$439.6 million in the year ended December 31, 2006. This increase was primarily due to the fact that: • our cost of goods increased by 32.9%, or R$100.7 million, from R$305.6 million in the year ended December 31, 2005 to R$406.2 million in the year ended December 31, 2006, as a result of our higher sales volume; • our cost of goods represented 45.8% of our net operating revenue in the year ended December 31, 2005 and 46.4% in the year ended December 31, 2006; and • of our total cost of goods and services in the year ended December 31, 2006, our cost of services accounted for 7.6%, or R$33.3 million, resulting in a 3.8% increase when compared to the year ended December 31, 2005. This increase was due to our higher sales volume, which generated an increase in the revenue from Due Mille’s services related to clothes hangers.

Gross profit Our gross profit increased by 32.1%, or R$106.0 million, from R$329.9 million in the year ended December 31, 2005 to R$435.8 million in the year ended December 31, 2006. This increase was primarily due to an increase of our gross operating revenue and a decrease in the share of costs over the net operating revenue during the period. Our gross margin remained relatively stable, increasing from 49.4% in the year ended December 31, 2005 to 49.8% in the year ended December 31, 2006.

Operating (expenses) income Our operating (expenses) income increased by 39.5%, or R$110.1 million, from R$279.0 million in the year ended December 31, 2005 to R$389.1 million in the year ended December 31, 2006. This increase was primarily a result of an increase in our selling expenses.

Selling expenses Our selling expenses increased by 49.4%, or R$101.0 million, from R$204.3 million in the year ended December 31, 2005 to R$305.3 million in the year ended December 31, 2006. This increase was primarily the result of (a) an increase in the volume of units sold and a 42.3% increase in our sales area, from 107,100 m² as of December 31, 2005 to 152,400 m² as of December 31, 2006, and (b) an increase in the volume of units sold. The increase in our sales area and in the volume of goods sold resulted in an increase of (a) R$32.4 million in personnel expenses, (b) R$12.4 million in leases and related payments, (c) R$8.1 million in advertising and marketing expenses, (d) R$7.5 million in utility expenses, (e) R$7.7 million in expenses related to materials and (f) R$4.6 million in expenses related to the transportation of goods. The increase in our selling expenses compared to our gross operating revenue is due to expenses related to the expansion, renovation and/or inauguration of stores that exceed increases in our gross operating revenue. Our stores have fixed costs which, in turn, normally will not vary considerably over time. In general, when a store is opened, its fixed costs generally are not matched by its sales revenue. Once a store’s sales increase and fixed costs remain the same, fixed costs are diluted.

Our selling expenses represented 30.6% of our net operating revenue in the year ended December 31, 2005 compared to 34.9% in the year ended December 31, 2006.

With respect to the increase in our selling expenses excluding depreciation and amortization expenses, the 34.9% increase in the year ended December 31, 2006, compared to the year ended December 31, 2005, is due to the expansion of our sales area or the inauguration of new stores. Similarly, with respect to the total increase in

56 depreciation and amortization expenses, the 81.9% increase in the year ended December 31, 2006, compared to the year ended December 31, 2005, is due to the expansion in sales area or opening of new stores.

General and administrative expenses Our general and administrative expenses increased by 22.2%, or R$12.7 million, from R$57.2 million in the year ended December 31, 2005 to R$69.9 million in the year ended December 31, 2006. This increase was primarily due to an increase of R$11.3 million in personnel expenses. Our general and administrative expenses as a percentage of our net operating revenue decreased from 8.6% in the year ended December 31, 2005 to 8.0% in the year ended December 31, 2006.

Other operating income (expenses) Our other operating income (expenses) decreased by 20.6%, or R$3.6 million, from an expense of R$17.5 million in the year ended December 31, 2005 to an expense of R$13.9 million in the year ended December 31, 2006, as a result of an increase in the revenue from financial services provided by Credi-21, mainly due to a new extended term of maturity (up to eight installments accruing interest) for the payment of card bills, which accrued interest in the amount of R$20.7 million, and an increase of R$10.7 million in revenue from default charges (interest, fines and other charges). The decrease in the other operating income (expenses) was partially offset by an increase of R$23.8 million in our provision for doubtful accounts due to a higher volume of transactions paid for with the Marisa Card by our customers and the higher volume of purchases paid for with credit cards in general. Our other operating income (expenses) decreased to 1.6% of our net operating revenue in the year ended December 31, 2006, compared to 2.6% in the year ended December 31, 2005.

The table below sets forth our revenue and expenses related to the Marisa Card:

Year ended December 31, 2005 2006 (R$ millions) Other operating income Interest on payment in installments...... — 20.7 Interest charges ...... 37.8 47.1 Fines and default charges ...... 7.7 9.1 Total ...... 45.5 76.9 Other operating expenses Provision for doubtful accounts, net ...... (48.9) (72.7) Financial expenses ...... (19.6) (16.9) Total ...... (68.5) (89.6)

Financial income (expenses) Our net financial expenses decreased by 578.5%, or R$53.8 million, from R$9.3 million in the year ended December 31, 2005 to R$63.1 million in the year ended December 31, 2006. Our financial expenses increased by R$119.9 million, from R$41.7 million in the year ended December 31, 2005 to R$161.6 million in the year ended December 31, 2006, primarily as a result of higher interest paid and adjustments to swaps on bank loans entered into to fund the expansion of our stores. The increase in our financial expenses was partially offset by a R$61.4 million increase in our financial income, primarily as a result of higher gains from our cash fixed-income financial transactions and also positive adjustments to swap transactions. Our net financial income represented 1.4% of our net operating revenue in the year ended December 31, 2005 compared to 7.2% in the year ended December 31, 2006.

57 Income (loss) from operations before depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property Our income (loss) from operations before depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property decreased by R$58.0 million, from an income of R$41.6 million in the year ended December 31, 2005 to a loss of R$16.4 million in the year ended December 31, 2006. This decrease was primarily due to an increase in our operating expenses and financial expenses.

Non-operating income (expenses), net Our non-operating income (expenses), net remained stable at R$5.4 million, from R$5.3 million in income in the year ended December 31, 2005 to R$5.4 million in income in the year ended December 31, 2006.

Income (loss) before income and social contribution taxes, depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property Our income (loss) before income and social contribution taxes, depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property decreased by R$57.9 million, from an income of R$46.9 million in the year ended December 31, 2005 to a loss of R$11.0 million in the year ended December 31, 2006. This decrease was primarily due to an increase in our operating expenses and financial expenses.

Income and social contribution taxes – current Our current income and social contribution taxes decreased by 19.3%, or R$4.4 million, from R$22.8 million in the year ended December 31, 2005 to R$18.4 million in the year ended December 31, 2006. This decrease was primarily due to a decrease in taxable income under the actual profit method (regime do lucro real).

Income and social contribution taxes – deferred Our deferred income and social contribution taxes increased by 528.6%, or R$18.5 million, from R$3.5 million in the year ended December 31, 2005 to R$22.0 million in the year ended December 31, 2006. This increase was primarily due to the increased provisions for tax, labor and civil contingencies, to be deducted from the taxable basis upon the final court decision.

Income (loss) after depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property Our income (loss) after depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property decreased by R$71.3 million, from an income of R$13.8 million in the year ended December 31, 2005 to a loss of R$57.5 million in the year ended December 31, 2006. This decrease was primarily due to an increase in an operating expenses and financial expenses.

Year ended December 31, 2005 compared to year ended December 31, 2004 Gross operating revenue Our gross operating revenue increased by 35.5%, or R$256.3 million, from R$721.3 million in the year ended December 31, 2004 to R$977.7 million in the year ended December 31, 2005.

Product sales revenue Our product sales revenue increased by 35.1%, or R$246.3 million, from R$701.7 million in the year ended December 31, 2004 to R$948.1 million in the year ended December 31, 2005. This increase in our product sales

58 revenue was due to an increase in the volume of items sold in the year ended December 31, 2005 of 15.8%, as a result of: • the expansion and/or renovation of 13 stores and the inauguration of five stores. Expansion, renovation and/or inauguration of stores led to an increase of approximately 12,400 m² in our sales area and consequently an increase in the volume of products sold; and • a 13.4% increase in the average unit price of our products which we calculate by dividing our total gross operating revenue from sales by the total volume of units sold.

In the year ended December 31, 2004 compared to the year ended December 31, 2005, the product sales revenue of children’s clothing, men’s clothing and bed, bath and table linens increased by 45.8%, 73.9% and 54.2%, respectively. These percentages show that we were able to significantly increase the sales of the products that were added to our mix of products as a result of the expansion strategy initiated in 1999. In the year ended December 31, 2005, women’s clothing accounted for 86.5% of our product sales revenue, children’s clothing accounted for 6.1%, men’s clothing accounted for 4.3%, while bed, bath and table linens accounted for 3.1% of our product sales revenue. In turn, during the year ended December 31, 2004, women’s clothing accounted for 89.8% of our product sales revenue, children’s clothing accounted for 4.9%, men’s clothing accounted for 2.9%, while bed, bath and table linens accounted for 2.5% of our product sales revenue.

Revenue from services Our revenue from services increased by 51.2%, or R$10.0 million, from R$19.6 million in the year ended December 31, 2004 to R$29.6 million in the year ended December 31, 2005. This increase was primarily due to an increase in sales volume. Our revenue from services accounted for 3.0% of our gross operating revenue in the year ended December 31, 2006.

Sales deductions Our sales deductions increased by 40.3%, or R$89.1 million, from R$221.0 million in the year ended December 31, 2004 to R$310.1 million in the year ended December 31, 2005. Deductions as a result of goods exchanged accounted for 6.7% of our gross operating revenue in the year ended December 31, 2005. Additionally, this increase was due to a 35.9% increase, or R$17.2 million, in goods exchanged by our customers. Our sales deductions represented 30.6% of our gross operating revenue in the year ended December 31, 2004 and 31.7% of our gross operating revenue in the year ended December 31, 2005. This increase was primarily due to a 41.6% increase, or R$72.0 million, in sales taxes paid due to higher gross operating revenue recorded for the period.

Net operating revenue Our net operating revenue increased by 33.4%, or R$167.2 million, from R$500.3 million in the year ended December 31, 2004 to R$667.5 million in the year ended December 31, 2005, primarily due to an increase in our sales area, gross sales revenue and sales ticket.

Cost of goods and services Our cost of goods and services increased by 19.5%, or R$55.1 million, from R$282.6 million in the year ended December 31, 2004 to R$337.7 million in the year ended December 31, 2005. This increase was due to the fact that: • our cost of goods increased by 14.2%, or R$37.9 million, from R$267.6 million in the year ended December 31, 2004 to R$305.6 million in the year ended December 31, 2005, as a result of our higher sales volume in this same period.

59 • of our total cost of goods and services for the year ended December 31, 2005, our cost of services accounted for 9.5%, or R$32.1 million, resulting in a 114.9% increase when compared to the year ended December 31, 2004. This increase is due to an increase in our sales volume, which generated an increase in our revenue from Due Mille’s clothes hanging services, an increase in revenue due to an increase in the use of our private label Marisa Card, and increased purchase of insurance. • our costs of goods and services represented 53.5% of our net operating revenue in the year ended December 31, 2004 and 45.8% in the year ended December 31, 2005, as a result of an increased volume in the sale of value-added products for men’s and children’s clothing as well as bed, bath and table linens. Additionally, as a result of our adoption of the new layout at our stores, we have a larger sales area, which allows us to display and sell a wider variety of products.

Gross profit Our gross profit increased by 51.5%, or R$112.1 million, from R$217.8 million in the year ended December 31, 2004 to R$329.9 million in the year ended December 31, 2005. This increase was primarily due to an increase of our gross operating revenue and the decrease in the share of costs over the net operating revenue during the period. Our gross margin increased from 43.5% in the year ended December 31, 2004 to 49.4% in the year ended December 31, 2005.

Operating (expenses) income Our operating (expenses) income increased by 27.6%, or R$60.4 million, from R$218.6 million in the year ended December 31, 2004 to R$279.0 million in the year ended December 31, 2005. This increase was primarily a result of an increase in our selling expenses and, to a lesser extent, in other operating expenses.

Selling expenses. Our selling expenses increased by 19.0%, or R$32.6 million, from R$171.7 million in the year ended December 31, 2004 to R$204.3 million in the year ended December 31, 2005. This increase was primarily as a result of an increase in the volume of units sold, and, to a lesser extent, in our sales area, which increased by 13.1% in the period. The increase in our sales area and in the volume of goods sold resulted in an increase of (a) R$7.0 million in rentals and related expenses, (b) R$6.1 million in personnel expenses, (c) R$6.8 million in advertising and marketing expenses, and (d) R$7.0 million in expenses related to non-fixed assets, transportation vouchers and the transport of valuables. This increase was partially offset by an increase of R$5.7 million in our revenue from miscellaneous services.

Our selling expenses represented 34.3% of our net operating revenue in the year ended December 31, 2004 compared to 30.6% in the year ended December 31, 2005.

With respect to the increase in our selling expenses excluding depreciation and amortization expenses, the 46.4% increase in the year ended December 31, 2005 compared to the year ended December 31, 2004 is mainly due to expansion in sales area or opening of new stores. Similarly, with respect to the total increase in depreciation and amortization expenses, the 19.1% increase in the year ended December 31, 2005, compared to the same period in the year ended December 31, 2004, is due to the expansion in our sales area or the inauguration of new stores.

General and administrative expenses Our general and administrative expenses increased by 20.4%, or R$9.7 million, from R$47.5 million in the year ended December 31, 2004 to R$57.2 million in the year ended December 31, 2005. This increase was primarily a result of increases of R$4.8 million in general expenses and of R$4.9 million in miscellaneous services where information technology services represented R$3.7 million. Our general and administrative expenses as a percentage of our net operating revenue decreased from 9.5% in the year ended December 31, 2004 to 8.6% in the year ended December 31, 2005.

60 Other operating income (expenses) Our other operating income (expenses) decreased by R$18.2 million, from R$0.6 million in the year ended December 31, 2004 to R$17.5 million in the year ended December 31, 2005, as a result of (a) an increase of R$21.9 million in our provision for doubtful accounts due to a higher volume of transactions made with the Marisa Card, (b) an increase of R$10.5 million in our provision for tax and labor contingencies due to a higher number of legal actions, and (c) a R$15.7 million increase in expenses related to interest paid by Credi-21 for funds borrowed to finance the operations of Marisa Card. Our operating expenses increased by R$27.7 million, or 76.9%, as a result of an increase in the amount of R$25.8 million in credit card recoveries (interest, fines and other charges).

Our other operating income (expenses) represented 0.1% of our net operating revenue in the year ended December 31, 2004 compared to 2.6% in the year ended December 31, 2005.

The table below sets forth the revenue and expenses related to the Marisa Card:

Year ended December 31, 2004 2005 (In R$ millions) Other operating income Interest on payment in installments...... 3.9 — Interest charges ...... 15.9 37.8 Fines and default charges ...... 3.8 7.7 Total ...... 23.6 45.5 Other operating expenses Provision for doubtful accounts, net ...... (27.0) (48.9) Financial expenses ...... (3.9) (19.6) Total ...... (30.9) (68.5)

Financial income (expenses) Our net financial income increased by R$4.4 million, from R$4.9 million in the year ended December 31, 2004 to R$9.3 million in the year ended December 31, 2005. Our financial expenses increased by R$17.0 million, from R$24.7 million in the year ended December 31, 2004 to R$41.7 million in the year ended December 31, 2005, primarily as a result of higher CPMF and interest paid and adjustments to swaps on bank loans entered into to fund the expansion of our stores. The increase in our financial expenses was partially offset by a R$12.3 million increase in our financial income, primarily as a result of higher gains from our cash fixed- income financial transactions and also from swap transactions. Our net financial income represented 1.0% of our net operating revenue in the year ended December 31, 2004 compared to 1.4% in the year ended December 31, 2005.

Income (loss) from operations before depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property Our income (loss) from operations before depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property increased by R$47.3 million, from a loss of R$5.7 million in the year ended December 31, 2004 to an income of R$41.6 million in the year ended December 31, 2005. This increase was mainly due to the increase of gross operating revenue, a decrease in the share of costs over net operating revenue and an efficient reduction in operating expenses during the period.

61 Non-operating income (expenses), net Our non-operating income (expenses), net increased by R$13.9 million, from R$8.6 million in expenses in the year ended December 31, 2004 to R$5.3 million in income in the year ended December 31, 2005. This increase was primarily due to gains from percentage variation of our investments in subsidiaries.

Income (loss) before income and social contribution taxes, depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property Our income (loss) before income and social contribution taxes, depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property increased by R$61.2 million, from a loss of R$14.3 million in the year ended December 31, 2004 to income of R$46.9 million in the year ended December 31, 2005. This increase was mainly due to an increase of our gross operating revenue, a decrease in costs in net operating income and a decrease in operating expenses as of the year ended December 31, 2005.

Income and social contribution taxes – current Our current income and social contribution taxes increased by R$12.6 million, from R$10.2 million in the year ended December 31, 2004 to R$22.8 million in the year ended December 31, 2005. This increase was primarily due to an increase in our taxable income under the actual profit method.

Income and social contribution taxes – deferred Our deferred income and social contribution taxes decreased by 34.0%, or R$1.8 million, from R$5.3 million in the year ended December 31, 2004 to R$3.5 million in the year ended December 31, 2005. This decrease was primarily due to a decrease in our estimate on income and social contribution taxes – deferred, which generated lower non-deductible tax, labor and civil contingencies. These amounts will be deducted from our taxable basis when a final court decision is issued.

For figures on actual income and social contribution tax rates, see note No. 10 to our financial statements, item “b” of the combined financial statements included elsewhere in this offering circular.

Income (loss) after depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property Our income (loss) after depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property increased by R$53.8 million, from a loss of R$40.0 million in the year ended December 31, 2004 to an income of R$13.8 million in the year ended December 31, 2005. This increase was mainly due to an increase in gross operating revenue, a decrease in costs, the reduction in operating expenses, and an increase in net non operating income as of December 31, 2005.

Liquidity and capital resources We enter into short-term financing agreements mostly to finance Marisa Card’s operations. Under Brazilian law, we are not allowed to grant loans directly to our customers because we are not a financial institution. As a result, the Marisa Card adhesion agreement contains a provision pursuant to which the customer authorizes us to enter into financing agreements with financial institutions on his or her behalf. We finance credit sales paid in installments, revolving credit operations and late payments related to the Marisa Card with the resources from these financing agreements. Most of the short-term financing agreements that we have entered into are working capital financing agreements as well as a type of financing agreement called “compror.” Compror financings are financings either related to the financing of acquisition of goods of capital or goods as clothing goods. In our

62 case, these compror financings are used to finance the acquisition of our products by our customers. Our outstanding short-term financing agreements are described below in a table under “—Indebtedness.” We will continue to enter into short-term financing agreements in connection with Marisa Card’s operations.

We enter into long-term financing agreements mainly to finance our expansion, the expansion of our sales area and renovation of our stores. In 2006, we spent R$66.2 million on the expansion and renovation of our stores. Additionally, we spent R$38.5 million on the inauguration of new stores. We financed our expansion and renovation with long-term loans, as a part of which the acquisition of cash registers, software and other equipment is necessary. Most of our long-term financing agreements are mainly from the Brazilian National Bank for Economic and Social Development (Banco Nacional de Desenvolvimento Econômico e Social), or BNDES, specifically, with the Program for the Modernization of the Brazilian Industry Sector (Programa de Modernização da Indústria Nacional do BNDES), or FINAME. Moreover, most of our long-term financings are CMN Resolutions No. 2,770 of August 30, 2000 and 3,221 of July 29, 2004 financings, which allow us the fundraising abroad by companies and individuals in Brazil in foreign currency and in reais, respectively. In general, long-term financing interest rates are, in general, lower comparing to short-term financings.

Until December 31, 2006, we commonly used excess cash to invest in the equity market (floating income investments) as a way of diversifying our investment portfolio. As of January 1, 2007, we did not initiate new equity market transactions and liquidated any and all equity investments. We no longer invest in the equity market .

The table below sets forth our cash flow for the periods indicated:

Year ended December 31, 2004 2005 2006 (R$ millions) Net cash flow from operating activities ...... 5.8 17.2 284.6 Net cash flow from investing activities...... (89.8) (53.3) (349.6) Net cash flow from financing activities ...... 71.3 62.8 190.5 Cash flow ...... (12.6) 26.7 125.5

Operating activities Our net cash flow from operating activities increased by R$267.4 million, from R$17.2 million as of December 31, 2005 to R$284.6 million as of December 31, 2006, primarily as a result of (a) a R$9.1 million increase in depreciation and amortization expenses, due to an increase in the number of our stores from 2005 to 2006, (b) a R$5.5 million increase in salaries, accounting provisions and social contributions due to an increase in the number of our stores in the period, (c) a R$13.0 million decrease in our inventory, due to an increase in product sales in our stores during this period, and (d) a R$6.5 million increase in purchases from suppliers due to greater volume of sales in the period.

Our net cash from operations increased by R$11.4 million, from R$5.8 million in 2004 to R$17.2 million in 2005. This increase was primarily due to a R$38.4 million increase in purchases from suppliers, as a result of a higher sales volume in the period, and a R$1.6 million increase in salaries, provisions and social contributions due to an increase in our number of stores from December 31, 2004 to December 31, 2005.

Investment activities Our net cash from investment activities increased by R$296.3 million, from R$53.3 million in the year ended December 31, 2005 to R$349.6 million in the year ended December 31, 2006. This increase was primarily due to a R$169.9 million increase in investments in securities and financial investments as a result of increased need of working capital. This need for working capital was brought on by Marisa Card promotions that

63 extended the term of maturity for payment of Marisa Card bills, an increase in expenses related to the expansion and opening of stores, and a R$85.3 million increase resulting from the acquisition of property and equipment, as a result of our investment in the expansion and inauguration of stores.

Our net cash from investment activities decreased by R$36.5 million, from R$89.8 million in the year ended December 31, 2004 to R$53.3 million in the year ended December 31, 2005. This decrease was primarily due to a R$75.8 million decrease resulting from our acquisition of property and equipment, of our subsidiaries.

Financing activities Our net cash from financing activities increased by R$127.6 million, from R$62.8 million in the year ended December 31, 2005 to R$190.5 million in the year ended December 31, 2006. This increase was primarily due to a R$494.6 million increase in loan agreements entered into with third parties.

Our net cash from financing activities decreased by R$8.5 million, from R$71.3 million in the year ended December 31, 2004 to R$62.8 million in the year ended December 31, 2005. The increase was primarily due to a R$192.1 million decrease in loan agreements entered into with third parties.

Indebtedness As of December 31, 2006, we had entered into loan agreements with banks that totaled R$518.0 million, of which R$341.6 million are short-term agreements and R$176.5 million are long-term agreements. The average funding rate was the TJLP plus interest for agreements entered into with the BNDES, and a percentage on the CDI for the other agreements. As of June 30, 2007, we had entered into loan agreements with banks totaling R$714.9 million, of which R$491.3 million are short-term agreements and R$223.5 million are long-term agreements.

All of our indebtedness is denominated in Brazilian reais, and therefore we are not exposed to foreign currency risks.

The table below sets forth our indebtedness for the periods indicated:

Combined December 31, June 30, 2004 2005 2006 2007 Charges Maturity (in R$ million) Current liabilities: Banco Alfa – working capital...... — — — 2.1 Interest of 106% of the CDI(1) July 2007 Banco Alfa – From April through working capital...... 6.5 3.0 5.1 — Interest of 106% of the CDI(1) May 2007 Banco Bradesco – Interest of 108.5% of the July 2007 working capital...... — 3.9 4.0 4.1 CDI(1) Banco Bradesco – BNDES.... — 3.0 2.2 2.3 Interest of 6.5% per annum April 2009 + TJLP(2) Banco Safra – “compror”..... 26.1 14.7 8.6 — Interest of 102% of CDI(1) April 2007 Banco Safra – Interest from 0.6% per annum From July 2007 through working capital...... — — — 164.1 to 2.0% per annum of the January 2008 CDI(1) Banco Safra – Interest of 108% per year of working capital...... — — 20.1 — CDI(1) April 2007 Banco Safra – Interest of 1.5% to 2.5% per working capital...... — 1.2 9.2 — annum of the CDI(1) April 2007 Banco Safra – FINAME ...... — — — 0.8 Interest from 4.5% per annum From August 2007 through to 9.3% per annum + CDI(1) January 2010

64 Combined December 31, June 30, 2004 2005 2006 2007 Charges Maturity (in R$ million) Banco Safra – FINAME ..... — — 0.6 — Interest from 4.5% per From April 2007 through annum to 6% per annum + October 2009 TJLP(2) Banco Santander (4)(5) ...... — — — 38.1 Interest of 118% of the From August 2007 through CDI(1) October 2007 Banco Santander (4)(5) ...... — 19.9 34.7 — Interest of 118% of the April 2007 CDI(1) Banco Santander (4)(5) ...... — — 5.3 — Interest from 112% to 118% April 2007 + CDI(1) Unibanco S.A. – 21.3 5.0 7.8 7.9 Interest of 1.5% per annum July 2007 “compror”...... + CDI(1) Unibanco S.A. (4)(5) ...... — — — 14.3 Interest from 2.83% per September 2007 annum to 3.17% per annum + CDI(1) Unibanco S.A. (4)(5) ...... — 2.0 11.9 — Interest of 2.96% per annum September 2007 + CDI(1) Unibanco S.A. – BNDES .... 1.9 4.0 2.3 1.5 Interest from 4.5% per From December 2007 annum to 5.5% per annum + through February 2009 TJLP(2) Banco Santander (4)(5) ...... — 9.0 10.3 — Interest of 2.3% per year of September 2007 CDI(1) Banco Itaú (4)(5) ...... — — — 20.4 Interest from 2.70% per September 2007 annum to 2.88% per annum + CDI(1) Banco Itaú (4)(5)...... — — — 15.5 Interest of 2.61% to 2.8% From September through of the CDI(1) December 2007 Banco Santander (4)(5) ...... — — 10.9 — Interest of 111.6% to 112% June 2007 of the CDI(1) Banco J. Safra S.A...... — 34.2 50.6 — Interest of 1.81% per year + CDI(1) From March to May 2007 Banco J. Safra S.A...... — — — 25.1 Interest from 1.81% per annum to 2.0% per annum + CDI(1) July 2007 Banco Credit Suisse S.A(5) .. Interest of 111% of the — — 73.1 77.7 CDI(1) July 2007 Banco Credit Suisse S.A(5) .. Interest of 106% of the — 20.3 1.6 1.8 CDI(1) August 2011 Banco Credit Suisse S.A(5) .. Interest of 108% of the August 2007 to — — — 28.0 CDI(1) February 2009 Banco Credit Suisse S.A(5) .. Interest of 108% of the From May 2008 through — — 26.8 — CDI(1) February 2009 Financing – BNDES...... — — 10.9 15.2 Interest of 2.8% per annum From April 2011 through + TJLP(2) April 2012 UBS Pactual...... — — — 49.8 Interest of 1.2% per annum + CDI(1) February 2009 Banco Citibank(4)(5) ...... Interest of 13.58% per — — — 22.7 annum September 2007 Banco Citibank(4)(5) ...... Interest of 14.26% per From May through — — 45.5 — annum June 2007 Total ...... 55.8 120.2 341.6 491.3

65 Combined December 31, June 30, 2004 2005 2006 2007 Charges Maturity (in R$ million) Non current liabilities: Financing – BNDES ...... — — 63.7 95.8 Interest of 2.8% per annum From April 2011 through + TJLP(2) April 2012 Banco Credit Suisse S.A(5) ... Interest from 106% of the From August 2007 to — — 78.1 93.3 CDI(1) August 2010 Banco Credit Suisse S.A(5) ... Interest from 108% to 108% — — 28.7 — of the CDI(1) February 2009 Safra S.A. – FINAME...... 0.1 0.6 1.5 0.8 Interest from 4.5% per annum to 9.3% per annum + From April 2008 through TJLP(2) December 2009 Banco Bradesco S.A. – Interest of 6.5% per annum BNDES ...... — 3.6 3.0 1.8 + TJLP(2) April 2009 UBS Pactual ...... — — — 31.6 Interest of 1.2% per annum + CDI(1) February 2009 Unibanco – BNDES ...... 4.0 1.2 0.6 0.2 Interest from 4.5% per annum to 5.5% per annum + TJLP(2) December 2007 Banco Santander S.A...... — — 1.0 — Interest of 9% per annum From May 2009 through + IPCA(3) August 2010 Total...... 4.1 5.3 176.5 223.5

(1) Interbank Deposit Certificate (Certificado de Depósito Interbancário), or CDI. A deposit certificate issued by financial institutions and that are purchased only by financial institutions. The CDI referred to in the table above is the average rate of the CDI during a one-day period. (2) Long-term interest rate (Taxa de Juros de Longo Prazo), or TJLP. (3) Broad national consumer price index measured by the IBGE (Índice Nacional de Preços ao Consumidor Amplo), or IPCA. (4) CMN Resolutions Nos. 2,770 of August 30, 2000 and 3,221 of July 29, 2004, pursuant to which individuals and legal entities may gather fundraising abroad in international currency and in reais, respectively. (5) On the same funding date, our subsidiaries Marisa Lojas and Credi-21 entered into swap transactions to hedge against exposure to market risks, foreign currency risks and interest rate risks. As of December 31, 2006, the balance of our swaps recorded in the corresponding loans and financing accounts under current liabilities and offset against financial expense totaled R$17,950.

The following table sets forth the TJLP, CDI and IPCA annual rates for years 2004, 2006 and 2006:

Annual rate Index 2006 2005 2004 TJLP...... 6.85% 9.75% 9.75% CDI...... 12.47% 19.09% 19.28% IPCA ...... 3.14% — —

Our subsidiaries and SPEs are subject to covenants under various financing agreements entered into with banks. See “—Financing Activities—Indebtedness” and “—Financing Activities—Financing agreements.” As of the six-month period ended June 30, 2007, the more restrictive of these covenants relate to the financial indicators required in the loan agreements entered into with Banco de Investimentos Credit Suisse (Brasil) S.A. Our subsidiaries and SPEs requested a waiver to these covenants in mid-June 2007. On July 31, 2007, Banco de Investimentos Credit Suisse (Brasil) S.A. granted a waiver to those covenants that is valid until February 28, 2008. The covenants waived are: • Shareholders’ equity or net indebtedness shall not exceed R$350,000,000.00. Due to the implementation of our expansion strategy and the increased number of Marisa Card holders, our funding needs

66 increased. As a result, our net indebtedness for the six-month period ended June 30, 2007 exceeded the ratio established in the Banco de Investimentos Credit Suisse (Brasil) S.A.’s financing agreements. • Dividends and interest paid on capital shall not exceed 40% of the net profits. On June 30, 2006, Marisa Lojas’ net combined losses were R$27.1 million. Marisa was incorporated on August 15, 2006. On June 30, 2007, our net consolidated profits were R$37.3 million. At a shareholders’ general and extraordinary meeting held on July 26, 2007, our shareholders approved an interim dividend distribution of approximately R$35.4 million, an amount that exceeded the ratio established in the financing agreement.

The other more restrictive covenant established in those financing agreements which was not and has not been breached yet as of the date of this offering circular is the obligation of disclosure of annual or quarterly financial reports.

Financing agreements As of June 30, 2007 and as of December 31, 2004, 2005 and 2006, our short- and long-term financing agreements were for funds used mainly to finance our daily operations and the expansion strategy. The most relevant of these agreements is a financing agreement entered into with the BNDES (described on the next page). Most of our financing agreements are short-term transactions related to financing the working capital of our subsidiaries. As of December 31, 2004, 2005 and 2006, our short-term borrowings and financing agreements represented 93.2%, 95.7% and 65.9% of our total indebtedness, respectively.

Our net cash from financing activities increased by R$127.6 million, from R$62.8 million in the year ended December 31, 2005 to R$190.5 million in the year ended December 31, 2006. This increase was primarily due to a R$494.6 million increase in loans from third parties. Our net cash from financing activities decreased by R$8.5 million, from R$71.3 million in the year ended December 31, 2004 to R$62.8 million in the year ended December 31, 2005. The increase was primarily due to a R$192.1 million decrease in loans from third parties.

As of June 30, 2006 and 2007, our short- and long-term borrowings and financing agreements represented, respectively, 97.0% and 68.7% of our total indebtedness. Our long-term financings and borrowings as of December 31, 2004, 2005 and 2006 represented 6.8%, 4.3% and 34.1% of our total indebtedness, respectively. Our long-term borrowings and financings as of June 30, 2006 and 2007 represented 3.0% and 31.3% of our total indebtedness, respectively.

We provide below a brief description of our relevant financing agreements.

Agreement with BNDES Credit facility agreement We entered into a credit facility agreement dated October 2, 2006 with BNDES, in an amount of expansion approximately R$111.7 million consisting of two different loans. One was for the financing of our store expansion project, specifically the opening of eight stores, expansion of 21 stores and renovation of ten stores, in the amount of R$61.3 million, payable in 48 monthly and consecutive payments beginning on May 15, 2007 and ending on April 15, 2011, with interest calculated pursuant to the TJLP, plus 2.8% per annum and a six-month grace period for the principal amount; and the second loan was for the financing of the opening of eleven stores, expansion of nine stores and renovation of two stores, in the amount of R$50.4 million, payable in 48 monthly and consecutive payments, but beginning on May 15, 2008 and ending on April 15, 2012, with interest calculated pursuant to the TJLP, plus 2.8% per annum and an 18-month grace period for the principal amount. They contain provisions governing the acceleration in the event of a disposition of our control, and in the event these funds are used for purposes other than agreed, they are guaranteed by Banco Bradesco S.A. (See “—Agreements with Banco Bradesco S.A.—Private guarantee agreements and other covenants”) and Banco Safra S.A. (See “—Agreements with Banco Safra S.A.—Bank surety”).

67 Agreements with Banco Bradesco S.A. Private guarantee agreements and other covenants Because of our obligations under the credit facility agreement discussed above, we entered into two guarantee agreements dated October 3, 2006 and November 17, 2006 with Banco Bradesco S.A., pursuant to which Banco Bradesco S.A. agreed to provide guarantees under the BNDES credit facility agreement. These guarantees amount to R$31.5 million and R$63.5 million, respectively, and their effectiveness is tied to the maturity of the BNDES financing on October 15, 2012. For these guarantees we pay to Banco Bradesco S.A. a fee equal to 1.0% per annum of the total amount of the guarantees, pursuant to payments made at the beginning of each quarter. In addition, to secure these guarantees we have issued two promissory notes in the amounts of approximately R$47 million and R$95 million. These notes are secured by personal guarantees provided by Denise Goldfarb Terpins and Décio Goldfarb.

Guaranteed account/revolving account agreement Since October 14, 2005 we have held a guaranteed account/revolving account with Banco Bradesco S.A., with an approved credit line of R$19.9 million and interests of 108.5% of CDJ on outstanding debt.

Agreements with Banco de Investimentos Credit Suisse (Brasil) S.A. Bank credit note dated January 26, 2006 On January 26, 2006, Banco de Investimentos Credit Suisse (Brasil) S.A. and Marisa Lojas entered into a loan facility agreement in the amount of approximately R$73 million for working capital requirements and the expansion and remodeling of our stores. The transaction involved the issuance of 24 bank credit notes in the amount of R$3.0 million each and another credit note in the amount of R$930,000.00, which were guaranteed by securities provided by NIX and by Begoldi, our controlling shareholder. This 36-month loan bears a floating interest rate of 108% of the average reference rate for one-day CDIs (CDI Extragrupo), as calculated by CETIP. Repayment will be made in 36 equal and consecutive monthly payments, beginning on February 2, 2006 and ending on February 2, 2009. This credit facility agreement contains standard acceleration provisions in the event of bankruptcy and/or payment default.

Fiduciary assignment of credit rights and other covenants As a guarantee of the bank credit notes of January 2006 described above, received by NIX, Begoldi and our controlling shareholders, on January 26, 2006, Marisa Lojas entered into a credit rights fiduciary lien assignment agreement, with Banco de Investimentos Credit Suisse (Brasil) S.A., pursuant to which Marisa Lojas assigned credit rights corresponding to 75.0% of Redecard S.A. and Companhia Brasileira de Meios de Pagamento in sales billing. The assignment agreement will remain in effect until the loan is repaid in full. Pursuant to this agreement, Marisa Lojas agreed to maintain an account with a minimum amount corresponding to three times the amount required for payment of the debt to Banco de Investimentos Credit Suisse (Brasil) S.A. If Marisa Lojas defaults on the loan described above or an event of acceleration takes place, Banco de Investimentos Credit Suisse (Brasil) S.A. will be entitled to enforce the guarantee. The agreement contains standard provisions governing acceleration in the event of full or partial alienation or creation of liens or encumbrances which could render the credit rights insufficient for proper repayment of the loan.

Bank credit notes dated July 19, 2006 On July 19, 2006, Banco Credit Suisse (Brasil) S.A. granted a loan to Marisa Lojas in the amount of R$78.1 million, for refinancing our working capital and financing the expansion and renovation of our stores. The transaction involved the issuance of 18 bank credit notes in the amount of R$4.0 million each and another credit note in the amount of R$6.1 million. This 60-month loan bears a floating interest rate corresponding to 114% of the average reference rate for one-day CDIs (CDI extragrupo), as calculated by CETIP. Repayment will be made in

68 eleven quarterly payments ending on August 1, 2011. This credit facility agreement contains standard acceleration provisions in the event of bankruptcy and/or payment default.

Fiduciary assignment of credit rights and other covenants As a guarantee of the bank credit notes of July 2006, Marisa Lojas, secured by a guarantee granted by NIX, Begoldi and our controlling shareholders, entered into the following agreements with Banco Credit Suisse (Brasil) S.A. on July 19, 2006: (1) fiduciary assignment of credit rights and other covenants, pursuant to which Marisa Lojas granted to Banco Credit Suisse (Brasil) S.A. fiduciary rights, interest in funds, bank deposit certificates and other financial assets that were kept and managed by Marisa Lojas; and (2) fiduciary assignment of credit rights and other covenants, pursuant to which Marisa Lojas granted to Banco Credit Suisse (Brasil) S.A. 75% of its fiduciary credit rights related to billings resulting from sales carried out with two credit card acquirers and payment processors, Redecard S.A. and Companhia Brasileira de Meios de Pagamento. The assignment will be in effect for as long as the obligations assumed under the bank credit notes of July 2006 are in effect. In addition, the assignment is conditioned to the full repayment of the bank credit notes of July 2006. Pursuant to this agreement, Marisa Lojas is required to maintain in a reserve account a minimum amount corresponding to two times the amount required for payment of the bank credit notes to Banco Credit Suisse (Brasil) S.A. If Marisa Lojas defaults or an event of acceleration takes place, Banco Credit Suisse (Brasil) S.A. will be entitled to obtain repayment by giving effect to the guarantee. The agreement contains standard provisions governing acceleration in the event of full or partial disposition of our control or creation of liens or encumbrances capable of rendering the credit rights insufficient for proper repayment of the loan.

Agreement to enter into swap transactions (no. 197FP22) On July 19, 2006, Marisa Lojas and Credit Suisse Próprio Fundo de Investimento Multimercado, a fund managed by Banco de Investimentos Credit Suisse (Brasil) S.A., entered into an agreement to enter into swap transactions. The base value was R$78.1 million. NIX and Begoldi are guarantors. The purpose of the swap transactions is to exchange financial results between the parties, applied on the base value. The reference for update applied to Banco de Investimentos Credit Suisse (Brasil) S.A. corresponds to the Japanese Yen, plus a fixed interest rate of 7.25% per annum. The reference for update due to Marisa Lojas corresponds to 114.0% of the DI rate, as calculated by CETIP, until the maturity date. The swap transactions have quarterly maturity dates and the last one is scheduled for August 1, 2011. The swap transaction contains standard provisions for offsetting and events of acceleration.

Agreement to enter into swap transactions (no. 197FP23) On July 19, 2006, Marisa Lojas and Credit Suisse Próprio Fundo de Investimento Multimercado, a fund managed by Banco de Investimentos Credit Suisse (Brasil) S.A., entered into an agreement to enter into swap transactions, which were carried out in 20 swap transactions with different base values. The highest base value was R$78.1 million and the lowest was R$7.1 million. NIX and Begoldi are guarantors. The purpose of the swap transactions is to exchange financial results between the parties, applied on the base value. The reference for update applied to Marisa Lojas corresponds to the Japanese Yen, plus a fixed interest rate of 7.25% per annum. The reference for update due to Banco de Investimentos Credit Suisse (Brasil) S.A. corresponds to 106.0% of the DI rate, as calculated by CETIP, until maturity date. The swap transactions have different have different maturities and the last one is scheduled for August 1, 2011. The swap transaction contains standard provisions for offsetting and events of acceleration.

Fiduciary assignment of credit rights, revenues and other covenants

As guarantee of the swap transactions nos. 197FP22 and 197FP23, Marisa Lojas, secured by NIX, Begoldi and our controlling shareholders, entered into with Credit Suisse Próprio Fundo de Investimento Multimercado, a fund managed by Banco de Investimentos Credit Suisse (Brasil) S.A., on July 19, 2006, a fiduciary assignment of

69 credit rights, revenues and other covenants, pursuant to which Marisa Lojas assigned to the fund 25% of all fiduciary credit rights related to billings resulting from sales carried out with two credit card acquirers and payment processors, Redecard S.A. and Companhia Brasileira de Meios de Pagamento. This assignment will be in effect as long as the obligations assumed under the swap transactions nos. 197FP22 and 197FP23 are in effect. In addition, the assignment is conditioned to the full repayment of the bank credit notes of July 2006 and 25% of all amounts and revenues realized and/or that will be realized in the future in a new reserve account. In case of default or an event of acceleration, the fund is entitled to obtain repayment by giving effect to the guarantee. The agreement contains standard provisions governing acceleration in the event of full or partial disposition of our control or creation of liens or encumbrances capable of rendering the credit rights insufficient for proper repayment.

CMN Resolution 2770 financing Between November 10, 2006 and September 24, 2007, Marisa Lojas and Credi-21 entered into 18 financing agreements in the total amount of R$ 194.3 million, of which there were (i) two with Banco Safra S.A., (ii) eight with Banco Santander Banespa S.A., (iii) five with Banco Itaú BBA S.A., (iv) two with Unibanco - União de Bancos Brasileiros S.A., and (v) one with Citibank N.A. This resolution allows companies in Brazil to obtain foreign loans. Nine of these agreements are tied up to swap transactions bearing interest pursuant to CDI rate plus spreads ranging from 0.6% per annum to 2.9% per annum. The agreement with Citibank includes an interest rate at a 13.58% per annum rate. These agreements’ maturity dates range from October 5, 2007 to March 3, 2008.

CMN Resolution 3221 financing Between June 22, 2007 and June 26, 2007, Marisa Lojas and Credi-21 entered into three on lending transactions with Banco Itaú BBA S.A. carried out under CMN Resolution 3221, in the total amount of R$10.8 million. Pursuant to this resolution, companies in Brazil are allowed to obtain foreign loans already converted into reais. One of these agreements charges interest calculated pursuant to the CDI rate plus 2.5% per annum, whereas the other agreement charges interest calculated pursuant to the CDI rate plus 2.7% per annum.

Agreements with Banco Safra S.A. Loan agreement and bank credit notes Between January 29, 2007 and September 26, 2007, Marisa Lojas and Credi-21 entered into two loan agreements and two bank credit notes with Banco Safra S.A. totaling R$98.1 million, maturing on October 3, 2007 and January 28, 2007. The agreements charge interest calculated pursuant to the CDI rate plus a spread of 2.0% per annum. The bank audit notes are collaterized by fiduciary liens on certain financial investments.

Compror agreement On June 4, 2001, we entered into by and between Banco Safra S.A. a compror agreement up to the total amount of R$10.0 million, with 103.0% of the CDI interest rate, accrued as from August 20, 2007. There is no stated maturity dated for this agreement.

Bank surety A bank surety was provided to us by Banco Safra S.A. as security under a financing agreement executed with the BNDES (see above) dated October 15, 2012, in the amount of approximately R$20.0 million. For the surety, at the beginning of each quarter we are charged 1.0% of the total guaranteed amount. This surety was counter guaranteed by the indirect controlling shareholders of Marisa S.A.

Current account overdraft facility On October 14, 2005, Banco Bradesco S.A. granted to us a current account overdraft facility limited to R$8.0 million. The facility agreement establishes an interest charge of 108.5% of the CDI rate.

70 Agreement with Banco UBS Pactual S.A. Bank credit certificates On February 12, 2007, Marisa Lojas and Credi-21 entered into two loan agreements with Banco UBS Pactual S.A. in the amounts of R$50.0 million and R$30.0 million, respectively, for refinancing working capital, and financing the expansion and renovation of our stores. These agreements involved issuing 16 bank credit certificates in the amount of R$5.0 million each, jointly secured by our controlling shareholder. Amortization of the principal of both agreements will be made in four installments. The first installment is due in May 2008 and the last in February 2009. Interest is payable in eight installments, beginning in May 2007. The last interest payment shall be made on the same date as the final principal payment. Each of these loans bears floating interest rate equivalent to the CDI plus a spread of 1.2% per year. These loan agreements contain standard acceleration provisions in the event of our bankruptcy or payment default.

Agreements with Unibanco — União de Bancos Brasileiros S.A. Compror agreement On July 20, 2004, we entered into by and between a compror agreement with Unibanco - União de Bancos Brasileiros S.A. up to the total amount of R$8.0 million, with an interest rate equivalent to the CDI plus a spread of 1.5% per year. There is no stated maturity date for this agreement.

Agreements with Banco Standard de Investimentos S.A. Bank credit note dated on October 10, 2007 We entered into a bank credit note no. 100105877-1 on October 10, 2007 in the total amount of US$6.0 million, with maturity date on December 28, 2007, at a post-fixed interest rate on the U.S. dollar exchange rate plus 5.0% per annum, for the financing of our working capital. This bank credit note has standard clauses concerning early termination in the event of bankruptcy, judicial recovery and/or payment default.

Agreement to enter into swap transactions (no. S100105877) On October 10, 2007, Marisa Lojas entered into a swap agreement with Banco Standard de Investimentos S.A. The agreement does not have a stated term of maturity. Further, it will remain in force while there are outstanding swap transactions between Marisa Lojas and the bank. In case there is no outstanding swap transaction between the parties, the agreement can be terminated by each of the parties, without any charge. The terms and conditions of each swap transaction must be established in each swap transactions confirmation.

This contract states that, if Marisa Lojas owes to Banco Standard de Investimentos S.A. an amount in excess of R$27.7 million, or if Marisa Lojas defaults on any other contract and this default is an amount in excess of R$1.0 million, the bank may terminate the agreement, at any time. Additionally, the contract foresees a penalty fee of 2% of the outstanding amount and moratorium interest rates at the SELIC rate, accrued pro rata from the due date until the date of payment.

Between October 10, 2007 and October 18, 2007, Marisa Lojas entered into one swap transaction with Banco Standard de Investimentos S.A. in the amount of R$10.7 million. The reference for update applied to Marisa Lojas corresponds to the exchange rate of the U.S. dollar plus an interest rate of 5.0% per annum. The reference for update applied to Banco Standard de Investimentos S.A. corresponds to 118.0% of the CDI rate. The term date of this operation is December 28, 2007.

71 Contractual obligations The table below sets forth our contractual obligations as of June 30, 2007:

Total Up to 1 year 1 to 3 years 3 to 5 years Over 5 years (in R$ millions) Payment of taxes in installments ...... 10.7 — 6.0 4.2 0.5 Leasing(1) ...... 10.0 4.9 4.9 0.2 — Rent(2) ...... 1,125.9 41.7 83.4 166.8 834.0 Current loans...... 491.3 491.3 — — — Non-current loans...... 223.5 — 107.7 115.8 — Total...... 1,861.4 537.9 202.0 287.0 834.5 (1) If registered under current liabilities, these transactions would have increased our liabilities by R$10.0 million. (2) Minimum rent calculated based on lease agreements effective as of the date of this offering circular, the amount of which may vary, as indicated below.

The table below sets forth our gross and net indebtedness, considering our cash and financial investments, as of June 30, 2007:

R$ Short-term loans and financings ...... 491.3 Long-term loans and financing ...... 223.5 Total gross indebtedness...... 714.8 Cash and cash equivalents ...... (162.3) Securities ...... (81.8) Total (cash and cash equivalents and securities) ...... (244.1) Total net indebtedness ...... 470.7

For the classification of foregoing indebtedness, we have considered the Brazilian GAAP. For managerial purposes, we have classified indebtedness that is paid within the fiscal year of 2007 or after the end of the fiscal year of 2007. The table below sets forth our short- and long-term loans classified according to this method as of June 30, 2007:

R$ Loans to be paid within fiscal year of 2007...... 273.0 Loans to be paid after the end of fiscal year of 2007...... 441.8 Total...... 714.8

The table below sets forth how we intend to pay the foregoing indebtedness as of June 30, 2007:

R$ Loans to be paid during 2007 ...... 441.8 Payment with Companies cash (Cash and cash equivalents and securities) ...... (244.1) Payment with future cash and cash equivalents and securities ...... (67.2) Loans to be maintained in connection with Marisa Card financing ...... (130.5)

As shown above, we intend to pay the short-term loans with our 2007 cash and cash equivalents and securities. We also intend to pay the loans which will mature after the end of the fiscal year 2007, with our cash equivalents and securities.

72 A portion of our short-term loans will be paid with cash generated over the year. The remaining contractual obligations are included in our audited financial statements.

Our subsidiaries are parties in lease agreements with related parties and third parties. The amount regarding properties leased from related parties is always the greater between: (1) the equivalent of 3.65% of gross monthly sales recorded at the store; or (2) a minimum monthly amount to be annually updated according to indexes reflecting the variation of inflation. These lease agreements are effective for five years and may be contractually and automatically renewed for up to two five-year periods. The amount regarding properties leased from third parties is always the greater between: (1) the equivalent of 3.0% of gross monthly sales recorded at the store; or (2) a minimum monthly amount to be annually updated according to indexes reflecting the variation of inflation. These lease agreements are effective for five to fifteen years and are subject to renewal. In the six-month period ended June 30, 2007, our lease expenses represented 5.9% of our net operating revenue.

Off-balance sheet arrangements We currently have no financing agreements, arrangements or liabilities that are not included in our balance sheets. We have no subsidiaries in which we hold a majority equity interest that are not included in our financial statements and described in this offering circular. We also have no interest in, or relationship with, any special purpose entity that is not reflected in our financial statements and described in this offering circular.

Quantitative and qualitative information on market risks In the course of our business, we are exposed to market risks, particularly variations in interest rates that may adversely affect our results of operations. Any increase in interest rates will result: • in an increase in our financial expenses, given that funds are raised at variable rates; and • in a decrease in our financial results, given that our financial income from operations involving the Marisa Card are linked to fixed interest rates. Therefore, increases in variable interest rates accruing on funds raised are not passed on to our customers.

As of June 30, 2007, our indebtedness accounting for the variation of the CDI and TJLP totaled R$714.9 million. In the event of a 10.0% increase in interest rates in 2007 compared to 2006, our financial expenses would increase by R$3.9 million, while a 10.0% decrease in variable interest rates in 2007 compared to 2006 would cause our income from interest from financial investments of cash surplus and investments to decrease by R$0.7 million, taking into account that variations in interest rates are hypothetical and calculated on the basis of investment balances as of June 30, 2007.

Adjusted EBITDA Adjusted EBITDA information provides a measure of our operating economic performance. Our Adjusted EBITDA consists of EBITDA added or reduced by the result from the equity method of accounting interest in real estate companies, revenue from the rental of spun-off property, net non-operating result and minority interests. The Adjusted EBITDA is not a measure of financial performance under Brazilian GAAP and should not be considered individually as a measure of economic performance, as an alternative to net income, or to operating cash flows, or as an indicator of liquidity. Adjusted EBITDA does not have a standardized meaning and our definition of Adjusted EBITDA may not compare to Adjusted EBITDA as used by other companies. See “Presentation of Financial and Certain Other Information” and “Selected Financial and Operating Information.”

Six-month period ended June 30, 2006 compared to the six-month period ended June 30, 2007 Our Adjusted EBITDA increased by 102.6%, or R$28.00 million, from R$27.3 million in the six-month period ended June 30, 2006 to R$55.3 million in the six-month period ended June 30, 2007. The significant

73 improvement in our Adjusted EBITDA is primarily due to the increase in our operating revenue when compared to our expenses as of June 30, 2007. This result is strongly positive, especially given the strong growth and the expansion of our stores, which tend to incur expenses.

Our Adjusted EBITDA represented 8.1% of our net operating revenue for the six-month period ended June 30, 2006 and 10.8% for the six-month period ended June 30, 2007. See “Presentation of Financial and Certain Other Information” and “Selected Financial and Operating Information.”

Year ended December 31, 2005 compared to year ended December 31, 2006 Our Adjusted EBITDA increased by 7.8%, or R$4.9 million, from R$63.0 million in 2005 to R$67.9 million in 2006. Our calculation of Adjusted EBITDA for the year ended December 31, 2005 included adjustments from expenses with depreciation of spun-off property and equipment (R$2.8 million); loss from the equity method of accounting interests in spun-off property (R$5.7 million); minority interests (R$18.4 million); net non-operating loss (R$5.3 million), less loss from rental of spun-off property (R$1.7 million). Our calculation of Adjusted EBITDA for 2006 included adjustments from expenses with depreciation of spun-off property and equipment (R$1.6 million); loss from the equity method of accounting interests in spun-off property (R$6.2 million); minority interests (R$56.4 million); net non-operating loss (R$5.4 million), less negative revenue from rental of spun-off property (R$1.7 million). Our Adjusted EBITDA represented 9.4% of our net operating revenue for 2005 and 7.8% for 2006. See “Presentation of Financial and Certain Other Information” and “Selected Financial Operating Information.”

Year ended December 31, 2004 compared to year ended December 31, 2005 Our Adjusted EBITDA increased by 624.1%, or R$54.3 million, from R$8.7 million in 2004 to R$63.0 million in 2005. Our calculation of Adjusted EBITDA for 2004 included adjustments from expenses with depreciation of spun-off property and equipment (R$3.4 million); income from the equity method of accounting interests in spun-off property (R$18.5 million); minority interests (R$0.3 million); net non-operating income (R$8.6 million), less loss from lease of spun-off property (R$1.4 million). Our calculation of Adjusted EBITDA for 2005 included adjustments from expenses with depreciation of spun-off property and equipment (R$2.8 million); income from the equity method of accounting interests in spun-off property (R$5.7 million); minority interests (R$18.4 million); net non-operating loss (R$5.3 million), less negative revenue from lease of spun-off property (R$1.7 million). Our Adjusted EBITDA represented 1.7% of our net operating revenue for 2004 and 9.4% for 2005. See “Presentation of Financial and Certain Other Information” and “Selected Financial and Operating Information.”

74 The table below sets forth the reconciliation of our net income to our Adjusted EBITDA, for the periods indicated:

75 INDUSTRY

Brazilian market Brazil is the fifth largest country in the world and the largest in Latin America in terms of population, according to 2006 World Bank statistics. Brazil has approximately 184 million inhabitants, 51.3% of whom are women. According to the World Bank, Brazil has the world’s tenth largest GDP (which in 2006 amounted to US$1.1 trillion) and has an annual purchasing power of approximately US$1.7 trillion.

Despite the fact that the Brazilian economy has historically been characterized by a high level of volatility, since 2003 Brazil has experienced a continuous period of economic growth and stability, and: • Inflation decreased from 7.6% in 2004 to 3.1% in 2006; • GDP grew 3.7% from 2004 to 2006; • a commercial accounts surplus was recorded of US$46.1 billion in 2006; and • the Brazilian real appreciated 8.7% against the U.S. dollar in 2006.

For 2007, the Central Bank believes growth will be mainly driven by an increase in domestic consumption and capital investment. The effects of a flexible monetary policy and economic stability, including the continuous improvement of credit conditions and the maintenance of consumer income levels, will most likely positively impact various business industries and services within Brazil, including the retail and wholesale industry.

The role of women Despite historical inequality between the sexes, the status of Brazilian women has improved in various ways over the past four decades, including equal rights and access to education, greater participation in the labor market and an improvement in their role in family relationships.

Brazilian women gained equal access to education and work at the turn of the century and the right to vote in national elections in 1933. Following the trend of other countries in Latin America, improvements in Brazilian women’s access to education increased the proportion of single women in the formal labor market, as compared to the informal and self-employed labor market. Female participation in the labor market also increased dramatically in the 1970s and 1980s as a result of new hiring standards (especially due to the expansion of the service industry) and economic pressure on family budgets. Currently, the same number of men and women attend school, including at institutions of higher education. Professions that were traditionally dominated by men, such as law, medicine, dentistry and engineering, are increasingly balanced in terms of distribution between the sexes. The following statistics outline the economic role of women in Brazil today: • women’s participation in the Brazilian economy increased from 18.0% in 1970 to 27.0% in 1980 and 30.0% in 1990, although those numbers underestimate the actual rate of women’s participation in the Brazilian economy because they do not take into consideration informal activities performed in small, family businesses; • currently, over 70.0% of women in the Brazilian labor market are employed in the service industry, compared to 42.0% of men; and • Brazilian women are more commonly employed in domestic work, and tend not to be satisfactorily represented in the formal labor market related to agriculture and industrial activities.

In recent decades, the structure of Brazilian families has also changed significantly. Families were traditionally characterized as being predominantly patriarchal, with a man representing the highest authority

76 within the family. However, such male authority was focused on social factors and not on control of family income, which has generally been managed by women.

Brazilian women achieved legal equality with men under the Brazilian Federal Constitution of 1988. Until then, married women were subordinated to their husbands and men had the role of family leadership. Since the 1970s, studies have shown a significant increase in the number of Brazilian homes led by women: from 13.0% in 1970 to 16.0% in 1980 and 20.0% at the end of the 1980s. This trend has changed the dynamic of family relationships, especially with regard to lower income families. As women have begun to assume greater responsibility in home management, they have increasingly achieved the same status as men in the family. This trend has also given women an important role in the Brazilian society at large.

However, a considerable wage difference between men and women still exists in Brazil. According to recent studies, this difference is less pronounced in urban areas (for example, women earn on average 77.8% of the wage received by men in Rio de Janeiro and 73.6% in São Paulo), and more pronounced in the Northeastern region of the country (where on average, women earn 63.5% of the wage received by men). Despite this wage difference, there are indications that women make the majority of family consumer decisions, due to the fact that they are generally responsible for managing the family budget and for allocating funds for family expenses.

The evolution of women’s role in the Brazilian society, as well as their greater participation in the Brazilian labor market and economy, has created, and continues to represent, a potential source of growth in the women’s clothing retail market.

The retail industry in Brazil The Brazilian retail industry recorded a net operating revenue of R$333.5 billion in 2004, representing approximately 18.9% of Brazilian GDP in that year, according to the most recent Annual Commerce Survey (Pesquisa Annual do Comércio) conducted by IBGE in 2004. Retail sales have increased since 2004, according to a 2006 Monthly Commerce Survey (Pesquisa Annual do Comércio) by IBGE. The most recent data, from February 2007, showed an increase of 9.5% in net operating revenue in comparison to February 2006, demonstrating not only better than expected performance but also accelerated growth between late 2006 and early 2007.

This growth was due to a combination of several factors, including recovery of the Brazilian economy in recent years, an increase in the availability of consumer credit, an expansion in real wages and an increase in formal employment, mainly occurring in 2006.

The effective expansion of our business depends on the growth rate of the urban population of Brazil, as well as on the increased availability of consumer credit and an increase in income per household.

According to the Central Bank, credit availability in Brazil increased 21.0% in 2005 as compared to 2004, with total credit transactions amounting to R$606.8 billion, representing 31.0% of the GDP in 2005. In December 2006, total credit transactions amounted to R$732.8 billion, representing 34.3% of GDP.

Among the various types of individual credit, the consumer credit for short-term consumption has grown consistently. According to Central Bank data, in 2005 consumer credit offered in Brazil totaled R$63.4 billion, representing an increase of 46.0% from 2004. In 2006, with the decrease in interest rates and consequent decrease in the credit costs, the total amount of consumer credit increased by 26.0% compared to 2005, reaching R$79.9 billion.

Credit volume and conditions prevailing in the market also exercise a great deal of influence on the performance of the retail industry. The two main changes that negatively affect the consumer credit operations of the retail industry are: reduction of bank interest rates and decrease of payment default by our customers.

77 However, when faced with such changes, the existence of our own credit system and the use of our electronic sales channel place us in a privileged position in relation to other companies in the industry which lack such systems, by making our credit transactions with customers less dependent on banking sector loan conditions.

Purchasing power is sensitive to fluctuations in Brazil’s main economic indexes. We expect that the Brazilian economy will continue to grow with salary levels rising while inflation rates lower and population growth rates remain stable. We believe that these conditions will lead to overall consumption growth and increased expenditures on clothing, durable and nondurable goods.

The table below sets forth the levels of household income by socioeconomic group in Brazil, according to the ABEP in 2006 and PNAD in 2005.

Socioeconomic group Annual family income Annual family income Upper class ...... R$82,740.00 US$42,959.50 Upper-middle class ...... R$32,760.00 US$17,009.35 Middle class...... R$12,600.00 US$ 6,542.06 Lower-middle class ...... R$ 6,720.00 US$ 3,489.10 Lower class ...... R$ 3,360.00 US$ 1,744.55 Source: PNAD 2005, ABEP 2006.

According to ABEP, in 2006, the urban population of Brazil was divided as follows: (i) the upper-income population, representing approximately 6.0%; (ii) the upper-middle income population, representing approximately 26.0%, (iii) the middle-income population, representing approximately 42.0%; and (iv) the lower- income population, representing approximately 24.0%. Recently, the purchasing power of the middle class and the lower-middle class has increased as a result of various factors, including lower inflation rates, lower unemployment rates, an increase in consumer credit and a government policy of social inclusion, among others. As a result, the retail industry has increasingly focused on sales to lower-income families.

In general, Brazilian demographic trends are favorable to the retail industry, especially to department stores. According to IBGE data, 81.2% of the Brazilian population resides in urban areas, which is also where most department stores are located. Another favorable aspect benefiting the retail industry is that approximately 53.9% of the population is less than 29 years old. Younger individuals are generally more concerned about clothing and usually spend a greater portion of their income on clothing.

Similarly to Brazil’s industrial sectors, the Brazilian retail industry has recorded lower profit margins due to competition. The entry of large international chains beginning in 1990 required small and medium-sized local retailers to seek alternatives to expand their competitive advantages. Alternatively, small producers realized that cooperation strategies, commonly adopted by agrobusiness companies, industrial companies and exporters, would also facilitate their business by generating value and competitive advantages.

As a consequence, we believe that the retail sector will experience market concentration which will favor the larger surviving companies. These larger surviving companies may benefit from increased revenue from services, as well as cost reduction and efficiency gains from measures such as outsourcing logistics for the supply of goods and services. The trend of cooperation in the retail sector among small competing retailers will tend to have the favorable result of preventing predatory competition, including product “dumping” and offering artificially low-cost products, or a “price war,” which could negatively affect the retail industry as a whole. The Brazilian retail sector depends on gains from economies of scale to increase profitability, since margins in this industry tend to be lower when compared to the other sectors. We believe that such pressures and incentives will result in the increasing consolidation of the retail industry.

The clothing retail industry in Brazil Historically, the clothing retail industry in Brazil has been highly fragmented. While we have quickly acquired leased properties in shopping centers over the last decade and have successfully expanded into the large

78 clothing department stores market. We believe that considerable opportunity still exists for both organic growth and acquisitions in our industry. The clothing retail industry in Brazil is highly competitive but has a low level of concentration. Competition in this industry may increase because there are few barriers to the entry of competitors. We compete with local, national and international department stores, specialty stores, discount stores and commercial retailers. See “Business—Competition.”

Aside from large department store chains, the clothing retail industry in Brazil is composed of small, local retail companies that often lack the economies of scale, the broad base of suppliers and the operating efficiency of large chains. However, small retail companies are capable of competing with large chains by adapting to local preferences with greater flexibility. Moreover, in some cases, these small retailers are not in compliance with Brazilian tax, labor and social security laws and, therefore, are able to offer artificially low prices. Due to their small size and limited access to funding, these local retailers are generally more exposed to economic downturns than large chains.

Shopping centers are the principal shopping destination of urban Brazilian consumers. Shopping centers are able to conveniently concentrate, in the same place, a variety of products that meet different demands. Shopping centers also offer security, easy access, parking and other associated services that are highly valued by consumers. From 2000 to 2005, the number of shopping centers in Brazil grew from 281 to 335. According to the Brazilian Association of Shopping Centers (Associação Brasileira de Shopping Centers), or ABRASCE, as of December 31, 2006, Brazil had 346 shopping centers. Therefore, the ability to find appropriate space in shopping centers with a large flow of customers is a key component of our expansion strategy in the clothing retail industry in Brazil. For further information see “Business—Our Strategies.”

Another area that stands out with regard to the development of the industry is the development of online commerce. As the digital divide in Brazil has been increasingly bridged, particularly with regard to the middle and lower-middle class, the potential for future online sales, including sales through Marisa Virtual, has increased. According to surveys conducted by E-bit, revenue derived from online sales reached R$4.4 billion in 2006 compared to R$2.5 billion in 2005, representing a 76.0% increase in sales volume.

We believe that the clothing retail industry is less susceptible to competition from new internet clothing retailers than from other retail industries. Brazilian consumers prefer to try on clothing before purchase, both due to the lack of size standardization in the Brazilian clothing market and to a general consumer preference for checking the colors, styles and patterns of the most recent fashion trends, as well as touching the texture of the fabrics, in person, instead of purchasing clothing based on photos and descriptive text.

79 BUSINESS

This section contains an overview of our business and financial and operating information. It does not contain all of the information that you should consider before making a decision to invest in our common shares. You should read this entire offering circular carefully for a more complete understanding of our business and this offering, including the information in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our financial statements and related notes attached to this offering circular.

Overview

We believe our success is due to our stores’ pleasant and modern environment, which are well decorated and have creative and attractive display windows. We strive to offer our customers a higher quality of customer service than that offered by our main competitors and to transform their shopping experience into a “dream” instead of just the purchase of clothing. We seek to offer our customers a shopping experience that echoes our philosophy of establishing and cultivating a corporate image that reflects the affinity we share with Brazilian women.

80 Additionally, unlike our main Brazilian competitors, we are the only women’s clothing store that has an online store, Marisa Virtual (www.marisa.com.br). Our online store allows us to reach customers in Brazilian cities in which we do not have a physical presence and to increase our data base of target customers.

81 The table below sets forth our principal consolidated financial and operating data for the periods indicated:

Year ended December 31, Six-month period ended June 30, 2004 2005 2006 2006 2006 2007 2007 (in millions, except as other wise indicated) R$ R$ R$ US$ R$ R$ US$ Gross operating revenue ...... 721.3 977.7 1,299.4 674.7 497.1 743.6 386.1 Net operating revenue...... 500.3 667.6 875.4 454.5 338.6 510.8 265.2 Income (loss) from operations before financial earnings, depreciation of spun-off property and equipment, results from the equity method of accounting interest in real estate companies and revenue from lease of spun-off real property(1) ...... (0.8) 50.9 46.7 24.3 17.6 38.4 19.9 Net income (loss) from operations before minority interests, depreciation of spun-off property(5) and equipment, results from the equity method of accounting interest in real estate companies(5) and revenue from lease of spun-off real property(5) ...... (19.2) 27.6 (7.4) (3.8) (10.0) 37.9 19.7 Net income (loss) from operations after depreciation of spun-off property and equipment, results from the equity method of accounting interest in real estate companies and revenue from lease of spun-off real property ...... (40.0) 13.8 (57.5) (29.8) (27.1) 37.3 19.4 Adjusted EBITDA(2) ...... 8.7 63.0 67.9 35.3 27.3 55.3 28.7 Gross margin (%)(3) ...... 43.5% 49.4% 49.8% 49.8% 48.4% 48.5% 48.5% Adjusted EBITDA margin (%)(4) ...... 1.7% 9.4% 7.8% 7.8% 8.1% 10.8% 10.8% Short-term indebtedness ...... 55.8 120.2 341.6 177.3 310.4 491.2 255.1 Long-term indebtedness ...... 4.1 5.3 176.5 91.6 9.5 223.5 116.1 Number of stores ...... 148 149 166 166 152 175 175 Total sales area (in m2)...... 94,696 107,057 152,412 152,412 116,728 167,047 167,047 Average sales area (in m2)...... 639.8 718.5 918.1 918.1 767.9 954.6 954.6 Average sales in installments ticket including interest ...... 112.1 127.4 119.9 62.2 121.6 110.2 57.2 Average sales in installments ticket excluding interest ...... 87.8 91.0 90.1 46.8 82.7 89.8 46.6 (1) For further information on our corporate restructuring process, real estate companies and the organization of our activities, see “—Corporate restructuring” and notes Nos. 1, 4 and 11 to our financial statements, included elsewhere in this offering circular. (2) Adjusted EBITDA provides for a measure of our operating performance. Adjusted EBITDA is not a measure of financial performance under Brazilian GAAP and should not be considered individually as a measure of our economic performance or as an indication of liquidity. Our Adjusted EBITDA consists of EBITDA plus or minus the result from the equity method of accounting interest in real estate companies, revenues from the rental of spun-off property, net non-operating result and minority interests. There is no standard formula for calculating Adjusted EBITDA. Our definition of Adjusted EBITDA and how we calculate it may not be similar to the definition or calculation method of Adjusted EBITDA used by other companies. For more information on Adjusted EBITDA, see “Presentation of Financial and Certain Other

82 Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” (3) Gross margin equals gross income divided by net operating income. (4) Adjusted EBITDA margin equals adjusted EBITDA divided by net operating revenue. (5) Discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Presentation of Financial and Certain Other Information—Combined and consolidated financial information” and Note No. 4 to our financial statements.

Our strengths

We believe our strengths increase our competitiveness and help us achieve our strategic objectives. They include the following:

Strong brand and highly recognized slogan: “Marisa – By Women for Women” (“De Mulher para Mulher”). We believe we are the first choice of middle and middle-lower income Brazilian women who want to be fashionable and acquire quality lingerie at competitive prices, according to studies conducted by Interscience in 2001, 2002 and 2003. We have a strong brand recognized throughout Brazil and believe our products have added value because of our corporate brand “Marisa.” We believe we have developed a corporate image that reflects the affinity we believe we share with Brazilian women. Furthermore, we believe our brand is the only one that focuses exclusively on women, especially middle-lower income women customers. Our well-known slogan, “By Women for Women” (“De Mulher para Mulher”), reflects our philosophy of (1) designing products, adopting marketing strategies and offering a shopping environment focused on women; (2) providing higher quality customer service and a more pleasant overall shopping experience to our customers than that offered by our main competitors; and (3) focusing on the quality and variety of our products. We believe we are better positioned to take advantage of the increased demand for clothing and financial products among our target customers than our main competitors given our reputation and brand recognition.

83 Quality, fashion-oriented products at affordable prices and with attractive margins. We have significant experience selling women’s clothing to middle and middle-lower income customers and designing quality products at affordable prices, inspired by the latest national and international fashion trends. This allows us to offer our fashion-conscious and cost-sensitive target customers products at reasonable prices while obtaining margins that we believe are generally higher than those achieved by our competitors.

Our strategies

Our strategies focus on maintaining our position as the leading clothing retailer in Brazil, sustaining the continued growth of our business and increasing our profitability.

84 • Expanding our stores and increasing product diversification. We intend to continue offering Brazilian women the convenience of purchasing clothing for all members of their families at our stores. We plan on increasing the size of our stores and adapting them to our updated store layout standards with sales areas averaging between 1,200 m² and 1,700 m². Historically, implementation of this improved layout has resulted in significant increases in our market share, gross operating revenue and enabled the addition of product lines. In 2004, 2005 and 2006, the gross revenue from sales in our new departments (men’s clothing, children’s clothing, bed, bath and table linens) grew twice as much as the sales in our women’s department. We believe the growth of our revenue was mainly due to our successful incorporation of the new departments because women shop for their families while acquiring products for themselves. • Analyzing acquisition opportunities. We plan on continually monitoring the clothing retail industry and constantly analyzing opportunities for acquisitions and strategic partnerships. We intend to explore selected opportunities for operating in complementary business segments, increasing profitability and gains from scale, and adding value to our shareholders.

Our history We opened our first store, “Marisa Handbags” (“Marisa Bolsas”), in 1948 under the leadership of our founder, Bernardo Goldfarb. During our first years in operation, we gradually developed brand recognition among Brazilian women. In 1950, we were at the forefront of developments in the women’s clothing market and we opened what we believed to be the first outlet store in Brazil, “Marisa Wear” (“Marisa Malhas”). Shortly thereafter, we applied the brand name “Marisa” to all of our stores.

In 1952, we began expanding our operations throughout Brazil, opening new stores in Porto Alegre, Belo Horizonte, Salvador, Recife and Manaus. In 1982, we were present in all of Brazil’s regions and, in 1990, following retail market trends, we opened our first store in a shopping center in the city of São Paulo. We can attribute our early growth to a gradual and planned development. Marisa became recognized nationwide as a chain for women’s fashion clothing and lingerie because of its philosophy of offering women quality clothing at affordable prices.

In 1999, we developed a new store model in response to consumer demand as documented in market studies conducted by Interscience, a well-known market research company in the retail industry. The new store model was designed to make shopping more convenient for our target consumers by increasing the mix of products we offered so that female Brazilian shoppers could purchase goods for their entire families at one store. We developed a new concept of stores with sales area greater than 1,200 m2 that sold men’s and children’s clothing and bed, table and bath linens, as well as women’s clothing.

To better meet our customers’ needs, in 1999 we created our private label credit card, the Marisa Card, to provide credit to our customers. See “—The Marisa Card.” We also opened our online store, Marisa Virtual, which facilitates purchases through our website (www.marisa.com.br).

85 In 2001, we entered into a new phase of modernization and expansion which included the standardization of our stores’ display merchandise according to “lifestyle” categories. As a part of this transition, we have focused on improving and modernizing our brand’s image.

In 2006, in order to expand the types of consumer credit we offer to our Marisa Card holders, we executed a purchase agreement to acquire SAX, a financial institution. The main purpose of SAX will be the financing of credit for our customers, but only after its transfer is approved by the Central Bank.

Corporate restructuring The Marisa Group is composed of various companies that operate in the retail, wholesale, logistics, real estate, financial and private label card segments. See “—Ownership structure.”

We were incorporated on August 15, 2006.

On December 31, 2006, we completed a corporate restructuring process intended to spin off wholesale and real estate operations that were not directly related to our main corporate purpose of retail and retail financing. As part of this process, Begoldi transferred the retail, logistical services, financial and private label card companies previously under its direct control to us. Begoldi became our direct controlling shareholder pursuant to a transaction whereby Begoldi subscribed for shares issued by us. Begoldi paid for the shares it acquired with its equity interests in these retail, logistical services, financial and private label card companies.

As a result, Begoldi became our controlling shareholder through the contribution of equity interests held in Marisa Lojas, Due Mille and FIX, and our capital stock increased to R$41,284,417.00. The shares we issued to Begoldi in exchange for these equity interests represented 99.9% of our capital stock. See “Principal Shareholders.”

On March 2, 2007, we increased our capital stock. Begoldi contributed R$1,000,000.00 and the indirect controlling shareholders of Marisa S.A. contributed their equity interests in FIX, which amounted to 4.41% of its total shares. Also in March 2007, our controlling shareholder reduced our capital stock by R$8,882,784.00, and paid our shareholders Marcio Luiz Goldfarb, Denise Goldfarb Terpins and Décio Goldfarb shares issued by us. As a result, the indirect controlling shareholders currently hold 25.2% of our capital stock and Begoldi holds the remaining 74.8% equity interest as of the date of this offering.

On June 29, 2007, Flin became our shareholder pursuant to a transaction whereby the indirect controlling shareholders of Marisa S.A. subscribed for shares issued by Flin. As a consideration for the shares issued by Flin, the indirect controlling shareholders of Marisa S.A. transferred 8,652,777 common shares issued by us to Flin. These 8,652,777 shares corresponded to 19.4% of our capital stock.

On September 20, 2007 our shareholders approved in a special general meeting a 1 to 3 split of our shares. As of that date, we have 133,903,230 issued shares.

Currently, MAX controls SAX. MAX is controlled by the indirect controlling shareholders of Marisa S.A., and Begoldi is a minority shareholder of this company. In early March 2007, we submitted an application to the Central Bank to acquire all of MAX’s shares, which is currently under the Central Bank’s review.

86 Ownership structure Our current ownership structure is set forth below:

R.T.M PARTICIPAÇÕES TWISTER PARTICIPAÇÕES M.G. PARTICIPAÇÕES LTDA. LTDA. LTDA.

33.3% 33.3% 33.3% Décio, Marcio e Denise

BEGOLDI COMÉRCIO FLIN PART. LTDA. PARTICIPAÇÃO E ADM. S.A. (1) 19.4%

74.8%(1)

MARISA S/A

99.9%(2)

(3)

MARISA LOJAS DUE MILLE FIX PARTICIPAÇÕES MAX PARTICIPAÇÕES VAREJISTAS PARTICIPAÇÕES LTDA. LTDA. LTDA. LTDA. (2) 99.9% 100%

CREDI-21 SAX S.A. PARTICIPAÇÕES LTDA. CRÉDITO, FINANCIAMENTO E INVESTIMENTO (2) 99.9%

TEF SERVIÇOS DE PRIMOS PARTICIPAÇÕES TCM PARTICIPAÇÕES PROCESSAMENTO DE LTDA. LTDA. DADOS LTDA.

Our subsidiaries We currently hold equity interest in the following companies: • Marisa Lojas: The business purpose of Marisa Lojas is the sale of clothing in general and other items that are commonly found in a department store. Marisa Lojas additionally imports lingerie, trousers, sweaters, jackets and shirts mainly from Vietnam, China and Bangladesh and sells our products in Brazil and abroad. • Due Mille: Due Mille oversees our logistics related to the transport and distribution of the items we sell at our stores and the clothes hangers used by us. • FIX: FIX operates as a holding company that invests in companies that manage the Marisa Card. The following are currently direct and indirect subsidiaries of FIX: • Credi-21: The main corporate purposes of Credi-21 are the management of the Marisa Card and the holding of equity interest in other companies.

87 • Primos: The main corporate purpose of Primos is to act as an intermediate between customers and insurance companies in the sale of insurance to Marisa Card holders. The insurance companies offer our cardholders life, home and unemployment insurances. • TCM: TCM gathers data from customers and performs audit analyses for the Marisa Card. • TEF: TEF prints and distributes the Marisa Card monthly bills.

“By Women for Women” (“De Mulher Para Mulher”) We are the largest Brazilian department store chain specialized in women’s clothing and lingerie, based on the number of stores published by our major competitors on their websites. We believe our success is mainly due to our philosophy of establishing a close relationship with our Brazilian customers, as reflected in our slogan “By Women for Women” (“De Mulher Para Mulher”). This relationship is established through our consistently personalized services, which often result in strong interpersonal relationships between our salespersons and our customers that promote consumer loyalty and future purchases at our stores.

Our customers We target middle-lower income women between the ages of 20 and 35 who have an average annual household income of R$12,600.00. Our customer profile is young and modern women who want to dress well and acquire quality products at affordable prices.

The middle-lower income class is the largest socioeconomic group in Brazil, according to ABEP. This factor, combined with women’s greater participation in the labor market, has created favorable conditions for middle-lower income women to increase their purchasing power for personal consumption. Our strong position in this market gives us a competitive advantage to benefit from this potential growth.

Product themes and variety We offer our customers the convenience of purchasing personal clothing and family products at the same store. We have a broad mix of products, including women’s clothing and lingerie, men’s and children’s clothing and bed, table and bath linens.

Our departments are organized according to “lifestyle” categories, which facilitate sales and encourage impulse purchases. As of June 30, 2007, we offered the following “lifestyle” categories of clothing in our stores: • Women’s clothing: young, contemporary, classic, surf wear, sporting and beachwear; • Women’s lingerie: young, contemporary, sexy and classic; • Men’s clothing: young, contemporary, casual and business casual; and • Children’s clothing: age groups between one and three years old, four and eight years old and ten and sixteen years old.

Our fashion departments, their respective “lifestyle” categories and our non-clothing products, as well as their respective percentages of our gross revenue for year ended December 31, 2006, are described below:

Women’s clothing and lingerie department. We organize our women’s clothing and lingerie departments according to the following “lifestyle” categories: young, contemporary, classic, surf wear, sporting and beachwear. In our women’s department, we sell a broad variety of products, including blouses, pants, skirts, dresses, jackets, sweaters, lingerie, socks, purses, jewelry and accessories, among others. These products represented 81.6% of our gross revenue in the first half of 2007.

88 Men’s clothing department. Our men’s clothing department targets men between the ages of 20 and 35. We organize this department according to the following “lifestyle” categories: young, contemporary, casual and business casual. Products in this department include shirts, pants, T-shirts, shorts, jackets, sweaters, underwear, socks and accessories. These products represented 6.5% of our gross revenue in the first half of 2007.

Children’s clothing department. This department is organized by age group: from one to three years old, four to eight years old and ten to sixteen years old. Our children’s clothing department sells mainly blouses, shirts, pants, shorts, t-shirts, socks, baby clothes and other items and accessories. These products represented 8.5% of our gross revenue in the first half of 2007.

Bed, table and bath linens department. This department sells sheets, bedspreads, comforters, tablecloths and towels and represented 3.3% of our gross revenue in the first half of 2007.

Our brand has a strong market reputation. The majority of our products are sold under the “Marisa” corporate brand with the aim of benefiting from our market reputation, distinguishing our products and enhancing brand loyalty among our customers. We also offer a variety of products sold under well-recognized brands from suppliers including Disney, Warner, Mash, Del Rio, Valfrance, De Millus, Lupo, Trifil, Puket, Teka, Santista and Altemburg, among others.

In addition, we offer financial products to our customers through our Marisa Card. See “—The Marisa Card.”

Product development We develop quality products at attractive prices in accordance with the latest fashion trends. Our collections are organized according to “lifestyle” categories and fashion themes and are designed in-house on the basis of frequent research on international and domestic fashion markets. We have three main collections during the year: two for summer and one for winter. We create mini-collections on a monthly basis to renew our main collections, which are based on the same styles but marketed in different colors, shapes and fabric patterns to increase variety within our brand and promote impulse purchases. Our stores receive new products on a daily basis to renew our collections, leading to increased customer traffic and loyalty.

In addition to in-house fashion design, the items in our collections are developed in partnership with the design departments of our suppliers according to the themes, colors, shapes and fabric patterns determined by our designers.

After our collections are developed by our designers, the products are then manufactured exclusively for us by carefully selected suppliers, following our quality standards, models and price. Products developed in partnership with the design departments of our suppliers are also manufactured exclusively for our brand.

By developing our collections in-house and stipulating the guidelines to be followed by our suppliers, we have control over the production process, which includes: researching for our collections, selecting product themes, negotiating with our suppliers over topics such as quality control and delivering our products to our distribution centers and ultimately our stores.

Our suppliers We currently have more than 550 carefully selected suppliers throughout Brazil and the world. Our strategy is to create long-lasting partnerships with our suppliers aimed at improving the management of our product supply chain.

89 Our purchasing decisions are always based on market research and aim to further our goal to offer high quality, fashionable products at attractive prices to our customers. In the first half of 2007, approximately 8.1% of our purchases were imported goods, mostly from Vietnam, India, China and Bangladesh. In addition, our purchases are diversified and we are not overly dependent on any single supplier. In the first half of 2007, our largest supplier represented less than 4.7% of our purchases and our five largest suppliers together represented 13.9% of our purchases. During the same period, our top 100 suppliers represented 73.1% of our total purchases.

Our 60 years of experience in the market has enhanced our ability to select and build relationships with our suppliers. We select suppliers that meet our requirements based on quality, price, modeling and that demonstrate the ability to keep pace with the fashion industry’s current trends. Additionally, we require our domestic suppliers to adhere to legal and ethical guidelines by signing specific contracts with us. We are in the process of implementing this obligation with our international suppliers. In addition, every month we evaluate new suppliers to identify new commercial partners. We also periodically monitor our current suppliers according to ethical, financial and tax criteria in accordance with applicable Brazilian laws.

Our shopping experience We are the largest Brazilian department store chain specialized in women’s clothing and lingerie, based on the number of stores published by our major competitors on their websites. We currently have 181 stores distributed throughout Brazil, except in the states of Roraima and Tocantins, with approximately 178,037 m2 of total selling space. In addition, we have an online store, Marisa Virtual (www.marisa.com.br). As of June 30, 2007, we operated 175 stores in 84 cities, with the following regional breakdown:

Summary Stores in per region shopping Street Geographic region (number of stores) centers stores Southeast ...... 94 41 53 South...... 30 11 19 Northeast ...... 31 14 17 North...... 9 2 7 Midwest ...... 11 7 4 Total ...... 175 75 100

Unique shopping experience. Most of our expanded stores have more than 1,200 m² of selling space and feature renovated lighting, modern decorations and creative and attractive displays. Our products are displayed according to “lifestyles” categories to encourage the purchase of additional merchandise from themed displays. We seek to provide our customers with a welcoming environment and effective, personalized services. We believe that we provide a unique shopping experience to our target market of middle-lower income women who traditionally shop at stores that do not provide the same quality of commercial atmosphere and service.

Stores. As of June 30, 2007, 100 of our stores were street stores located in busy commercial areas and 75 were located in shopping centers. All of our stores are rented. See “—Material contracts—Lease agreements.”

Currently, approximately 85% of our total selling space already meets our architectural and visual standards. As over half of our stores have been renovated in the last year, most of our stores will not require modernization investments in the coming five years. Therefore, we intend to use the proceeds of this offering for the expansion of our chain.

90 As of June 30, 2007, the table below sets forth the development of our stores and selling space, including the number of renovated, newly-opened and closed stores per year, for the periods indicated:

Total sales Total area at number of year-end Enlarged Opened Closed stores at (thousand Period stores stores stores year-end m²)(1) 2000 ...... 4 5 7 138 72,057 2001 ...... — 3 1 140 72,804 2002 ...... 2 8 6 142 79,222 2003 ...... 1 11 5 148 87,582 2004 ...... 7 6 6 148 94,696 2005 ...... 13 5 4 149 107,057 2006 ...... 36 18 1 166 152,412 January-June 2007 ...... 7 9 — 175 167,047 Total ...... 70 65 30 175 167,047

(1) Excluding sales area related to Marisa Card services.

On June 30, 2007, we owned 111 renovated stores and 64 stores not yet remodeled in line with our new expanded area model. Currently, we own 121 renovated stores and 60 stores not yet remodeled in line with our new expanded area model. • Expanded stores. We renovate and expand the selling space of stores we operate to promote our strategy of increasing the number and variety of products we offer. Between 2000 and 2006, we expanded the selling space of 63 of our stores. • Newly-opened stores. We open new stores in strategic locations, both to consolidate our market share in locations where we already operate and to develop our customer base in new markets. Between 2000 and 2006, we opened 56 stores. • Closed stores. We close stores that under-perform, that no longer meet our standards for selling space and that have depreciated buildings. In general, we open a new store in line with our expanded selling space model to replace any store closed, with the goal of locating the new store within the same market as the previous store. Between 2000 and 2006, we closed 30 stores.

We intend to continue evaluating opportunities to open new stores throughout the country in strategic locations, as well as to remodel stores that have not yet converted to our expanded selling space model. • Online store. We are the only women’s clothing department store among our competitors that has an online store. Our virtual store offers the same products sold in our department stores. Our virtual store allows us to sell products in cities where we do not have a physical presence and to provide our customers with the convenience of purchasing our products without having to go to a store. While our revenue from sales by our virtual store is still not significant in our operating results, such sales have increased by 100% in the last two years. Our virtual store is the fastest growing store in our chain. We expect sales over the internet to continue growing as the digital divide that currently affects the middle and middle- lower income classes is bridged and acceptance of online shopping increases among internet users. Our experience in e-commerce places us in a strong position to take advantage of such changes.

91 Logistics and distribution We have four distribution centers that are strategically located close to Brazil’s largest consumer markets as set forth in the following map:

Distribution Map

All of our distribution centers are rented. The largest is located in the state of São Paulo and distributes merchandise to all of the southeastern states and part of the midwestern and northern regions of Brazil. Our other distribution centers are located in the state of Santa Catarina, distributing merchandise to the other states in the southern region, in the state of Pernambuco, distributing merchandise to states in the northeastern region, and in the state of Goiás, distributing merchandise to states in the midwestern and northern regions.

Our distribution centers provide flexibility and efficiency in our distribution process. They are responsible for the receipt, quality control, processing, packaging and delivery of merchandise to our stores, which arrive at our stores labeled and on clothes hangers, ready for immediate sale to the consumer. Our clothes hangers are then recirculated through our distribution centers via a process that involves the removal of clothes hangers from our stores, their return to our distribution centers for reprocessing and packaging and their later delivery to our suppliers.

We believe that our distribution centers have the capacity to meet both the current needs of our department store chain and the future needs of the stores that we intend to open in accordance with our expansion plan. Investments we have already made in our distribution centers will allow us to increase our product distribution by an additional 30.0%.

We use outsourced transporters to transport our product from our distribution centers to our stores. We are not overly dependent on any single transport company, and we believe that, if any of our current transporters were to become unavailable, alternate transporters could be contracted without any material disruption to our

92 business. Our transporters are carefully selected and monitored by our logistics team. We believe that the existing fleet of trucks operated by our transporters is sufficient for our operations and suitable for the types of products we distribute. In the case of e-commerce sales, deliveries are made through the postal service and paid for directly by our customers to the post office.

The Marisa Card To facilitate our customers’ purchase of our products, in 1999 we created our own private label credit card, the Marisa Card, to provide our customers with rapid and easy access to credit. The Marisa Card allows our customers to pay for their purchases either in up to five monthly installments without accruing interest or in up to eight monthly installments with interest. Currently all of our stores have equipment which issues permanent cards in less than ten minutes.

Marisa cardholders are offered credit for any purchase at our department stores or through our virtual store and may pay for purchases in installments, obtain revolving credit and participate in exclusive promotions for cardholders. In addition, by using our Marisa Card, our customers have access to insurance policies which we offer, including insurance against card loss or theft, residential damage insurance, unemployment insurance and family insurance.

The Marisa Card is an important tool in our business strategy to: (1) gain customer loyalty; (2) market our regular sales promotions; (3) increase our average revenue per customer; (4) increase the likelihood of future purchases by encouraging customers to use our Marisa Card, which is accepted exclusively at our stores; and (5) offer a broad variety of financial services through our network of stores. The Marisa Card thus represents an important tool for increasing our sales revenue.

Customers who use our Marisa Card benefit from our status as the card’s sole issuer. As the sole card issuer, we can offer our consumers more credit flexibility and provide purchase incentives at our stores. We also benefit from our status as the card’s sole issuer as this provides us access to the card’s customer database and allows us to develop targeted marketing strategies and sales promotions.

Our customers’ initial credit limit varies between R$100.00 and R$1,000.00. Customer credit analysis is carried out by means of an evaluation using our own credit score model. Upon receipt of our customers’ registration information, we make telephone calls for the confirmation of certain data such as residence, home telephone and work address. Then, we carry out an initial credit check through Brazil’s main credit protection agency, the SPC. If the results of the SPC system list the individual as pre-approved, the customer’s information is then analyzed according to our credit score method by means of data cross-checking. The credit score method establishes an appropriate credit limit for each particular customer’s risk profile. We call our credit score model “good for” (“bom para”), where our approved customers are designated an appropriate profile that is “good for” a particular credit limit. This model differentiates us from the traditional method of granting credit, called “pass-or-fail,” and allows us to increase our consumer base by offering credit to customers who otherwise do not have access to such financial services while mitigating our credit risk portfolio.

As of June 30, 2007, we had issued over 8.5 million cards, of which 48.7% were active cards where purchases have been made in the preceding six-month period. In 2006, 65.6% of our sales were financed through the Marisa Card, with the average customer having spent R$85.67. In the six-month periods ended June 30, 2006 and 2007, our Marisa Card financed 61.7% and 66.2% of our sales, corresponding to average purchase amounts of R$81.03 and R$83.57, respectively.

In 2006, the Marisa Card payment default rate was 8.8% of our receivables portfolio. In the six-month periods ended June 30, 2006 and 2007, our Marisa Card default rates were 8.0% and 7.0% of our sales paid with the Marisa Card, respectively. In the course of 2007, our customer database has increased significantly and, thus, we have expanded our consumer credit offer. As a consequence, we believe that Marisa Card’s payment default rate may be 14.8% of the sales paid with our Marisa Card on December 31, 2007, meaning that the respective

93 amounts will be recorded as losses. We consider a customer to be in default when he or she has not paid a monthly bill or has not partially renegotiated the outstanding debt for more than 180 days past maturity. In these cases, if the customer does not pay the amount of the bill or pays less than the minimum payment amount stated in the bill (equivalent to 40.0% of the total amount of the bill), a fine of 2.0% will be charged plus a late payment interest of 1.0% per month for monetary penalty and 9.98% per month for financial charges, on a pro rata basis. If the customer pays the minimum amount stated in the bill or more, 9.98% interest per month will be charged for financial charges on a pro rata basis. Thus, any outstanding debt is covered by interest payments, fines and other charges, as well as by card insurance, which covers our losses. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

We seek to minimize our losses by initiating debt recovery procedures on outstanding unpaid bills. Our debt recovery department has a system that differentiates between the profiles of defaulting customers and initiates a variety of debt recovery measures tailored to each profile. Each debt recovery measure is carried out through one of the 102 customer payment centers that are dedicated exclusively to customers who are in default between 11 and 90 days. After this period, we use specialized debt recovery firms to expedite recovery of the unpaid credit.

While all customer payment centers are outsourced, we control the collection process. In addition to our 102 customer payment centers specializing in the recovery of late payments, we have a call center with approximately 100 customer service stations, where approximately 3 million telephone calls are received every year. In addition to telephone services, we answer approximately 52 million service requests per year in our stores, including opening accounts for new customers, balance inquiries, requests for copies of statements and billing and payments inquiries.

In June 2006, our indirect controlling shareholders began SAX operations by implementing the “Tá na Mão” (“It’s in your hands”) program, where we select certain Marisa Card registered clients and provide them with the ability to make in-store cash withdrawals up to a maximum limit of R$150.00 per customer, which can be repaid in up to five installments with interest. In 2006, we processed 34,078 such withdrawals averaging R$124.00 per withdrawal, representing total withdrawals of R$4,253,621.04. In the first half of 2007, we processed 96,057 withdrawals averaging R$115.60 per withdrawal, representing total withdrawals of R$11,104,427.00.

Insurance We maintain a partnership with Assurant Seguradora S.A. whereby we offer our Marisa cardholders the following types of insurance:

Marisa Card loss or theft insurance. This insurance covers payments from fraudulent transactions that may occur as a result of card loss or theft, provided that the cardholder notifies us of the loss or theft within 72 hours of the event.

Family insurance. This insurance covers an insured cardholder’s legal beneficiary in the event of accidental cardholder death and provides limited reimbursement of burial expenses in the event of death.

Death or unemployment insurance. This insurance covers payment of outstanding Marisa Card debts in the event of the cardholder’s death for any reason, full or partial permanent disability in the event of an accident, involuntary unemployment, and full or partial temporary disability in the event of accident or disease.

Residential insurance. This service provides residential insurance to individuals without bank accounts, who otherwise do not have access to this type of insurance. The insurance covers residential damages due to fire, explosion, landslides or flooding and, in addition, offers 24-hour small repair assistance at one of the lowest insurance costs available in the market.

Personal loan insurance. This insurance provides limited coverage for the payment of outstanding credit card debts in the event of the cardholder’s death for any reason, full or partial permanent disability due to accident, involuntary unemployment and full or temporary disability due to accident or disease.

94 These types of insurance have been selected by Primos, a company within our group that manages the Marisa Card, with headquarters located in the city of Barueri, state of São Paulo, pursuant to a specific agreement to which Marisa Lojas is an intervening consenting party.

Credi-21 is responsible for managing all insurance proposals submitted by Assurant Seguradora S.A. to Marisa cardholders. Credi-21 is also responsible for any insurance where eligibility requirements are not observed or where a cardholder’s application for insurance is maintained by Credi-21 even after such application is refused by the insurance company.

Insurance is sold in-store, either on credit or through additional insurance, and through telemarketing. Credi-21 is required to transfer all premiums to the insurance company. If Credi-21 does not transfer the premium, the insured person will continue to be covered by the insurance and the insurance company will be liable for the payment of any claims under the relevant insurance policies. However, Credi-21 will indemnify the insurance company in the amount of 100% of the un-transferred premiums, any indemnified claims and all necessary expenses related to prizes offered by the insurance policy, such as capitalization bonds granted by lottery, mileage credits, loyalty credits and others.

Forms of payment Our customers may purchase products at our stores using the following forms of payment: the Marisa Card, cash, checks, debit cards and credit cards.

The principal form of payment for purchases of our products is the Marisa Card, which allows customers to pay for purchases in installments. See “—The Marisa Card.” As of June 30, 2007, payments using the Marisa Card represented 66.2% of our total sales during the period. As of the same date, cash, checks, and debit and credit card payments represented 14.7%, 7.6% and 11.5%, respectively, of our total sales.

The table below sets forth the share of each payment type of our total sales volume for the periods indicated:

Six-month period ended Year ended December 31, June 30, Form of payment 2004 2005 2006 2006 2007 Cash and checks ...... 21.9% 17.3% 16.0% 17.3% 14.7% Debit cards ...... 8.5% 7.7% 7.5% 8.4% 7.6% Post-dated checks (30, 60 and 90 days)(1)...... 3.1% 1.0% 0% 0% 0% Credit cards ...... 14.2% 11.6% 11.0% 12.6% 11.5% Marisa Card ...... 52.3% 62.4% 65.5% 61.7% 66.2% Total ...... 100% 100% 100% 100% 100% (1) Post-dated checks are no longer accepted since our customers may instead purchase on credit through the Marisa Card.

Credit cards. We accept the following credit cards: MasterCard, Visa, Diners Club, Hipercard, Aura, Sorocred and American Express. The total amount of the purchases with these credit cards can be paid in up to three installments without accruing interest.

Debit cards. We accept debit cards issued by most Brazilian financial institutions.

Our default rate is practically zero for payment made via cash, check, debit cards and credit cards. The most significant default rates for payment for our products is registered by the Marisa Card. See “—The Marisa Card.”

Marketing and advertising Our slogan “By Women for Women” (“De Mulher para Mulher”), recognized nationwide, underscores the close relationship that we have developed with Brazilian women throughout our operation. We are recognized for

95 the quality of our marketing campaigns and our special offers. We seek to develop marketing campaigns using characters, slogans and logos that are identifiable with our target market.

Advertising and publicity campaigns carried out by us have given us a strong and recognizable presence in Brazilian women’s fashion. Our strategy of constant innovation and high quality marketing materials has given us a strong and modern image recognized by Brazilian women.

Through media such as television and radio advertising and advertisements at our sales centers, we present new retail collections and special offers to our target market. Through memorable and focused media campaigns we have distinguished ourselves vis-à-vis our competitors, and today our brand is positively viewed by Brazilian female public and is nationally recognized as a modern, dynamic and sensual women’s clothing brand.

In 2001, 2002 and 2003, we were recognized in São Paulo and Porto Alegre as the first choice of lingerie brand of consumers, according to the Top of Mind surveys published by the Interscience Research Institute (Instituto de Pesquisa Interscience).

In 2006, we were the recipients of a Superbrands publication prize acknowledging us as one of the strongest brands in Brazil, with outstanding performance in the women’s clothing segment.

A 2006 Interscience survey of consumers ranking companies according to “respect for customers,” considering such factors as product quality, price, marketing, and customer service, ranked us ahead of other clothing retailers in Brazil.

For the third year in a row, our virtual store was awarded the 2007 Diamond Store (Loja Diamante) prize for excellence and quality in e-commerce (Excelência e Qualidade em Comércio Eletrônico) by E-bit, a market research institute that evaluates e-commerce in Brazil.

Competition The retail sector in Brazil, including the clothing retail business, is highly diversified and consequently very competitive. In the clothing, bed, table and bath linens market, we compete with small-, medium- and large-scale urban street stores, national and international department stores, supermarkets, hypermarkets and discount and specialized stores.

Given the fragmentation of competition in the clothing, bed, table and bath linens market, and the difference in the characteristics of competing stores, it is difficult to define a single standard for identifying our competitors. The market for large-scale stores is significantly different from that for small-scale stores. In addition, the location and area of service coverage of these small- and large-scale stores do not directly correlate with the competition these stores impose on our business.

Our competitors in the clothing, bed, table and bath linens market can be divided according to characteristics including: the institution’s size and tradition, target markets, location of stores, visiting public, area of service coverage, proximity to public transportation and the products offered, among others. However, the main differences among individual competitors in the retail market relate to the quality and variety of products offered, customer service, prices, store layout, the brands sold, the capacity to offer credit to customers and the number of complimentary services offered.

Some Brazilian department stores may compete with us by offering a larger variety of merchandise, lower prices or more financing than we do. Our main competitors in these product areas, as well as in target customers and store location, are: C&A, Riachuelo and Renner.

Small-, medium- and large-scale retailers are also our competitors. Some small-scale stores take advantage of the inefficient enforcement of the Brazilian tax and legal systems and operate in the informal market where

96 they are able to offer goods at artificially low prices. To a lesser extent, we also compete with discount stores that generally offer low quality goods at lower prices.

The Brazilian retail market may experience unexpected changes that could adversely affect us. Our current competitors and new participants in the Brazilian retail market, including large international retailers, may have significantly larger financial resources than we do or may have access to these resources as well as access to the Brazilian and international capital markets on better terms than we do. In addition, large international retailers may acquire Brazilian retailers, negatively affecting our current market share and preventing us from increasing our customer base in new markets.

Information technology systems We believe that our information technology system is a key component of our business strategy. We use a broad range of software applications, some of which we have developed in-house, to manage and process our retail, inventory, supplies and financial analysis information. These systems provide us with daily information on commercial, financial and other indicators, and such information is used in our strategic planning and decision- making.

Our information technology systems are integrated and provide our managers and employees with quick access to company-wide information, which is essential for us to maintain efficient control of our operations. Our operations are supported by the best information management systems available in the Brazilian market. We also employ SAP software to support our financial management, including internal control over financial reporting and our supply management. We use state-of-the-art software developed by U.S. software maker JDA Software Group, Inc. for the management of our merchandise and distribution centers. Additionally, SAX and the Marisa Card management company, FIX, maintain integrated computer systems. We also have specialized human resources and store automation software systems.

We believe that our information technology systems represent a competitive advantage in the Brazilian market. To reinforce our competitive position, we intend to further invest in information technology, with the aim of reducing waiting lines at cash registers while also reducing our labor costs, obtaining further information about purchases made at our stores and improving the management of our distribution network, pricing policies, inventory control and accounts payable and receivable. Additionally, we intend to bring our information systems in line with international standards regarding information storage, information security and contingency plans. See “Risk Factors—Risks relating to our business—Our data technology systems may be considered outdated when compared to those used by large American or European clothing retail companies.”

Employees Our human resources policy seeks to attract, retain and develop qualified employees, encouraging their professional development through training, development and professional recognition programs. We seek to retain employees that are aligned with our business values and strategies, with the goal of further supporting our business growth.

We formally employ and register our employees in accordance with the Brazilian Consolidated Labor Laws. In addition, interns, trainees and apprentices are employed in accordance with applicable rules and regulations. During the Christmas season and during other periods of unusually high sales volumes, we hire temporary personnel through temporary work agencies in order to meet the excess demand. We have on average 45 employees per store.

As of December 31, 2004, 2005 and 2006, we had 4,640, 5,350, and 8,157 employees, respectively. We hired a total of 1,536 temporary workers in 2004, 2,277 in 2005, and 2,733 in 2006, mostly in anticipation of sales peaks during the Christmas season.

97 The table below sets forth the number of our employees for the periods indicated:

Six-month period ended Year ended December 31, June 30, 2004 2005 2006 2007 Geographic regions Midwest ...... 255 309 479 489 Northeast ...... 692 910 1,397 1,437 North ...... 336 463 540 691 Southeast ...... 2,689 2,934 4,460 4,914 South ...... 668 734 1,281 1,325 Total ...... 4,640 5,350 8,157 8,856

Our compensation policy seeks to compensate each individual relative to his or her competence, development and professional responsibilities. Our compensation package is comprised of a standard wage, a variable additional compensation related to our internal policies regarding job role duties and related compensation levels and a performance bonus based on achievement measured against predefined goals and individual merit. As of the date of this offering circular, we have not experienced any strikes, protests or work stoppages. Our relationship with unions is reflected in collective bargaining agreements negotiated on a region- wide basis where our stores are located.

In 2006, we trained 7,316 employees and recorded 104,500 hours of training aimed at improving the individual performance of all of our personnel. Our training programs are aimed at developing the technical and interpersonal skills of our sales and administrative staff and providing management training.

Our main training programs evaluate individual employee performance and oversee the implementation of e-learning programs (distance training), the management of our trainee program, general management training, standardized attendance training and visual merchandising training.

We offer benefits including extensive medical assistance to employees and their dependents and a daycare allowance.

Every two years our human resources department carries out a survey of our corporate environment, which provides feedback on topics including working conditions, employee quality of life, the relationship between employees and our management and communication within our company. This research is conducted with the goal of revising, adjusting and ultimately improving our corporate environment.

98 Historical seasonality of our sales The table below sets forth the distribution of our gross sales revenue per quarter for the last three years. Over 60.0% of our billing is concentrated in the second half of the year, mainly due to purchases during the Christmas season and the spending of Christmas bonuses by employed consumers.

38.2% 38.9% 36.5%

24.4% 24.3% 23.1% 22.0% 23.0% 20.0% 17.3% 15.7% 16.2%

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

2004 2005 2006

Social responsibility We seek to incorporate a high standard of ethical responsibility into our activities; for example through the distribution of a manual to our stores, our head offices and Credi-21 regarding specific guidelines for physically disabled individuals.

We currently do not have a defined social responsibility policy, but we do take part in periodic events with organizations including the Morumbi Young Men’s Association (Associação Meninos do Morumbi), an entity that seeks to employ lower income young men, the New Project Association (Associação Nova Projeto), an organization for mentally disabled individuals.

Environmental responsibility Although we do not formally adhere to any international environmental protection standards, our activities do not cause a significant negative impact on the environment as we do not directly participate in pollutant- generating industrial processes.

Intellectual property Our most important and valuable asset is our “Marisa” trademark. Through our wholly owned subsidiary Marisa Lojas, we hold title to the “Marisa” trademark, which is registered with the Brazilian National Institute of Industrial Property (Instituto Nacional da Propriedade Industrial), or INPI. We also own other registered trademarks fundamental to our business, including the Credi-21 and SAX trademarks. In addition, we own the domain name “marisa.com.br.” These registrations are typically valid for ten years and are renewable for equal periods, so long as the registrable trademarks are in use during the renewal period.

99 Most of our merchandise is sold under the Marisa brand. Sales under this brand represented about 85.0% of our total sales in 2006.

In addition to the above trademarks, we own the “By Women for Women” (“De Mulher para Mulher”) slogan, associated with our corporate logo, which is recognized nationwide and supports our identity as a store that specializes in products for women.

We also hold exclusive licenses to sell merchandise in our stores under several registered and trademarked popular children’s brands.

In addition to these trademarks, we also hold licenses to distribute several trademarks with worldwide recognition, including Disney and Warner.

Moreover, we have registered with the INPI, a specialized software program, CCM, for the management and control of credit cards which we developed in-house in connection with our private label credit card.

Legal and administrative proceedings We are a party to several civil, tax and labor, legal and administrative claims. As of June 30, 2007, our provisions for legal and administrative proceedings amounted to R$96.3 million, of which R$71.0 million was related to tax cases, R$10.2 million was related to civil lawsuits and R$15.1 million was related to labor claims. We believe that our provisions for legal and administrative proceedings are sufficient to cover probable losses. We do not believe that any currently undecided legal or administrative proceeding, if judged against us, will have a material adverse effect on our financial condition, results of operations, business or corporate image.

The table below presents the consolidated position of our judicial contingencies, our provisions and our court deposits as of June 30, 2007.

Contingencies Provisions Court deposits As of June 30, 2007 (R$ millions) Tax cases ...... 98.1 71.0 12.4 Civil lawsuits ...... 24.7 10.2 0.7 Labor claims ...... 25.3 15.1 4.4 Total ...... 148.1 96.3 17.5

Tax litigation As of June 30, 2007, we were party to judicial and administrative tax lawsuits that represented a maximum contingency of approximately R$98.1 million, R$71.0 million of which were provisioned and R$12.4 million of which were deposited into judicial deposits accounts.

The most relevant tax cases disputed both in the administrative sphere and in court involve disputes related to (1) the collection of educational allowances; (2) the payment of social security contributions charged on a Christmas bonus paid to employees; (3) changes in the method for payment of contributions to the Unemployment Compensation Fund (Fundo de Garantia por Tempo de Serviço), or FGTS contributions; (4) changes in the system for determining, calculating and paying contributions to PIS and COFINS under Law No. 9,718/98; (5) balance sheet monetary adjustment indexes set forth under Law No. 8,200/91; (6) the levy of corporate income tax, or IRPJ, on remuneration payable to profit-sharing debentures; (7) the offsetting of tax losses; and (8) liabilities related to the value-added tax (a tax on circulation of goods), or ICMS, charged by Brazilian states.

100 The principal court and administrative tax cases to which we and/or any of our subsidiaries are parties are briefly discussed below:

Social security contributions. In February 1998, we filed a lawsuit disputing the collection of social security contributions levied on Christmas bonuses paid to employees and asserting our right to offset amounts unduly paid against regular social security contributions levied on payroll and payable by us. The action is pending judgment and the total amount involved in this case as of June 30, 2007 was R$3.6 million, which has been deposited with the court. The risk of loss in this case is classified as probable.

Unemployment compensation fund (FGTS). We also filed a lawsuit against the collection of social contributions to FGTS as levied under Supplementary Law No. 110/2001. The lower court decision was rendered in our favor, but both parties appealed it. The higher court judgment partially granted the claim, for which reason the National Treasury filed an appeal which was not received and has been denied. The total amount under litigation in this case, as of June 30, 2007, amounted to approximately R$4.1 million, which has been deposited with the court. The risk of loss in this case is classified as possible.

Law No. 9,718/98. We are also currently disputing the constitutionality of certain amendments under Law No. 9,718/98 which increased the tax basis of PIS and COFINS by encompassing financial revenue rather than just amounts billed, and also increased the COFINS tax rate on amounts billed from 2.0% to 3.0%. Based on the decision granted in our favor, since February 1, 1999 we have not paid contributions to PIS or to COFINS per the calculation method established by Law No. 9,718/98. The lower court decision recognized the unconstitutionality of the relevant provisions of Law No. 9,718/98 and ordered PIS and COFINS payments to be made according to the previously applicable law, which essentially required levy of these taxes strictly on gross revenue from sales of goods and services, such as ordered by case law, at a 2.0% tax rate until January 27, 2000 and 3.0% thereafter. Based on these changes in the payment system for these contributions, the Federal Revenue assessments demanded payment of COFINS in the amount of approximately R$46.3 million and PIS in the amount of approximately R$0.9 million. We have provisioned approximately R$46.3 million for COFINS and R$1.0 million for PIS. Based on a precedent set by the Supreme Federal Court, the risk of loss has been evaluated as probable in connection with the increase in the COFINS tax rate (from 2.0% to 3.0% of amounts billed), but is considered remote with respect to the COFINS tax base.

Law No. 8,200/91. We are currently disputing the applicability of the BTN-tax (National Treasury Bonds for tax purposes) as indexed by the Tax Liability Adjustment Index (Índice de Reajuste de Valores Fiscais), or IRVF, to our financial statements for the year 1991, with base year 1990, versus applying the BTN-tax indexed by the Consumer Price Index (Índice de Preços ao Consumidor), or IPC. We are also disputing the rule in Law No. 8,200/91 implementing the application of the Daily Reference Interest Rate (Taxa de Referência Diária), or TRD, on maturing income tax and contribution on net profit and tax on net profit monthly payments. Two tax assessments were drawn up against us in connection with the underpayment of such corporate income tax and contribution on net profits, which as of June 30, 2007 amounted to R$7.5 million, for which we established a provision in the same amount. The risk of loss in this case is classified as probable.

Corporate income tax (IRPJ)—offsetting tax losses. This tax case concerns (1) the allegedly undue offsetting of tax losses for the years 2000 and 2001, and (2) the failure to include a subsidiary’s profits earned abroad and paid to us in Brazil when calculating our taxable net profits. The final administrative decision was partially favorable to us, ruling that corporate income tax was not owed on the profits generated abroad by our subsidiary through 1997. The remainder of the tax levy, in the amount of approximately R$10.7 million as of June 30, 2007, was paid in installments according to a settlement procedure agreed upon with the tax authorities. We currently have 51 outstanding installments representing a balance of R$10.7 million.

VAT tax (ICMS). Taxes were levied on us by various Brazilian states requiring payment of a tax on the circulation of goods (Imposto sobre Circulação de Mercadorias), or ICMS, plus payment of fines and interest calculated at the legally applicable tax rate with respect to: (1) monetary restatement supposedly due on outstanding ICMS credits; (2) differences in application of a tax rate of 17.0% rather than 18.0% on the tax base;

101 (3) the exclusion of the tax from its calculation base; and (4) tax offsetting resulting from the acquisition of goods by taxpayers issuing bills the tax authority considers to be unreliable. As of June 30, 2007, our total provisioned amount for these cases was R$0.3 million.

Labor litigation As of June 30, 2007, we were a party to 529 labor cases representing a total contingency of R$25.3 million. A total of 437 of these labor cases refer to claims filed by employees of outsourced service providers, and 92 of these cases refer to claims filed by our former employees. Under Brazilian labor law, we are jointly and secondarily liable for non compliance with labor laws by our outsourced service providers. We have established a provision amounting to R$15.1 million. Based on the understanding of our outside legal counsel, these suits may be lost.

Civil litigation As of June 30, 2007, our subsidiaries Marisa Lojas, Credi-21 and SAX were defendants in a total of 1,868 civil lawsuits, of which 1,579 were filed against Marisa Lojas, 232 were filed against Credi-21 and one was filed against SAX. The total contingency represented by these lawsuits is approximately R$24.7 million. These lawsuits principally relate to indemnity claims for allegedly undue collections, wrongful inclusion in defaulting customer data centers, emotional distress damages mostly related to undue collections, and review of abusive interest rates.

As of June 30, 2007, the total amount provisioned for the 1,868 lawsuits was R$10.2 million. Marisa Lojas provisioned R$7.3 million, Credi-21 provisioned R$2.9 million and SAX recorded no provision.

In addition to these 1,868 lawsuits, Credi-21 and Marisa Lojas are defendants in a civil public action filed by the National Association for Citizenship and Consumer Defense (Associação Nacional de Defesa da Cidadania e do Consumidor), or Anadec, pursuant to which Anadec wants the courts to rule that some clauses related to the issuance of drafts against defaulting card holders and appointment of jurisdiction in São Paulo of the Marisa Card Administration Agreement to be null and void. Marisa lost the case and appealed. For tax purposes, we attributed an amount of R$10,000.00 to this action and we have established a R$60,000.00 contingency reserves for this action. Based on the understanding of our outside legal counsel, this suit may be lost.

Material contracts Purchase option–MAX Participações Ltda. On September 12, 2007, our indirect controlling shareholders granted us a private purchase option instrument for the acquisition of 99.9% of the shares of MAX Participações Ltda., at the book value of R$7,419,000.00. This purchase is subject to approval by the Central Bank and, if executed, will give us indirect control of SAX, which provides financial services to us. Furthermore, we believe the payment of this acquisition will not adversely affect our cash flow.

Below, are MAX’s financial data as of June 30, 2007: (in millions of reais) Total assets...... 11.7 Current assets...... 11.7 Current liabilities...... 4.1 Shareholders’ equity...... 7.7 Intermediate financial revenue ...... 4.1 Net profits...... 0.8

102 Lease agreements All real estate properties in which our registered offices and stores are located are leased properties. We believe the terms and conditions under which we have executed these lease agreements, in particular with respect to the term during which the contract is in effect, the events that trigger termination and the amounts involved, conform to prevailing market practices. In 2006, our expenses for the lease of the 205 properties on which our stores are located amounted to approximately R$45.0 million. We have executed lease agreements with (1) shopping centers, (2) third parties, and (3) related parties. See “Related Party Transactions.”

On June 30, 2007, we executed 223 lease agreements, related to the 205 properties above mentioned, of which 86 were entered with shopping centers, 64 with owners of street located real estates and 68 entered with related parties.

Lease agreements executed with shopping centers have terms varying between five and fifteen years which are renewable for subsequent five-year periods. In addition, shopping centers usually require the execution of related contracts, generally to ensure adherence to the general conditions governing the lease of commercial spaces in shopping centers and to the shopping center’s particular internal regulations. These internal regulations typically establish rules and guidelines applying to all shopping center storeowners. Our lease agreements typically require related party guarantors. See “Related Party Transactions.”

Lease agreements executed with third parties also generally have terms of between five and fifteen years and are typically renewable for subsequent five-year periods. Our lease agreements with related parties are entered into for five-year periods and may be automatically renewed for periods between two and five years. Several related parties are lessors under these lease agreements and thus do not require that we provide guarantors. Rent is always set pursuant to the local market practices.

All of our lease agreements have been entered into for a minimum of five years. Pursuant to Law No. 8,245, dated October 18, 1991 (Lease Law), tenants are entitled to file a lawsuit to ensure lease renewal for additional five-year periods. The requirements for filing this action typically include: (1) a lease agreement originally entered into for a definite five-year period at minimum; (2) tenants operating in the same business for a minimum of three years; and (3) filing must take place between one year and six months prior to the termination of the lease.

The table below indicates the number of our lease agreements by termination date and the number of agreements we are entitled to renew, either contractually or under the Lease Law, as of June 30, 2007.

Number of agreements Number of agreements Number of agreements permitting at least two permitting one Number of lease we may renew pursuant automatic five-year automatic five-year Year agreements terminating to the Lease Law renewals renewal 2007 ...... 49 49 46 3 2008 ...... 29 29 19 3 2009 – 2011 ...... 34 34 3 — 2012 onwards...... 111 111 — 2 Total ...... 223 223 68 8

In general, tenants are typically granted preemptive rights to acquire a leased real estate property under the same terms and conditions as a third party bona fide offer to purchase. However, if the leased property is sold to a third party, the acquirer of the property is required to not terminate and abide by the terms of the lease agreement, except under certain specific circumstances, provided that the lease agreement: (1) has been entered into for a definite period, (2) contains a provision on the term of effectiveness of the lease and (3) has been registered with the real estate registry office with jurisdiction over the area in which the property is located.

103 Decisions regarding transactions entered between us and related parties are approved by our board of executive directors or our board of directors, in accordance with the Brazilian Corporate Law and our bylaws.

Moreover, according to Brazilian Corporate Law, our directors and executive officers are prohibited from voting at shareholders’ meetings and from taking part in company transactions or operations that may present a conflict of interest. See “Description of Capital Stock—Board of directors.”

Insurance Marisa Lojas maintains comprehensive corporate insurance with Unibanco AIG Seguros S.A. to cover its stores, offices and distribution centers throughout Brazil from risks related to material property damage to facilities, inventory and inventory in transit. No deductible applies in the case of material damages to property. In the case of inventory held in our stores, the maximum deductible is 20.0% of the total indemnity amount, and in the case of inventory in transit, 15.0% of the total indemnity amount. This insurance policy, however, contains no provision with respect to the loss of profits.

Marisa Lojas also keeps an international transportation (imports) insurance policy with Unibanco AIG S.A. to cover all risks associated with losses and damages to insured merchandise, pursuant to the same commercial terms and conditions applicable to the national policy.

We also hold a general civil liability insurance policy with Unibanco AIG Seguros S.A. covering 182 locations, including our distribution centers, our central administrative offices and our stores against property and emotional distress.

We believe Marisa Lojas has appropriate insurance policies to cover its risks. However, we cannot make any assurance that our insurance coverage will be sufficient to protect us from material losses.

In addition, certain losses and occurrences may not be covered by these insurance policies, including war, terrorist acts, acts of God or events of force majeure. If any of the events not covered under our insurance currently in effect occur, Marisa Lojas could judicially be held liable for accidents or injuries to consumers resulting from potential occurrences not covered by insurance. Marisa Lojas also has a vehicle insurance policy with Unibanco AIG Seguros S.A. to cover mutual and individual losses.

Cardholder financing agreement Our Marisa Card is governed by a certain Marisa credit card management agreement, pursuant to which execution is evidenced by a signed customer card application or, in the case of online purchase at our virtual store, by the first transaction carried out with the use of the Marisa Card. We seek to offer the most competitive financing terms available in the market. Our credit card management agreement grants us special powers, conferred via a power of attorney, to negotiate for our customers the terms and conditions of financing, including interest rates, monetary adjustment, fees and other charges. This arrangement allows us to obtain the best possible financing conditions for our customers, within certain limits established by relevant financial institutions.

The agreement contains provisions regarding the enforcement of penalties in the event of default by Marisa cardholders, including card cancellation or the blocking of purchases at our stores following any 8-day payment default and the blocking of purchase at any Credi-21 accredited or associated establishment after a 1-day payment default, in addition to other penalties usually adopted for credit card protection as mentioned elsewhere in this offering circular.

The following subsidiaries are parties to these cardholder agreements: Marisa Lojas, as intervening consenting party and, as contracting parties, Credi-21, TEF, TCM and SAX, with each exercising the activities described under “—Corporate restructuring” and “—Our subsidiaries.”

104 MANAGEMENT

Pursuant to our bylaws, we are managed by a board of directors (Conselho de Administração) and a board of executive officers (Diretoria). Our bylaws also provide for the establishment of a non-permanent fiscal council that may be installed at the request of our shareholders.

Board of directors Our board of directors defines our general business policies, overall strategic guidelines and long-term goals. The duties of the board of directors include, among others, the election of our executive officers, the supervision of such officers, and, as set out by Brazilian Corporate Law, the appointment of our independent auditors.

Our board of directors meets every three months and can convene additional meetings under special circumstances. Resolutions are established by a majority vote of the directors present at a board of directors meeting. In the event of a tie vote, our bylaws do not grant the chairman of our board of directors the deciding vote.

Pursuant to our bylaws, our board of directors is composed of a minimum of five and a maximum of seven directors, each of whom must be a shareholder, although there is no requirement as to a minimum number of shares a board member must hold. They are elected for one year terms at a shareholders’ meeting. Reelection is permitted, but directors may be removed from our board at any time pursuant to simple majority vote of our shareholders. Our directors are required to remain in office until their successors are elected and take office, unless a shareholders’ meeting decides otherwise. According to Novo Mercado regulations, a minimum of 20% of the members of our board of directors must be independent. See “Description of Capital Stock—Board of directors.” In addition, according to Novo Mercado regulations, prior to taking office, our directors are required to sign an agreement in which they agree to adhere to the rules and regulations of the Novo Mercado and the Arbitration Chamber established by the BOVESPA.

Our board of directors is currently composed of five members. The term of office of our directors, elected at special shareholders’ meetings held on March 20, 2007 and July 31, 2007, will last until the annual shareholders’ meeting to be held in 2008.

The table below sets forth the names, age, titles and date of election of the members of our board of directors:

Date of Name Age Title election Marcio Luiz Goldfarb...... 54 Chairman 03/20/2007 Décio Goldfarb ...... 49 Director 03/20/2007 Denise Goldfarb Terpins ...... 57 Director 03/20/2007 Celso Clemente Giacometti(1) ...... 64 Director 03/20/2007 Luiz Fernando Furlan(1) ...... 61 Director 07/31/2007

(1) Independent director.

For a description of the agreements or other relevant obligations involving our directors and us, see “Related Party Transactions” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

105 Below is brief biographical description of the members of our board of directors: Marcio Luiz Goldfarb. Chairman of our board of directors and chief executive officer. Marcio Goldfarb joined the Marisa Group in 1967 and has held various management positions with Marisa Lojas. In addition to these activities, he attended workshops about brand management by “lifestyle” categories and trends in the retail market sponsored by Whitaker International in New York and managed the Albatroz, GLD and Flip investment funds from 1994 to 1996. He was a manager of Marisa Distribuidora de Títulos e Valores Mobiliários, previously held by our indirect controlling shareholders, when Petrobrás, Agrale, Aquatec, Petroflex, Eletropaulo, Varig, Borella, Transparaná, Agroceres, Telebrasília, Telebrás and Copene, among others, launched their shares on BOVESPA. Marcio Luiz Goldfarb is the brother of Décio Goldfarb and Denise Goldfarb Terpins. Décio Goldfarb. Director. Mr. Décio Goldfarb has been the vice chairman of Marisa Lojas since 1992 and a member of our board of directors since March 20, 2007. He joined the Marisa Group in 1974 as the treasurer of Marisa Lojas. In addition to these activities, he co-managed the Albatroz, GLD and Flip investment funds from 1994 to 1996. Together with Marcio Luiz Goldfarb, he was a manager of Marisa Distribuidora de Títulos e Valores Mobiliários when Petrobrás, Agrale, Aquatec, Petroflex, Eletropaulo, Varig, Borella, Transparaná, Agroceres, Telebrasília, Telebrás, and Copene, among others, launched their shares on BOVESPA. Mr. Décio Goldfarb received a notification from the CVM on July 20, 2000, under administrative proceeding No. 033/1998, regarding noncompliance with the terms and conditions of accounting practices established in Brazilian Corporate Law regarding the accounting method used for recording taxes and noncompliance with legal requirements regarding the financial statements for the year ended December 31, 1993 of Lojas Brasileiras S.A. In 1993, Décio Goldfarb was the chairman of the board of directors of Lojas Brasileiras S.A. According to the terms of the CVM’s decision, the CVM took into account the good record of Mr. Décio Goldfarb. The notification did not adversely affect the appointment of Mr. Décio Goldfarb to our board of directors. Denise Goldfarb Terpins. Director. Denise Goldfarb Terpins joined the Marisa Group in 1968. In 1968, she managed the creation of and production at Super Bolsas S.A. Later in her career, she acted as a purchasing assistant at Marisa and became our chief purchasing officer in 1990. She attended workshops about brand management by “lifestyle” categories and trends in the retail market sponsored by Whitaker International in New York and was responsible for the implementation of “lifestyle” categories in our fashion division and fashion coordination. She remained in this position until appointed to our board of directors. She worked as a volunteer at the Jewish Center for Minors Assistance (Centro Israelita de Assistência ao Menor), or CIAM, and at the Golda Meir Home (Lar Golda Meir), an institution for elderly care. She was an executive officer and currently is a member of the board of directors of the Jewish Association for Social Welfare (União Israelita do Bem Estar Social). Celso Clemente Giacometti. Independent director. Giacometti has a degree in business administration and accounting from the São Luis School of Economics and from the Moura Lacerda School. He has been a member of the board of directors and of the audit committee of Sabó Autopeças Ltda. since 2005, and of the audit committee of O Estado de São Paulo – OESP Group and the fiscal council of CTEEP – Companhia de Transmissão de Energia Elétrica Paulista, as well as of the fiscal council and the audit committee of TIM Participações Ltda., since 2006. From 1973 to 2001, he worked for Arthur Andersen where he became a partner in 1974, was chief executive officer from 1985 to 2000 and has been the partner in charge of the tax practice for Brazil and Latin America from 2001. Luiz Fernando Furlan. Independent director. Furlan has a degree in chemical engineering from Centro Universitário da Fuculdade de Engenharia Industrial, or FEI, and in business administration from Faculdade Santana in São Paulo. He also has a postgraduate degree in financial management from Fundação Getulio Vargas in São Paulo. From 2002 to 2007, he was a minister of the Ministry of Development, Industry and Foreign Trade. He is a former director of Sadia S.A., where he has worked since 1978. He is also a former director of Panamco (Pan American Beverages, Inc. – USA), Telefonica S.A. (Spain) and Brasmotor S.A. (Brazil), a former member of the advisory board of IBM, Latin America and of the ABN Amro Bank (Brazil),

106 president of the Brazilian Association of Poultry Producers and Exporters (Associação Brasileira dos Produtores e Exportadores de Frangos), or ABEF, of the Brazilian Association of Listed Companies (Associação Brasileira das Companhias Abertas), or ABRASCA, and of the Mercosur European Union Business Forum and vice- president of the Federation of Industries of the State of São Paulo (Federação das Indústrias do Estado de São Paulo), or FIESP.

Board of executive officers Our executive officers are our legal representatives. They are principally responsible for our day-to-day management and for implementing the policies and strategies set by our board of directors.

According to Brazilian Corporate Law, all of our executive officers must be residents of Brazil and can be, but do not have to be, our shareholders. In addition, a maximum of one third of our directors may also serve as our executive officers.

Our executive officers are elected at a meeting of our board of directors for three year terms and reelection is permitted. According to our bylaws, our officers may be removed at any time and are required to remain in office until their successors are elected and take office.

In addition, our bylaws require that our board of executive officers be composed of six members with the following titles: one chief executive officer, one chief financial officer, one chief administrative officer, one chief information officer, one investor relations officer and one chief strategic management officer. Furthermore, according to Novo Mercado regulations, prior to taking office, our executive officers are required to sign an agreement in which they agree to adhere to the rules and regulations of the Novo Mercado. Our board of executive officers is currently composed of five members.

Paulo Sergio Borsatto is our investor relations officer. He was elected at a meeting of our board of directors on March 20, 2007. Our investor relations office is located on Rua James Holland 422, district of Barra Funda, in the city of São Paulo, state of São Paulo, 01138-909. The telephone number is +55-11-2109-6252, the fax number is +55-11-3392-4276 and the e-mail address is [email protected].

The table below sets forth the names, age, titles and date of election of the members of our board of executive officers.

Name Age Title Date of election Marcio Luiz Goldfarb ...... 54 Chief executive officer 08/15/2006 Paulo Sergio Borsatto ...... 43 Chief financial officer and investor relations officer 03/20/2007 Ricardo José Ribeiro dos Santos ...... 48 Chief administrative officer 03/20/2007 Mendel Leib Szlejf ...... 57 Chief information officer 03/20/2007 Fernand Ezra Setton ...... 74 Chief strategic management officer 08/10/2007

For a description of the agreements or of other relevant obligations involving our officers and us, see “Related Party Transactions.”

Below is brief biographical description of the members of our board of executive officers:

Marcio Luiz Goldfarb. See “—Board of directors.”

Paulo Sergio Borsatto. Chief financial officer and investor relations officer. Paulo Sergio Borsatto started his career in 1987 at Banco Econômico S.A. as a trader and fixed income manager and, from 1986 to 1987, he worked as a fixed income trader for Banco Fortaleza. He holds a degree in economics and accounting from the Universidade São Judas and has an MBA in executive finance from the Instituto Brasileiro de Mercado de Capitais, or IBMEC. He has more than 20 years of experience in finance, during which time he primarily worked for the Goldfarb family companies. He managed the Marisa Group’s funds and developed the domestic and

107 foreign investment, fundraising and tax planning areas. He was directly responsible for negotiations with public and private financial institutions and the development of the financial strategies for the companies of our group. Ricardo José Ribeiro dos Santos. Chief administrative officer. Between 1985 and 1986, he worked at Banco Safra S.A. as a trader in several markets, including local fixed income and international floating income, and was a fundraising manager at Banco Noroeste S.A. between 1986 and 1988. He was appointed as our chief administrative officer on March 10, 2007. Ricardo José Ribeiro dos Santos joined the Marisa Group in 1988 as the financial manager of Marisa Distribuidora de Títulos e Valores Mobiliários, the company that managed our financial assets. He was an assistant officer of Marisa Lojas from 1993 to 1998 and its chief administrative officer between 1998 and March 2007. Mendel Leib Szlejf. Chief information officer. Mendel Leib Szleif joined our company in 1996. He is responsible for the development and implementation of our current integrated information system. From 1974 to 1992, he was a partner of BS Serviços de Computaçãs Ltda. and CMC Indústria e Comércio Ltda. He was an executive officer of PSC South America from 1992 to 1996, where he was responsible for the implementation of a South American distribution network of products and applications for commercial and industrial barcode wireless automation systems. He has a degree in business administration from the Universidade de São Paulo. Over the last 33 years, he has developed a solid reputation and recognized experience in information technology management, having been elected as one of the best CIOs of Brazil for five consecutive years by publications such as Computerworld, Information Week and Exame Informática. Fernand Ezra Setton. Chief strategic management officer. He received a degree in mechanical engineering from the University of Cairo in 1954. From 1948 to 1956, he worked at Orosdi-Back in Egypt as an assistant cost-benefit analyst, and later as the manager at one of our locations in Alexandria. In 1957, he started at Arno S.A. – Indústria e Comércio as a trainee and by 1959, when he left Arno, he was the general sales manager. Before joining our management, he held a variety of management positions. From 1959 to 1961, he was a sales promotions manager at Cofap (an auto-parts manufacturer). He soon became the executive vice president of Cofap and oversaw products sales and production engineering. Between 1991 and 1995, he was the superintendent at Arteb, also an auto-parts manufacturer. He joined the Marisa Group in 1998 as a strategic consultant to our chief executive officer and his staff, and he has been our chief strategic management officer since August 10, 2007.

Fiscal council Pursuant to Brazilian Corporate Law, a fiscal council is a corporate body independent of both the management and the independent auditors. It may operate on a permanent or non-permanent basis. The primary responsibilities of our fiscal council are: monitoring management activities, reviewing our financial statements and reporting any findings to our shareholders. According to our bylaws, our fiscal council is a non-permanent body, but may be established in any year at the request of a certain number of shareholders, as discussed below. We currently do not have an active fiscal council. Brazilian Corporate Law requires a fiscal council to be composed of a minimum of three and a maximum of five members and their respective alternates. Individuals with an undergraduate college degree or that have been a director, officer or fiscal council member of a company for at least three years may be elected to our fiscal council. In addition, our bylaws require our fiscal council members to sign an agreement in which they agree to adhere to the rules and regulations of the Novo Mercado prior to taking office. Under Brazilian Corporate Law, if the fiscal council is non-permanent, it may be established at the request of shareholders representing at least 10.0% of our voting shares, with a term ending on the date of the subsequent annual shareholders’ meeting. In addition, according to CVM Instruction No. 324 dated January 19, 2000, depending on the amount of the capital stock, this percentage may be reduced to 2.0% of the voting shares. Additionally, minority shareholders individually or collectively representing a minimum of 10.0% of the voting shares are entitled to elect one fiscal council member and his or her alternate by a separate vote. In this event, the other shareholders may elect the same number of council members as the minority, plus one.

108 Also according to Brazilian Corporate Law, our fiscal council may not include individuals who are on our board of directors or our board of executive officers, that are employed by a subsidiary or a company under our common control, or that are spouses or close family members of a member of our senior management. In addition, in order to comply with Brazilian laws, companies in Brazil with a fiscal council shall pay fiscal council members compensation at a minimum of 10.0% of the average annual compensation paid to our executive officers, not including benefits and other allowances or profit sharing payments.

Ownership interests in our shares Pursuant to Brazilian Corporate Law, each of the members of our board of directors is required to hold at least one share issued by us. As of June 30, 2007, the members of our board of directors directly held 2,580,002 common shares issued by us, in the aggregate representing 5.8% of our total capital stock. Of the members of our board of executive officers, only Marcio Luiz Goldfarb held a direct interest in our shares. The table below indicates the number of shares issued by us and the percentage of our capital stock directly or indirectly held by our directors and officers on the date of this offering circular. Name Number of shares Percentage of capital stock Marcio Luiz Goldfarb ...... 2,580,000 1.93% Décio Goldfarb...... 2,580,000 1.93% Denise Goldfarb Terpins ...... 2,580,000 1.93% Celso Clemente Giacometti ...... 1 — Luiz Fernando Furlan ...... 1 — Total ...... 7,740,002 5.8%

Remuneration According to Brazilian Corporate Law and our bylaws, our shareholders are responsible for establishing at the annual shareholders’ meeting the aggregate amount of the remunerations paid to the members of our senior management. A meeting of our board of directors must in turn allocate this amount among our directors and executive officers. The annual shareholders’ meeting held on March 20, 2007 set the aggregate annual remuneration of our board of directors and board of executive officers at an amount not to exceed R$2.3 million for the year 2007. As of the date of this offering circular, our senior management is composed of the following persons: Marcio Luiz Goldfarb, Décio Goldfarb, Denise Goldfarb Terpins, Celso Clemente Giacometti, Luiz Fernando Furlan, Paulo Borsatto, Ricardo José Ribeiro dos Santos, Mendel Leib Szlejf and Fernand Ezra Setton. For the year ended 2006, our directors received no remuneration other than the dividends they were paid as shareholders. Our directors and executive officers do not receive any other kind of remuneration other than the above mentioned. As of the date of this offering circular, no options have been exercised or subscription of shares under the stock option plan. In the future, management may receive bonuses. We do no have any bonus policy on the date of this offering circular.

Family relations amongst our directors and officers and between them and our controlling shareholder Marcio Luiz Goldfarb, Décio Goldfarb and Denise Goldfarb Terpins are siblings, members of our board of directors, and our direct shareholders, and they also hold equity in the holding companies that control the Marisa Group. After this offering, Marcio Luiz Goldfarb, Décio Goldfarb and Denise Goldfarb Terpins will continue to control us and will retain their current positions in our management.

Stock option plan A special shareholders’ meeting was held on April 25, 2007, during which the shareholders approved the implementation of a stock option plan designed for the members of our senior management, heads of departments, and highly qualified third party consulting services providing consultants that render services to us

109 or our subsidiaries. The purpose of this plan is to ensure that the interests of these persons are in line with our strategic goals and the expected results. Pursuant to this plan our and our subsidiaries’ senior management members, department heads and consultants may be granted options to purchase or subscribe to shares issued by us. Under our stock option plan, our directors are authorized to grant these stock options within a limit in the aggregate corresponding to 2.0% of our issued and outstanding common shares at any time in which the plan is in effect and to grant a discount of up to 20.0% on the stock option exercise price.

The objectives of our stock option plan are the following: • to foster our growth plans and the achievement of our preestablished targets by allowing participants to share in the benefits of being our shareholders and by aligning their interests to those of our shareholders; • to retain talent by retaining senior management members, employees and consultants; and • to enhance our attractiveness to potential senior management members.

Pursuant to our stock option plan, the strike price will be equivalent to the average market price of our common shares in the five trading sessions preceding the date of the option. Our board of directors may, at its discretion and on a case-by case basis, authorize a discount.

Our stock option plan took effect on April 25, 2007 and may be terminated at any time by a decision of our shareholders. As of the date of this offering circular, no stock options have been exercised under our plan.

As of the date of this offering circular, we have not exercised stock options, convertible securities or other rights (other than the options included in our stock option plan) for the purchase or subscription of shares issued by us, nor has any option to purchase shares, options, convertible securities or other rights (other than the options included in our stock option plan) been exercised in respect of our shares. As a result, no adjustment has to be made in our financial statements or in shareholders’ equity. See “Dilution.”

The exercise of the totality of the options under the stock option plan would represent a maximum dilution of 2.0% of our capital stock.

The table below sets forth two hypothetical situations as of June 30, 2007, for the maximum discount on the price per share that our board of directors may concede, under the stock option plan, if implemented. These are based on our results program and shareholders’ equity and consider the average market price of our common shares based on the initial offering price:

Considering price per share printed in the cover of this Shareholders’ equity offering circular Capital stock...... R$44,634,410.00 Legal reserve ...... R$ 1,866,591.00 R$46,501,001.00 Common shares issued by us as of the date of this offering memorandum ...... 133,903,230 Shareholders’ equity value per share ...... R$ 0.35 Total number of option shares...... 2,678,064 Option exercise price ...... R$ 10.00 New shareholders’ equity...... R$73,821,641.00 New shareholders’ equity value per share(1) ...... R$ 0.54 New investors’ estimated dilution in the shareholders’ equity value per share ...... R$ 9.46 % of dilution for the new investors(2) ...... 94.6% (1) Based on the initial offering price shown on the cover page of this offering circular. (2) Calculated by dividing the new investors’ estimated dilution in the shareholders’ equity value per share by the option exercise price.

110 Shareholders’ agreement As of February 15, 2007, our shareholders RTM Participações Ltda., Denise Goldfarb Terpins, Jack Leon Terpins, Rodrigo Terpins, Ticiana Terpins Strozenberg, Michel Terpins (together, “Group A Shareholders”), MG Administração e Participações Ltda., Marcio Luiz Goldfarb, Fany Rachel Goldfarb, Flávia Goldfarb Papa, Roberta Goldfarb, Marcelo Goldfarb, MIL Participações Ltda. (together, “Group B Shareholders”), Twister Participações Ltda., Décio Goldfarb, Márcia da Riva Garcia Goldfarb, D.G. Administração e Participações Ltda. (together, “Group C Shareholders”) entered into Begoldi’s shareholders’ agreement, the holding company that owns the majority of our shares. This shareholders’ agreement extends to us and to all the other companies we and Begoldi control and was amended on April 16 and September 12, 2007.

This shareholders’ agreement encompasses all outstanding shares or securities convertible into shares issued by Begoldi as of the date of this offering circular and as may be issued in the future, and is binding on current or future direct or indirect holders (Groups A, B or C).

This shareholders’ agreement also encompasses 100.0% of the shares issued by us that are held by the shareholders who are parties to the agreement immediately before this offering, always with due regard for the percentage interest of each group of shareholders in the total shares issued by us encompassed by the agreement. The shares held by Flin are not encompassed within the shareholders’ agreement. As of September 12, 2007 (the same date as the second amendment of the shareholders’ agreement), 80.6% of our shares were encompassed by this shareholders’ agreement. The shareholders’ agreement also includes mechanisms and procedures which release the shares to which each group of shareholders is entitled from the terms and conditions of the agreement.

Among other provisions, the shareholders’ agreement establishes that:

(1) the following matters will require unanimous approval obtained at a shareholders’ meeting of RTM Participações Ltda., MG Administração e Participações Ltda. and Twister Participações Ltda. (the corporate shareholders): • the going public or private process; • our listing or delisting from the Novo Mercado established by BOVESPA; • any change to our bylaws that may imply a change in our corporate purpose or the rights and prerogatives set forth in the shareholders’ agreement; • the issuing of shares by us or of other securities that are convertible into shares, or any change to the rights, prerogatives, advantages or restrictions pertaining to shares or other securities issued by us; • a spin-off, consolidation or merger transaction, including a merger of shares; • a transformation of our corporate type, or our dissolution or liquidation; • a bankruptcy application or a composition with creditors procedure; • setting the annual compensation level for our senior management members; • a decision to approve our annual financial statements; • a decision, based on a proposal submitted by our board of directors, of how to allocate our net income for the year and to distribute dividends or interest on shareholders’ equity determined in accordance with our annual financial statements; • a decision to approve or amend our stock option plan, which may not involve shares issued by us that represent over 5.0% of our issued and outstanding shares; and • the election or removal of members of our board of directors or fiscal council, with due regard for the provisions of the shareholders’ agreement.

(2) the following matters which are subject to approval by our board of directors will also require prior approval by two-thirds of the corporate shareholders (RTM Participações Ltda., MG Administração e

111 Participações Ltda. and Twister Participações Ltda.) attending a previous meeting at which each of these shareholders shall be entitled to one vote, irrespective of the number of shares they may hold: • the election or removal of our chief executive officer and our other executive officers, the allocation of duties to these officers and the designation of the investor relations officer; • the undertaking or approval by our subsidiaries on any matter or action listed in the item above; • a decision on how our representatives, or the senior management members of our subsidiaries appointed by us, should vote at shareholders’ meetings or should undertake the management of our subsidiaries; • a decision to approve shareholders’ agreements to be executed by us in connection with our holdings in our subsidiaries; • a decision to enter into a joint venture, partnership or consortium; • a decision to approve or amend our annual budget or our annual or multi-year strategic plans, capital expenditure plans and expansion projects; • a decision to distribute interim dividends or pay interest on shareholders’ equity based on our net income, as determined in our semiannual, quarterly or monthly interim financial statements; • a purchase or sale, lease or encumbrance on any account of our permanent assets (not including equity interest) whose market value or transaction value, individually or under a series of related transactions within the same year, is in excess of R$20,000,000.00; • the execution, amendment or renewal of any document, agreement or commitment involving liabilities, indebtedness or obligations whose value, individually or under a series of related transactions within the same year, is in excess of R$20,000,000.00; • the disposal, purchase, sale, lease, donation, or encumbrance, directly or indirectly, to any subsidiary or SPE and for any amount of common shares, as well as the formation of subsidiaries; • a transaction of any type, involving us and any of our subsidiaries or SPEs, or any of the shareholders or senior management, or members of a family group, or companies directly or indirectly controlled by any of these shareholders or senior management; • Begoldi will exert its best efforts to elect a majority of our directors. Moreover, each corporate holder of a minimum of 17.0% of the shares of Begoldi, as set out in the shareholders’ agreement, shall be entitled to appoint one member of our board of directors and one member of our fiscal council, if effective; • the signatory shareholders shall concede the right of preference to the other signatory shareholders for the direct or indirect, private or public, transfer or lien of shares, issued by us or issued by Begoldi; • shareholders bound to the shareholders’ agreement have been granted tag along and drag along rights concerning dispositions of their interests in the shares of Begoldi or our shares, provided these shares are bound to the shareholders’ agreement; and • we will not contract with any company controlled by shareholders bound to the shareholders’ agreement, or with any of their close family members, including if any agreement were to be entered by these persons in a capacity as senior management member, employee, consultant or service provider, unless (a) the contracting shall have been previously approved at a meeting of our board of directors in which the director elected by the interested shareholder shall abstain from voting; and (b) the relevant person fulfills qualification and capability requirements appropriate for the proposed position or function, provided he or she shall be subject to a career plan similar to those of other employees, including performance evaluations and compensation suited for the proposed position or function. Shares not bound to the shareholders’ agreement may be freely traded, and are not subject to transfer, restrictions or lock-up agreements discussed elsewhere in this offering circular.

The shareholders’ agreement shall be effective for an initial period of ten years, automatically renewable for successive additional periods of two years.

112 PRINCIPAL SHAREHOLDERS Principal shareholders The following table sets forth information relating to the ownership of our common shares as well as treasury stock, by each holder of 5.0% or more of our common shares and by all our directors and officers, before and after this offering, assuming no exercise of the over-allotment or hot issue options, on the date of this offering circular. Shareholder Before this offering After this offering(1) Shares (%) Shares (%) Begoldi ...... 100,204,897 74.8 100,204,897 56.3 Flin ...... 25,958,331 19.4 25,958,331 14.6 Marcio Luiz Goldfarb(2)...... 2,580,000 1.9 2,580,000 1.5 Décio Goldfarb(2) ...... 2,580,000 1.9 2,580,000 1.5 Denise Goldfarb Terpins(2) ...... 2,580,000 1.9 2,580,000 1.5 Our directors(3) ...... 2 — 2 — Treasury stock...... — — — — Other shareholders(4) ...... 0 — 44,000,000 24.7 Total ...... 133,903,230 100.0 177,903,230 100 (1) After giving effect to the issue of shares in this offering and without giving effect to the over-allotment option. (2) Members of our board of directors. (3) All of our directors, other than Marcio Luiz Goldfarb, Dec´io Goldfarb and Denise Goldfarb Terpins. See “Management—Board of directors.” (4) According to the terms and conditions of the lock-up agreement for participation in the Novo Mercado and the Novo Mercado rules, we will have up to three years from the date of publication in Brazil of the announcement of commencement of this offering to reach the minimum threshold of 25.0% of floating shares. During this period of three years, we agreed to maintain a minimum of floating shares of 18%. At any time and in case the negotiation of our shares exceeds the floating shares threshold of 18.0%, the new figure will be the new threshold until it reaches the percentage of 25.0%. From this date on, we will be following section 3.1(v) of the Novo Mercado Listing Rules. Floating shares are all shares issued by us, excluding the shares held by the controlling shareholder and related persons and those held by our management. Below please find a brief description of our current shareholders: Begoldi Begoldi’s headquarters are located at Rua Solimões, 335/363, in the city of São Paulo, state of São Paulo. It holds 74.8% of our capital stock. After this offering, Begoldi will hold approximate 56.3% of our capital stock. Begoldi is currently directly controlled by R.T.M. Participações Ltda., or RTM, Twister Participações Ltda., or Twister, and M.G. Participações Ltda., or MG. Each of RTM, Twister and MG holds 33.3% of Begoldi’s capital stock. Marcio Luiz Goldfarb, Dec´io Goldfarb and Denise Goldfarb Terpins jointly hold less than 0.01% of the capital stock of Begoldi. RTM, in turn, is held by Denise Goldfarb Terpins (less than 0.01%), Jack Leon Terpins (less than 0.01%), Rodrigo Terpins (33.3%), Ticiana Terpins Strozenberg (33.3%) and Michel Terpins (33.3%). Twister is held by Décio Goldfarb (80.0%) and by D.G. Administração e Participações Ltda., or DG (20.0%). DG is held by Décio99 Goldfarb (99.9%). MG is held by Marcio Luiz Goldfarb (less than 0.01%), Fany Rachel Goldfarb (less than 0.01%), Flávia Goldfarb Papa (33.3%), Roberta Goldfarb (33.3%) and Marcelo Goldfarb (33.3%).

Flin Flin’s headquarters are located at Rua James Holland, 422/432, suite 32, in the city of São Paulo, state of São Paulo. Flin became our shareholder on June 29, 2007, pursuant to a transaction whereby subscribed for

113 shares issued by Flin, a subscription which was paid with 8,652,777 shares issued by us (corresponding to 19.4% of our capital stock). See “Business—Corporate restructuring.”

After this offering, Flin will hold approximately 14.6% of our corporate capital (without considering the over-allotment option). Flin is held equally by Marcio Luiz Goldfarb, Denise Goldfarb and Décio Goldfarb, each holding 33.3% of its corporate capital.

Marcio Luiz Goldfarb Marcio Luiz Goldfarb is the Chairman of the board of directors and our Chief Executive Officer. As of the date of this offering circular, Marcio Luiz Goldfarb held 1.9% of our corporate capital. After this offering, he will hold 1.5% of our corporate capital. For further information on Marcio Luiz Goldfarb, see “Management.”

Décio Goldfarb Décio Goldfarb is the Vice-chairman of the board of directors. As of the date of this offering circular, Décio Goldfarb held 1.9% of our corporate capital. After this offering, he will hold 1.5% of our corporate capital. For further information on Décio Goldfarb, see “Management.”

Denise Goldfarb Terpins Denise Goldfarb Terpins is a member of our board of directors. As of the date of this offering circular, Denise Goldfarb Terpins held 1.9% of our corporate capital. After this offering, she will hold 1.5% of our corporate capital. For further information on Denise Goldfarb Terpins, see “Management.”

Changes in corporate holdings As of August 15, 2006, our principal shareholders were:

Shareholders Common shares % of our capital stock Begoldi ...... — — Flin...... — — Marcio Luiz Goldfarb...... 10,000 33.3 Décio Goldfarb ...... 10,000 33.3 Denise Goldfarb Terpins ...... 10,000 33.3 Total ...... 30,000 100

As of December 31, 2006, our controlling shareholder acquired 99.9% of our corporate capital for R$41.3 million. Begoldi contributed with quotas representing 99.9% of Marisa Lojas’ corporate capital, 99.9% of Due Mille’s corporate capital and 95.6% of Fix’s corporate capital. The table below sets forth the ownership distribution of our capital stock after this transaction:

Shareholders Common shares % of our capital stock Begoldi ...... 41,284,417 99.9 Flin...... — — Marcio Luiz Goldfarb...... 10,000 — Décio Goldfarb ...... 10,000 — Denise Goldfarb Terpins ...... 10,000 — Total ...... 41,314,417 100

114 On February 13, 2007, Begoldi’s shareholders approved a corporate capital reduction in the total amount of R$8,882,784.00. As a return on capital, Begoldi paid the shareholders Marcio Luiz Goldfarb, Décio Goldfarb and Denise Goldfarb Terpins with our shares. This corporate capital reduction was properly filed with the Trade Board of the State of São Paulo on March 27, 2007. As a result, the ownership distribution of our capital stock was the following: Shareholders Common shares % of our capital stock Begoldi ...... 33,401,633 74.8 Flin...... — — Marcio Luiz Goldfarb...... 3,744,259 8.4 Décio Goldfarb ...... 3,744,259 8.4 Denise Goldfarb Terpins ...... 3,744,259 8.4 Total ...... 44,634,410 100

On March 2, 2007, our controlling shareholder increased our corporate capital in the amount of R$1,000,000.00, and Marcio Luiz Goldfarb, Décio Goldfarb and Denise Goldfarb Terpins also increased our corporate capital through a contribution of 4.4% of their stake in Fix. The following table sets forth the ownership distribution of our capital stock as a result of this transaction: Shareholders Common shares % of our capital stock Begoldi ...... 42,284,417 94.8 Flin...... — — Marcio Luiz Goldfarb...... 783,331 1.75 Décio Goldfarb ...... 783,331 1.75 Denise Goldfarb Terpins ...... 783,331 1.75 Total ...... 44,634,410 100

On March 20, 2007, our controlling shareholder, Begoldi, as a condition for the completion of the appointment of Cássio Roberto Vieira Romano and Celso Clemente Giacometti as members of our board of directors, transferred one share to each of them. The following table sets forth the ownership distribution of our capital stock as a result of this transaction: Shareholders Common shares % of our capital stock Begoldi ...... 33,401,631 74.8 Flin...... — — Marcio Luiz Goldfarb...... 3,744,259 8.4 Décio Goldfarb ...... 3,744,259 8.4 Denise Goldfarb Terpins ...... 3,744,259 8.4 Cássio R. V. Romano ...... 1 — Celso Clemente Giacometti...... 1 — Total ...... 44,634,410 100

On June 29, 2007, Flin became our shareholder, through the contribution of 8,652,777 shares of our issuance previously held by Marcio Luiz Goldfarb, Décio Goldfarb and Denise Goldfarb Terpins. The following table sets forth the ownership distribution of our capital stock as a result of this transaction: Shareholders Common shares % of our capital stock Begoldi ...... 33,401,631 74.9 Flin...... 8,652,777 19.4 Marcio Luiz Goldfarb...... 860,000 1.9 Décio Goldfarb ...... 860,000 1.9 Denise Goldfarb Terpins ...... 860,000 1.9 Cássio R. V. Romano ...... 1 — Celso Clemente Giacometti...... 1 — Total ...... 44,634,410 100

115 On July 31, 2007, Cássio Roberto Vieira Romano withdrew from his office and Luiz Fernando Furlan replaced him as a member of our board of directors. The following table sets forth the ownership distribution of our capital stock as a result of this transaction:

Shareholders Common shares % of our capital stock Begoldi ...... 33,401,631 74.9 Flin...... 8,652,777 19.4 Marcio Luiz Goldfarb...... 860,000 1.9 Décio Goldfarb ...... 860,000 1.9 Denise Goldfarb Terpins ...... 860,000 1.9 Luiz Fernando Furlan ...... 1 — Celso Clemente Giacometti...... 1 — Total ...... 44,634,410 100

On September 20, 2007, our shareholders approved in a special general shareholders’ meeting a 1 to 3 split of our shares. As of that date, we have 133,903,230 common shares. The following table sets forth the ownership distribution of our capital stock as a result of this transaction:

Shareholders Common shares % of our capital stock Begoldi ...... 100,204,893 74.8 Flin...... 25,958,331 19.4 Marcio Luiz Goldfarb...... 2,580,000 1.9 Décio Goldfarb ...... 2,580,000 1.9 Denise Goldfarb Terpins ...... 2,580,000 1.9 Luiz Fernando Furlan ...... 3 — Celso Clemente Giacometti...... 3 — Total ...... 133,903,230 100

On September 20, 2007, both Luiz Fernando Furlan and Celso Clemente Giacometti transferred 2 of our shares to Begoldi. The following table sets forth the ownership distribution of our capital stock as a result of this transaction:

Shareholders Common shares % of our capital stock Begoldi ...... 100,204,897 74.8 Flin...... 25,958,331 19.4 Marcio Luiz Goldfarb...... 2,580,000 1.9 Décio Goldfarb ...... 2,580,000 1.9 Denise Goldfarb Terpins ...... 2,580,000 1.9 Luiz Fernando Furlan ...... 1 — Celso Clemente Giacometti...... 1 — Total ...... 133,903,230 100

116 RELATED PARTY TRANSACTIONS We maintain certain commercial relationships with, and thus enter into transactions with, related parties. All such transactions adhere to standard market practices and rules. Below is a description of our principal related-party transactions: The following table sets forth the balances of related party transactions for the years ended December 31, 2004, 2005 and 2006. Year ended December 31, 2004 2005 2006 (in millions of reais, except as otherwise indicated) Current assets: Dividends receivable(1) Mareasa Participações Ltda...... — 1.1 — Compar Participações Ltda...... — 0.2 — Total...... — 1.2 — Non-current assets: Related party Begoldi (2)...... 11.4 11.0 9.2 Payments in advance for future capital increase – AFAC granted by Begoldi(3) ...... — 30.0 — Other related parties ...... 0.3 0.1 — Total...... 11.8 41.1 9.2 Current liabilities: Related Parties Begoldi(4) ...... — 17.3 94.0 Rents payable(5) ...... Nix...... — 0.6 0.9 Mareasa ...... — 0.3 0.4 Novay ...... — 1.2 1.8 Others ...... — — — Total...... — 19.4 97.1 Dividends: Begoldi(6)...... — 3.7 25.5 Individuals ...... — — — Total...... — 3.7 25.5 Results: The Marisa real estate rents(7) ...... 8.3 11.1 14.4

(1) Dividends receivable from Mareasa Participações Ltda. and Compar Participações Ltda. (2) Payments made in advance by Begoldi to subsidiaries and SPEs for the payment of taxes and administrative expenses which do not bear interest. Balances are recorded in non-current assets accounts because these balances are valid for an indeterminate period of time. (3) AFAC granted by Begoldi to Marisa Lojas. (4) As of December 31, 2005 and 2006, this amount comprises the values of SPEs shareholders’ equity, combined in our financial statements as mentioned in notes Nos. 1 and 4 to our financial statements, included elsewhere in this offering circular. (5) Rents payable to subsidiaries, as mentioned in note No. 24 to our financial statements, included elsewhere in the offering circular. (6) Dividends payable by Marisa Lojas, Athol and Due Mille. (7) Rent amount paid by subsidiaries and SPEs.

117 The following table sets forth the value of assets and liabilities of the SPEs for the years ended December 31, 2005 and 2006:

As of December 31, 2006 Athol Lógica Racional Ativa Fax Transfer Actio Total Assets (in millions of reais, except as otherwise indicated) Cash and cash equivalents ...... 0.4 0.3 0.4 4.2 0.3 0.1 — 5.7 Securities ...... 8.0 6.9 8.2 1.1 — — 10.4 34.6 Trade accounts receivables...... 7.0 6.2 7.1 6.7 6.9 — — 33.9 Other receivables ...... 1.1 1.0 0.6 1.2 0.1 — 2.9 6.9 Long-term receivables...... — — — — — — 8.0 8.0 Investments ...... — — — — — — 13.1 13.1 Property and equipment ...... 0.1 — — — — — 16.4 16.4 Total assets ...... 16.6 14.4 16.3 13.2 7.3 0.1 50.8 118.7 Liabilities Trade accounts payable...... 3.3 1.6 3.8 7.3 2.3 — — 18.3 Taxes ...... 1.1 1.1 1.3 0.4 0.4 — 0.8 5.1 Other payables ...... — — — — — — — — Long-term payables ...... — — — — — — 1.3 1.3 Total liabilities ...... 4.3 2.7 5.0 7.7 2.9 0.0 2.1 24.7 Capital liability ...... 12.2 11.7 11.2 5.6 4.6 0.1 48.7 94.0

Year Ended December 31, 2005 Athol Lógica Racional Total (in millions of reais, except as Assets otherwise indicated) Cash and cash receivables...... — — — — Banks ...... — — — — Trade accounts receivable...... 9.0 9.9 10.6 29.5 Investments ...... 1.5 0.2 1.1 2.8 Inventories ...... 0.1 — 0.1 0.2 Other receivables ...... 0.1 — 0.1 0.2 Total assets ...... 10.7 10.1 11.9 32.7 Liabilities ...... Trade accounts payable ...... 3.7 4.0 4.5 12.2 Taxes payable ...... 0.5 0.7 0.8 2.0 Other payables ...... 1.2 — — 1.2 Total liabilities ...... 5.4 4.7 5.2 15.4 Shareholders’ equity ...... 5.3 5.4 6.6 17.3

The followings table sets forth the rent amounts paid by Begoldi’s SPEs subsidiaries to Begoldi during the periods indicated:

Year ended December 31, 2004 2005 2006 (in millions of reais, except as otherwise indicated) Nix ...... 2.8 3.4 4.1 Mareasa ...... 1.3 1.9 2.3 Novay ...... 4.2 5.8 7.9 Total ...... 8.3 11.1 14.4

118 The following table sets forth the balances of related party transactions for the six-month period ended June 30, 2006 and 2007:

Six-months ended June 30, 2006 2006 2007 (Controlling) (Combined) (Consolidated) (in millions of reais, except as otherwise indicated) Non-current assets Related party Begoldi(1) ...... — 11.1 1.9 Begoldi(2) ...... — 3.6 — Other related parties...... — 0.0 — Total ...... — 14.8 1.9 Current liabilities Related party Begoldi(3) ...... — 12.6 — Payment in advance for future capital increase – AFAC granted by Begoldi(4)...... — 3.8 — Rents payable(5) ...... — Nix...... — 0.3 0.9 Mareasa ...... — 0.2 0.2 Novay ...... — 0.6 0.8 Actio ...... — — 0.4 Others ...... — — — Total ...... 17.4 2.3 Dividends Begoldi and Flin(6)...... — — 37.5 Individuals ...... 37.5 2.3 0.7 2.4 Total ...... 39.8 0.7 39.9 Results Rentals of Marisa’s real estate(7)...... — 5.8 11.1

(1) Payments made in advance by Begoldi to subsidiaries and SPEs for the payment of taxes and administrative expenses which do not bear interest. Balances recorded in non-current assets accounts because these balances are valid for an indeterminate period of time. (2) As of June 30, 2006, this amount comprises of the values of SPEs shareholders’ equity, combined in our financial statements as mentioned in notes Nos. 1 and 4 to our financial statements, included elsewhere in this offering circular. (3) The balance of the assignment from Marisa Lojas to Begoldi of credits related to purchases with the Marisa Card. Credi-21 is an intervenient-consenting party to the assignment. (4) Payment in advance for future capital increases granted by Begoldi to Marisa Lojas. (5) Rents payable to subsidiaries, as mentioned in note No. 24.f of our financial statements, included elsewhere in this offering circular. (6) Dividends payable by Marisa Lojas. (7) Rent amounts paid by subsidiaries and SPEs.

119 The following table sets forth the value of assets and liabilities of these SPEs for the periods indicated:

As of June 30, 2006 Athol Lógica Racional Ativa Fax Total (in millions of reais) Cash and cash equivalents ...... 0.6 2.0 0.6 — — 3.3 Trade accounts receivable...... 7.7 7.5 8.0 0.6 0.5 24.3 Others receivables ...... 0.6 0.5 0.6 0.1 0.2 1.9 Total assets ...... 9.0 10.0 9.1 0.7 0.6 29.5 Trade accounts payable ...... 4.3 4.1 4.4 0.7 0.5 14.0 Taxes payable ...... 0.8 1.0 1.0 0.0 0.0 2.9 Total liabilities ...... 5.1 5.1 5.4 0.7 0.6 16.9 Shareholders’ equity ...... 3.8 4.9 3.7 0. 0.0 12.6

As of June 30, 2007 2006 Nix ...... 1.7 3.3 Mareasa ...... 1.0 1.2 Actio ...... — 2.5 Novay ...... 3.2 4.1 Total ...... 5.8 11.1

The decision to enter into related party transactions is taken by our executive board or our board of directors, in accordance with Brazilian Corporate Law and our bylaws. See “—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financing agreements.”

As of the date of this offering circular, as material obligations, we have only certain guarantees granted under certain financing agreements and lease agreements with third parties by Décio Goldfarb, Márcio Luiz Goldfarb and Denise Goldfarb Terpins. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financing Activities—Financing Agreements.”

Transactions with Begoldi Begoldi controls certain special purpose entities, or SPEs, which were organized to provide data processing services in connection with our Marisa Card and to sell retail goods to companies within the Marisa Group. The corporate purpose of these SPEs typically includes: (1) wholesale sales of clothing and accessory items; (2) investments in real estate; and (3) holding equity interest in other companies. In addition, as a result of the corporate restructuring process we carried out in 2006, the operations conducted by these SPEs were taken over by some of our subsidiaries. However, Begoldi has maintained control of the SPEs. See “Business—Corporate Restructuring,” “Presentation of Financial and Other Information,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

As of June 30, 2007, we held a credit recorded against Begoldi in the amount of R$1.9 million related to advances from Begoldi to our subsidiaries and the SPEs for the payment of taxes and general administrative expenses. This amount was in our non-current assets due to these transactions having definite terms.

Lease agreements between us and related parties We are a party to 68 agreements entered into by and between Begoldi and certain subsidiaries in connection with the lease of our registered offices and of the properties in which some of our stores are located. In addition, we entered into lease agreements with third parties, which are secured pursuant to guarantees provided by some of our related parties.

120 The 68 lease agreements we executed with subsidiaries are effective for five-year periods, and 67 of them are successively renewable for two additional five-year periods. The remaining lease agreement has been entered into for a five-year period, and includes a renewal clause that stipulates that the agreement is renewable once for five additional years, but may be renegotiated. None of these lease agreements require that we provide a guarantee. In addition, all of these agreements have terms and conditions commonly used in the market in which we operate. As of June 30, 2007, our accounts payable with regard to lease payments amounted to R$2.3 million. Our total lease payments to related parties as of December 31, 2004, December 31, 2005, December 31, 2006 and June 30, 2007 amounted to R$8.3 million, R$11.1 million, R$14.4 million and R$11.1 million, respectively.

Regarding the 155 lease agreements we entered into with third parties and guaranteed by related parties on our behalf, 153 are in effect for between five and 15 years and two agreements are for four-year periods. Since in nine of these cases the agreements have been in effect for over five consecutive years, we have filed suits to have these agreements renewed as permitted under applicable Brazilian legislation. As of December 31, 2004, 2005, 2006 and June 30, 2007, our total lease payments to third parties under 126 lease agreements guaranteed by us, our subsidiaries and SPEs amounted to R$15.3 million, R$18.5 million, R$27.5 million and R$11.1 million, respectively.

Logistical services agreement between Marisa Lojas and Due Mille On June 30, 2005, our subsidiary Marisa Lojas entered into an agreement with Due Mille, related to the provision of logistical services including the handling, requesting, loading and unloading of goods. This agreement involves monthly payments to Due Mille of R$7.15 per lot of 100 goods, with the average monthly payments under this agreement comprised an average amount of R$0.5 million for the years ended December 31, 2005 and 2006 and R$0.5 million for the six-month period ended June 30, 2007. This agreement is effective for an indefinite period of time and may be terminated by either party at any time upon 30 days’ written notice of termination.

Service agreement related to transactions with the Marisa Card On October 26, 1999, our subsidiary Marisa Lojas entered into an agreement with Credi-21 for the rendering of services related to Marisa Card transactions. These services include the listing, transmission and processing of transactions resulting from the use of Marisa Cards at any of our stores. The agreement stipulates that Marisa Lojas pay Credi-21 a monthly fee for such services corresponding to 2.5% of the total store sales using the Marisa Card. As of the years ended December 31, 2004, 2005 and 2006, our payments to Credi-21 under this agreement represented were R$8.2 million, R$15.8 million and R$19.7 million, respectively, and in the six-month period ended June 30, 2007, R$10.9 million. This agreement is effective for an indefinite period of time and may be terminated by either party, at any time, upon 15 days written notice of termination.

Financial agreements secured by related parties Certain related parties have provided collateral or other forms of guarantee on our behalf in connection with some of our financial agreements. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financing Activities—Financing Agreements.”

121 DESCRIPTION OF CAPITAL STOCK

Below is a descriptive summary of some provisions set forth in our bylaws and Brazilian Corporate Law, as well CVM and Novo Mercado regulations that pertain to our capital, management, periodical and occasional disclosures, as well as other corporate issues applicable to us.

This is not an exhaustive summary of the matters addressed below. It merely provides an overview of certain provisions of our bylaws, Brazilian Corporate Law, and CVM and Novo Mercado regulations.

On September 14, 2007, we entered into an agreement in order to join the Novo Mercado segment of the BOVESPA, to adhere to the requirements of corporate governance and disclosures of the Novo Mercado segment. This Novo Mercado agreement will become binding on the date of the announcement related to the beginning of the trading of our shares on the BOVESPA. Our shares will begin trading on the Novo Mercado segment on the business day immediately following the date of the announcement of this offering.

Corporate purpose Our corporate purpose consists of the organization of, participation in and management of, under any circumstances, partnerships or businesses of any kind, as a partner or shareholder.

Description of capital stock As of the date of this offering circular, our capital stock amounted to R$44,634,410.00, divided into 133,903,230 common shares, with no par value. According to our bylaws, our capital stock can be increased by up to 450,000,000 additional common shares without the need to amend our bylaws, as approved by our board of directors, up to the authorized capital stock limit. Any increase exceeding the authorized capital limit must be approved by the shareholders at a special shareholders’ meeting. In accordance with Novo Mercado regulations and our bylaws, we are not allowed to issue preferred shares or participation bonuses.

Amendments to the composition of our capital stock On December 31, 2006, our shareholders approved in a special general shareholders’ meeting a capital stock increase from R$30,000.00 to R$41,314,417.00, representing a total amount of R$41,284,417.00, with the issuance of 41,284,417 new common shares with an issuance price of R$1.00 per share. The capital stock increase was paid by Begoldi with shares in Marisa Lojas, Due Mille and FIX. As a result of this transaction, Begoldi holds 99.9% of our capital stock as of the date of this offering circular.

On March 2, 2007, our shareholders approved in a special general shareholders’ meeting a capital stock increase of R$3,319,993.00, pursuant to which our capital stock increased from R$41,314,417.00 to R$44,634,410.00. Of the total capital increase, Begoldi subscribed and paid for R$1,000,000.00, and the balance was subscribed for equally by the Marcio Luiz Goldfarb, Décio Goldfarb and Denise Goldfarb Terpins and paid for with equity held by them in FIX.

On September 20, 2007, our shareholders approved in a special general shareholders’ meeting a 1 to 3 split of our shares. As of that date we have 133,903,230 common shares.

Shares in treasury At this date, we do not own any of our shares.

Rights of common shares Each common share entitles its owner to one vote in our general and special shareholders’ meetings. According to our bylaws and Brazilian Corporate Law, our shareholders have the right to receive dividends and other distributions made in connection with our common shares in proportion to their ownership interest in

122 our capital stock. In the event of our liquidation, our shareholders have the right to receive reimbursements proportional to their ownership interest in our capital stock, after the settlement of all of our obligations. Owners of our common shares have a preemptive right to participate in increases of our capital stock, proportional to their ownership interest in our capital stock, but they are not obligated to subscribe to new shares in these future increases of our capital stock.

According to Brazilian Corporate Law, neither our bylaws nor actions taken at a shareholders’ meeting may deprive a shareholder of the following rights:

• the right to participate in the distribution of profits; • the right to participate, proportionally to their ownership interest in our capital stock, in the distribution of any residual assets in the event of our liquidation; • the right to inspect, in the manner set forth in Brazilian Corporate Law, the management of corporate businesses; • preemptive rights related to the subscription of shares, debentures convertible into shares or subscription warrants, except in some specific circumstances set forth in Brazilian Corporate Law as described under “—Preemptive rights”; and • the right to withdraw from the company in the circumstances defined by Brazilian Corporate Law, as described under “—Withdrawal rights and redemption.”

Registration of our shares Our common shares are held in book-entry form with Banco Bradesco S.A. The transfer of our shares is carried out by means of an entry by the bookkeeper in its system by debiting the account of the seller and crediting the account of the buyer, subject to a written order from the transferor or a judicial order of authorization.

Preemptive rights Except as described below, our shareholders have a general preemptive right to subscribe shares in any increase of capital stock proportionally to their ownership interest at the time of this increase of capital stock. Our shareholders also have preemptive rights to subscribe to any debentures convertible into shares and any offer of our shares or subscription warrants that we may issue. However, in the event of the conversion of debentures into our shares, and any offer of our shares through the grant or exercise of a subscription warrant or an option to acquire or subscribe to our shares, our shareholders do not have any preemptive rights. A period of at least 30 days following the publication of a notice of an increase of capital stock through issuance of new shares, issuance of debentures convertible into shares or subscription warrants is granted for the exercise of the preemptive right, and the right may be transferred or sold by the shareholder. Under the terms of Article 172 of Corporate Law and our bylaws, the board of directors may exclude preemptive rights or reduce their exercise period with respect to the issuance of new shares, debentures convertible into shares and subscription warrants, if the distribution of those shares is effected through a stock exchange, a public offering, or through an exchange of shares in a public offering for acquisition of control of another company.

Shareholders’ meetings At the shareholders’ meetings called on a regular basis, our shareholders are empowered to deliberate on all matters that fall within their authority according to Brazilian Corporate Law and our bylaws. Shareholders have the exclusive right, during an annual shareholders’ meeting, to approve our financial statements and to determine the allocation of our net income and the distribution of dividends related to the fiscal year immediately preceding the meeting. Members of our board of directors are generally elected at the annual shareholders’ meetings. However, according to the Brazilian Corporate Law, they can also be elected at special shareholders’ meetings. Members of our fiscal council, in the event that it is installed as per request of owners of a sufficient number of shares, may be elected at any shareholders’ meeting.

123 A special shareholders’ meeting may be held concurrent with the annual shareholders’ meeting. Our shareholders may take the following actions, among others, exclusively at shareholders’ meetings: • amendment of our bylaws; • election and dismissal of the members of our board of directors and fiscal council, if one has been installed at our shareholders’ request; • definition of the compensation of the members of the board of directors and our executive officers, as well as the compensation of the members of our fiscal council, if one has been installed at our shareholders’ request; • annual analysis of our management accounts and the financial statements prepared by our management; • allocation of bonuses on shares and decision on possible splits or reverse stock splits; • approval of stock option plans for our managers, employees and any person that renders services to us or other companies that are controlled by us; • issuance of debentures convertible into shares, except for the provisions of Article 59, first paragraph of Brazilian Corporate Law; • suspension of the rights of shareholders that have failed to comply with its obligations under applicable law or our bylaws; • appraisal of assets that a shareholder submits as payment for shares of our capital stock; • approval of our transformation, dissolution, liquidation, merger, spin-off, incorporation into another company or incorporation of another company; • election and dismissal of the liquidators, as well as our fiscal council should be functioning during the liquidation period, and the approval of the accounts submitted and the transactions and acts report; • de-listing from the Novo Mercado segment of the BOVESPA; • approval of amortization and/or withdrawal of our shares; • authorization for our management to petition for our bankruptcy or submit a request for judicial or extra-judicial restructuring.

Quorum As a general rule, Brazilian Corporate Law provides that a quorum at a shareholders’ meeting consists of shareholders representing at least 25.0% of our issued and outstanding voting shares on the first call and, on the second call, any number of voting shares. If our shareholders are called upon to amend our bylaws, the quorum required at the first call shall be shareholders representing at least two-thirds of our issued and outstanding voting shares, and any number on the second call.

Generally, the affirmative vote of shareholders representing at least a majority of our issued and outstanding common shares present in person or represented by proxy at a shareholders’ meeting is required to approve any proposed action. Abstentions and blank votes are not taken into account for purposes of this calculation. However, the approval of shareholders representing at least 50.0% of our voting shares is required for the definition of the following matters, among others: • reduction of the mandatory dividends to be distributed to the shareholders; • change of our objectives; • our merger or incorporation into another company (including merger of shares); • our spin-off; • our investment in a group of companies, as defined by Brazilian Corporate Law;

124 • cancellation of our liquidation; • our dissolution; and • our de-listing from the Novo Mercado segment of the BOVESPA.

The CVM can authorize the reduction of the above-mentioned quorum in the case of a publicly held company with shares traded on the market and whose last three shareholders’ meetings have been held with shareholders representing less than half of the voting shares present.

Call to participate in shareholders’ meetings According to Brazilian Corporate Law, all notices for shareholders’ meetings must be published at least three times in the official federal gazette or the official gazette of the state where our headquarters are located, as well as in another well-known newspaper in the same state. Our publications are currently made in the official gazette of the state of São Paulo (Diário Oficial do Estado de São Paulo), as well as in the Valor Economico newspaper. The first notice should be published at least 15 days prior to the shareholders’ meeting, and the second call should be published no later than eight days before the shareholders’ meeting. However, under certain circumstances, and at the request of any shareholder, the CVM may require that the first notice for a shareholders’ meeting must be published 30 days prior to the meeting. The CVM may also, at the request of any shareholder, suspend for up to 15 days, the term for a call to special shareholders’ meeting, in order to analyze and understand the proposals to be presented at the meeting. The notice must contain the meeting agenda and, when amendment of our bylaws is contemplated, a description of the subject matter of the proposed amendment, besides the location, date and hour of the meeting.

Location of shareholders’ meetings Our shareholders’ meetings take place at our headquarters, located in the city of São Paulo, state of São Paulo. Brazilian Corporate Law allows our shareholders’ meetings to be held at a place other than our headquarters in the event of force majeure, provided that the meetings are held in the city of São Paulo and that the relevant notice states clearly where the shareholders’ meeting will occur.

Who may call a shareholders’ meeting The members of our board of directors generally call shareholders’ meetings. However, shareholders’ meetings may also be called by: • any shareholder, if our board of directors fails to call a shareholders’ meeting within 60 days from the date set forth by applicable law or our bylaws; • shareholders holding at least 5.0% of our total capital stock, if our board of directors fails to call a shareholders’ meeting within eight days from the receipt of a request for a meeting indicating the issues to be discussed and appropriate reasons; • shareholders holding at least 5.0% of our total capital stock, if our board of directors fails to call a shareholders’ meeting within eight days of the receipt of a request to call a meeting for the formation of the fiscal council; and • the fiscal council, if our board of directors delays for more than one month the calling of the annual shareholders’ meeting. The fiscal council may also call a special shareholders’ meeting whenever there are important or urgent matters to be addressed.

Conditions of admission In accordance to Brazilian Corporate Law and our bylaws, the shareholders present at a shareholders’ meeting must produce, at least 48 hours in advance of the meeting, proof of ownership of the shares they intend

125 to vote with as well as identification and/or relevant corporate acts that evidence legal representation powers, including: (1) proof of ownership of our shares, issued by Banco Bradesco S.A. within a maximum of five days before the meeting; (2) a notarized power of attorney; and/or (3) in the case of shareholders that participate in the fungible custody of common shares, a statement containing the respective percentage of ownership of our capital stock, issued by the applicable entity.

A shareholder may be represented at a shareholders’ meeting by a proxy appointed less than a year before, who is our shareholder, one of the members of the management team, an attorney or a financial institution, if the company is public held. An investment fund must be represented by its manager.

Withdrawal rights and redemption Withdrawal rights Any shareholder who dissents from certain decisions made during a shareholders’ meeting has the right to withdraw from us and to receive the book value of his or her shares.

According to Brazilian Corporate Law, a shareholder’s withdrawal rights may be exercised in the following circumstances, among others: • our spin-off; • reduction of our mandatory dividends to be distributed to the shareholders; • change in our objective; • our merger with or incorporation by another company (in certain circumstances, as described below); • our participation in a group of companies, as defined in Brazilian Corporate Law; • incorporation of a related-party, as defined in Article 252 of Brazilian Corporate Law; • our transformation; and • acquisition of control over another company for a price that exceeds the limits set out in Brazilian Corporate Law.

Brazilian Corporate Law further provides that any resolution regarding a spin-off will also entitle shareholders to withdraw from us if the spin-off: • causes a change in our objectives, except if the equity spun off is purchased by a company whose primary activities are consistent with our objectives; • reduces our mandatory dividends; or • causes us to join a group of companies, as defined in Brazilian Corporate Law.

In the event of (1) our merger with or incorporation by another company; (2) participation in controlling groups of shareholders; (3) incorporation of a related-party, as defined in Article 252 of Brazilian Corporate Law; and (4) acquisition of control over another company for a price that exceeds the limits set out in Brazilian Corporate Law, our shareholders will not be entitled to withdraw if their respective shares (1) are liquid, which is defined as being part of the BOVESPA index or other traded stock exchange index, as defined by the CVM; and (2) are widely held, provided that the controlling shareholder, the parent company or other jointly controlled companies hold less than 50.0% of that type or class of our shares.

The right to withdraw expires 30 days after the publication of the minutes of the shareholders’ meeting that triggered that right. Furthermore, we are entitled to reconsider any action giving rise to withdrawal rights within ten days after the expiration term for exercise of those rights if we believe the redemption of shares of dissenting shareholders would jeopardize our financial stability.

126 If shareholders exercise withdrawal rights, they are entitled to receive the book value for their shares, based on our most recent balance sheet approved during a shareholders’ meeting. However, if the resolution giving rise to the withdrawal rights is made later than 60 days after the date of the most recent balance sheet, our shareholders may demand that their shares must be valued in accordance with a new balance sheet dated no earlier than 60 days before the resolution date. In this case, we must immediately pay 80.0% of the book value of the shares according to the most recent balance sheet approved by the shareholders, and the balance must be paid within 120 days after the date of the resolution of the shareholders’ meeting.

Redemption According to Brazilian Corporate Law, we may redeem our shares subject to the approval of our shareholders at a special shareholders’ meeting, where shareholders representing at least 50.0% of the shares that would be affected are present.

Board of directors According to our bylaws and the Novo Mercado regulations, our board of directors will be comprised of a minimum of five and a maximum of seven directors, where at least 20.0% of the members of our board of directors are independent directors. The exact number of directors is set by the affirmative vote of shareholders holding a majority of our common shares. Brazilian Corporate Law allow cumulative voting at the request of at least 10.0% of holders of our voting capital stock, and holders of shares representing a minimum of 10.0% of our common shares are entitled to elect one director by a separate vote. As a general rule, unless there is a request for cumulative voting, our directors are elected by a majority vote of the holders of our common shares, whether present at the meeting or represented by a proxy. The members of our board of directors are typically elected at the annual shareholders’ meeting for a one-year term of office, re-election being permitted.

Pursuant to CVM Instruction No. 282, dated June 26, 1998, the minimum percentage of voting shares required for adoption of cumulative voting may be reduced to a percentage between 5.0% and 10.0% depending on the amount of the capital stock.

In addition, in accordance with Brazilian Corporate Law, each member of our board of directors must hold at least one share of our company. See “Management—Board of directors.”

Transactions in which directors have an interest According to Brazilian Corporate Law, a director may not: • perform any gratuitous act using corporate assets, to our detriment, except for reasonable gratuitous acts that benefit our employees or the community in which the company is engaged, bearing in mind the company’s social responsibility, which might be authorized by the board of directors; • receive, by virtue of his or her position, any direct or indirect personal benefit from third parties without stated authorization in the relevant Article of our bylaws or permission granted during a shareholders’ meeting; • borrowing funds or obtaining any loan with, or borrowing any corporate assets from us, or using the benefits from our assets, services or credits, according to his own and personal interests, without the previous approval of the shareholders at a shareholders’ meeting or of the board of directors; • take part in a corporate transaction in which he or she has an interest that conflicts with our interests or in the deliberations undertaken by our directors on the matter; • take advantage of any commercial opportunity for his or her own benefit or, for the benefit of a third party at the expense of the company when he or she learned of this opportunity through his or her position as a director;

127 • neglect the protection of the company’s rights by failing to disclose a business opportunity in the interests of the company with a view to exploiting the opportunity for personal gain, or for the benefit of a third party; and • acquire, in order to resell for profit, a good or right that is essential to the company’s business operations, or that the company intends to acquire itself.

The compensation of our directors is determined by our shareholders at the annual shareholders’ meeting when the previous period’s financial statements are approved.

Fiscal council As the members of our board of directors, the members of our fiscal council, when installed, are required to agree in writing to the rules and regulations of the Novo Mercado through the execution of a consent term.

Under the Brazilian Corporate Law, we may have a fiscal council either on a permanent or non-permanent basis. Our fiscal council is a non-permanent body. When installed, our fiscal council will be comprised of a minimum of three and a maximum of five members and their respective alternates. Currently, our fiscal council is not constituted, however, it may be established at the request of shareholders. If any shareholder nominates one or more members of our fiscal council that have not been members of the council since the last annual shareholders’ meeting, this shareholder must send us a written notice of his or her nomination five days before the shareholders’ meeting. This notice must provide the candidate’s name, qualifications and professional experience. See “Management—Fiscal council.”

Restrictions on certain transactions by controlling shareholder, directors and officers We adopted the rules set forth in CVM Instruction No. 358, dated January 3, 2002, for the trading of our securities. As a result, we, our controlling shareholder, whether direct or indirect, directors, executive officers and members of our fiscal council, when installed, and of any committees or bodies performing technical or advisory functions, created under our bylaws, as well as any other person who has knowledge of certain information that has not been made publicly available to the market, are prohibited from trading in our securities, including derivatives based on our securities, before the public disclosure of any material act or fact with respect to our business.

This restriction also applies in the following instances: • to persons that are no longer members of our board of directors, executive officers of our Company and members of the fiscal council and, in addition, the prohibition from trading our securities is extended for a period of six months as from the date on which these persons resign from their positions; • whenever there is an intention to merge us into another company or to carry out our total or partial spin- off, consolidation, or corporate restructuring; • to us, if any agreement or contract for transfer of our corporate control has been executed, or if an option or power of attorney has been granted for this purpose; • to our controlling shareholder, directors and officers, in the event of acquisition or sale of our common shares by us or by any of our controlled or affiliated companies or any other company under our common control, or if an option or power of attorney has been granted for this purpose; and • during the 15-day period before the disclosure of our quarterly (“ITR”) and annual financial disclosures (“DPF”), as required by the CVM, subject to certain exceptions.

Arbitration We, our shareholders, our directors, our officers and members of our fiscal council, if installed, must resolve through arbitration any and all disputes or controversies related to the validity, application, interpretation,

128 violation and their effects of provisions of Brazilian Corporate Law, our bylaws, regulations issued by the CMN, Central Bank and CVM, as well as any other laws and regulations applicable to capital markets in general, including the Novo Mercado regulations, the contract for listing on the Novo Mercado, and arbitration rules.

Cancellation of our registration as a publicly held company The cancellation of our registration as a publicly held company may occur only if we make a public offering for the acquisition of all our outstanding shares in accordance with the following requirements: • the offering price must be fair, as established by applicable law; and • shareholders who hold more than two-thirds of our outstanding shares must expressly agree with the cancellation of our registration as a publicly held company or accept the public offering. For this specific purpose, the outstanding shares include only those shares whose holders have agreed with the cancellation of our registration as a publicly held company or have decided to participate in the public offering.

According to Novo Mercado regulations and our bylaws, the offering price must be at least equal to the economic value of our shares based on a valuation report prepared by a specialized and independent company, with renowned expertise, to be selected at the annual shareholders’ meeting from among the three companies suggested by the board of directors.

Brazilian Corporate Law sets forth that fair value must be determined based on criteria related to our net accounting equity, our net equity evaluated at market value, the discounted cash flows, the comparison by multiples, the quotation of the shares issued by us in the market or based on other criteria accepted by the CVM. Holders of at least 10.0% of the outstanding shares may request a review of the offering price by requesting the board of directors to call a special shareholders’ meeting to approve a new valuation according to the same or alternative criteria, for determining our economic value. This request must be presented no later than 15 days from the publication of the public offering, with appropriate supporting justification. The shareholders who request the new valuation, and those who voted in favor of it, must reimburse us for the costs incurred if the new valuation is lower or equal to the initial one. However, if the value determined in the second valuation is higher, the public offering must adopt this new value, except if the offeror decides to cancel the public offering as a result of this higher valuation.

In accordance with the provisions of our bylaws, if we do not have a controlling shareholder, whenever the cancellation of our registration as a publicly held company is approved by the shareholders’ meeting, we will be required to proceed with the public offering for the acquisition of all outstanding shares. In this case, we can only acquire the outstanding shares of the shareholders that vote in favor of the cancellation of our registration as a publicly held company after acquiring all outstanding shares owned by shareholders that vote against the cancellation of registration and who decide to accept the public offering.

Delisting from the Novo Mercado We may at any time request the delisting of our common shares from the Novo Mercado, pursuant to a resolution obtained in a shareholders’ meeting, and provided that the BOVESPA must receive 30 days’ prior written notice.

In this event, the resolution approved at our shareholders’ meeting should specify whether this delisting should take place because our securities would be listed for trading outside the Novo Mercado, or because of a going private process. Notwithstanding our delisting from the Novo Mercado, we will continue to be a publicly held corporation.

At the time the delisting from the Novo Mercado takes place, in order for the shares being delisted to be traded outside the Novo Mercado, the controlling shareholder must conduct a tender offer to acquire shares,

129 according to the applicable rules. In any event, the offering price should at a minimum equal the economic value of our common shares, as appraised by a specialized, experienced and independent company, to be selected at the annual shareholders’ meeting from among the three companies suggested by the board of directors.

At the meeting, our controlling shareholder, Marcio Luiz Goldfarb, Décio Goldfarb and Denise Goldfarb Terpins, their spouses, companions and dependents for income tax purposes, any treasury shares and the shares of our subsidiaries or affiliates or other companies under common control with our controlling shareholder, would not be permitted to cast a vote. Our controlling shareholder must incur the costs of this appraisal report.

In addition, if we delist from the Novo Mercado, the controlling shareholder is required to conduct a tender offer to acquire the shares held by the other shareholders for at least the economic value of the shares, to be set forth according to the Novo Mercado regulation, pursuant to the applicable laws and rules. Notice of the public offering must be given to the BOVESPA and disclosed to the market promptly after we receive notice of the termination of the agreement for participation in the Novo Mercado.

If there is a transfer or sale of our control within the 12-month period following the delisting from the Novo Mercado, the controlling shareholder and the acquirer of control, jointly and severally, must offer to purchase the shares of the other shareholders on the same conditions and for the same price offered to the acquirer of control.

After our delisting from the Novo Mercado, we would not be entitled to again request that our common shares be listed on the Novo Mercado for a period of two years following the delisting, unless there is a change in control after the delisting.

Change of control The sale of our control, in one transaction or in a series of transactions, must include an obligation by the acquirer to complete a public tender offer for the acquisition of all other outstanding shares on the same terms and conditions granted to the controlling shareholder. According to Novo Mercado regulations, we and the selling controlling shareholder must deliver a statement including the price and other conditions related to the sale of our control.

A public offering is also required: (1) when there is an assignment of share subscription rights or rights of other securities convertible into our shares, which results in the transfer of control of the company; (2) in case of a transfer of control by the controlling shareholder; and (3) when an existing shareholder that acquires a controlling stake in us. The shareholder shall conduct a public offering under the same terms and conditions offered by Marcio Luiz Goldfarb, Décio Goldfarb and Denise Goldfarb Terpins and shall reimburse the shareholders from whom the shares were acquired six months prior to the sale of control the amount equivalent to the difference between the price paid to the selling controlling shareholder and the price paid on the stock exchange for our common shares.

Public offering for the acquisition of shares Our bylaws provide for the occurrence more than one of the events described above leading to a single public offering for our shares. There would be advantages to a single public offering being structured for more than one purpose, as long as the public offering processes can occur without impeding on each processes’ distinct purpose. Recipients of shares from the offering would face no particular disadvantages, and it would be possible to secure the CVM’s approval as required by applicable law.

In addition, our bylaws permit us or those of our shareholders responsible for any public offering mentioned in this section, to launch the offering through any shareholder, third party or even through the company itself. The company or responsible shareholder, depending on the circumstances, would not be exempt from liability for the public offering until the transaction is concluded according to applicable rules and regulations.

130 Acquisition by us of our own shares Our bylaws authorize the board of directors to approve our purchase of our own shares, or our purchase or issuance of stock option plans related to our shares. Our purchase of our own shares with the purpose of holding them in treasury or canceling them cannot, among other things: • result in a decrease of our capital stock; • require the use of funds greater than our accumulated profits and the profit reserves available, except for our legal reserve, unrealized profit reserve, contingency reserve and special reserve for mandatory undistributed dividends; • create, directly or indirectly, any demand, offer, or artificial subscription price, or make use of any unjust practice act resulting from a specific action or omission; • be used for the purchase of shares held by our controlling shareholder(s); or • take place during the course of a public tender offer of our securities.

Our board of directors has the authority to make purchases of our shares, specifying (1) the objective of the transaction; (2) the quantity of shares to be purchased; (3) the maximum period allowed to execute to authorized transaction, which cannot exceed 365 days; (4) the quantity of outstanding shares in the market; and (5) the name and address of the financial institutions that will act as intermediaries in the transaction.

We cannot hold in treasury more than 10.0% of our outstanding shares in the market, including the shares held by our subsidiaries and associated companies.

Any purchase we make of our shares must be made in the stock exchange, unless the shares can be traded only on the over-the-counter market and not through private transactions, except when previously approved by the CVM. Our purchase of our shares can also occur when we are no longer a publicly held company. Additionally, we can purchase or issue stock option plans related to our shares.

Minimum percentage of free float shares after increase of capital stock According to Novo Mercado regulations, if a capital increase is not fully subscribed for by shareholders with preemptive rights or if there is not enough interest by prospective investors in the respective public offering, the controlling shareholder may partially or fully subscribe for the outstanding shares if the controlling shareholder takes the necessary measures to maintain the minimum percentage of free floating shares, which is 18% of our shares in the six months after the approval of this subscription.

Reporting requirements Once we become a publicly traded company, we will be subject to the reporting requirements established by Brazilian Corporate Law and the regulations of the CVM. In addition, as a result of our listing on the Novo Mercado, we must comply with the disclosure requirements set forth in the Novo Mercado regulations.

Cash flow statements According to Novo Mercado regulations, we must include changes on cash and cash equivalents in the financial statements disclosed every quarter and every year, broken down by (1) operating, (2) financial or (3) investment flows. In addition, according to Novo Mercado regulations, we must disclose cash flow statements after six months from the date that we were authorized to trade our shares on Novo Mercado.

131 Information required by the CVM Brazilian Corporate Law, the securities regulations of the CVM and the rules for listing on the Novo Mercado require that a publicly held corporation provide the following periodic information to the CVM and BOVESPA: • financial statements prepared in accordance with Brazilian GAAP and related management and auditors’ reports, within three months from the end of its fiscal year or on the date on which it is published or made available to shareholders, whichever occurs first, together with the Demonstrações Financeiras Padronizadas (a report on standard form containing relevant financial information derived from our financial statements required to be filled out by us and filed with the CVM); • notices of our annual shareholders’ meeting, on the same date as their publication; • a summary of the decisions made in annual shareholders’ meetings, on the day of their occurrence; • a copy of the minutes of the annual shareholders’ meeting, within ten days from its occurrence; • an annual report containing our relevant corporate, business and selected financial information (Informações Anuais) (“IAN”) within one month from the date of the annual shareholders’ meeting; and • a quarterly report containing our relevant quarterly corporate, business and financial information (Informações Trimestrais) (“ITR”), together with a limited review report issued by our independent auditor, within 45 days from the end of each quarter (except for the last quarter of each year) or upon disclosure of this information to shareholders or third parties, whichever occurs first.

In addition to the foregoing, we must also file the following information with the CVM and BOVESPA: • notice of our special shareholders’ meetings, on the same date as their publication; • summary of the decisions made in annual or special shareholders’ meetings, on the day of their occurrence; • minutes of our special shareholders’ meetings, within ten days from their occurrence; • a copy of any shareholders’ agreement on the date on which it is filed with us; • any press release giving notice of material facts, on the same date it is published in the press; • information on any filing for corporate restructuring, the reason for this filing, special financial statements prepared for obtaining a legal benefit, and, if applicable, any plan for payment of holders of debentures, as well as copies of any judicial decision granting this request, on the same date it is filed and on the date we take notice of it; • information on any bankruptcy filing, on the same day we became aware of it, or the filing of a judicial claim, as applicable; • a copy of any judicial decision granting a bankruptcy request and appointment of a bankruptcy trustee, on the date we take notice of it; and • other information requested by the CVM within the term determined by it.

Information required by the BOVESPA from companies listed on the Novo Mercado In addition to the disclosure obligations imposed by the Brazilian Corporate Law and the CVM, we also must comply with the following additional disclosure requirements set forth by Novo Mercado regulations: • no later than six months following our listing on the Novo Mercado, we must disclose financial statements and consolidated financial statements at the end of each quarter (except the last quarter of each year) and at the end of each fiscal year, including a cash flow statement which must indicate, at a minimum, the changes in our cash and cash equivalents, divided into operational, finance and investment cash flows;

132 • from the date on which we release our financial statements relating to the second fiscal year following our listing on the Novo Mercado we must, no later than four months after the end of the fiscal year: (1) prepare our annual financial statements and consolidated financial statements, if applicable, in accordance with U.S. GAAP or IFRS in reais or U.S. dollars, in English, together with (a) management reports, (b) the notes to our financial statements, and including information on net income and shareholders’ equity calculated at the end of this fiscal year in accordance with Brazilian GAAP as well as management proposals for allocation of net income, and (c) our independent auditors’ report; or (2) disclose, in English, the complete financial statements, management reports and notes to our financial statements, prepared in accordance with Brazilian Corporate Law, accompanied by (a) an additional explanatory note regarding the reconciliation of year-end results and shareholders’ equity calculated in accordance with Brazilian GAAP and U.S. GAAP or IFRS, as the case may be, which must include the main differences between the accounting principles used, and (b) the independent auditors’ report; and • from the date on which we release our first financial statement prepared as provided above, no more than 15 days following the term established by law for the publication of quarterly financial information, we must: (1) disclose, in its entirety, our quarterly financial information translated into the English language or (2) disclose our financial statements and consolidated financial statements in accordance with Brazilian GAAP, U.S. GAAP or IFRS as provided above, accompanied by the independent auditors’ report.

No later than six months following the listing of our common shares on the Novo Mercado, we must disclose the following information together with our ITR, except for the information required in the second, third sixth and seventh items below presented, which we disclose immediately after listing of our common shares on the Novo Mercado: • our consolidated balance sheet, consolidated income statement, and a discussion and analysis of our consolidated performance, if we are obliged to disclose consolidated financial statements at year-end; • any direct or indirect ownership interest exceeding 5.0% of our capital stock, considering any ultimate individual beneficial owner; • the number and characteristics, on a consolidated basis, of our shares held directly or indirectly by our controlling shareholder, members of our board of directors, board of executive officers and fiscal council; • changes in the numbers of our shares held by the controlling shareholder, members of our board of directors, board of executive officers and fiscal council in the immediately preceding 12 months; • in an explanatory note, our cash flow statement and consolidated cash flow statement, which should indicate the cash flow changes in cash balance and cash equivalents, separated into operating, finance and investment cash flows; • the number of free floating shares, and their percentage in relation to the total number of issued shares; and • information relating to the ownership interest exceeding 5.0% of our capital stock, number and characteristics, on a consolidated basis, of our shares directly or indirectly held by the controlling shareholder and members of the board of directors, executive officers and fiscal council; changes in the number of securities held by these persons within the immediately preceding 12 months, as well as the number of free floating shares and their respective percentage in relation to the total amount of shares issued must also be included in our IAN in “Additional Information Deemed Relevant by the Company.”

Disclosure of trading by our controlling shareholder, directors, officers or members of our fiscal council Our controlling shareholder, directors, officers, members of our fiscal council, when installed, or of any technical or advising body must disclose to company the ownership and the tradings (including price and date of

133 purchase) of securities issued by us, listed companies under our control or, by our listed controlling shareholder, including derivatives referenced in these securities that are held by each of them as well as any change in this investment. In case of individuals, this information shall also include securities held by the spouse, companion or dependents of these persons, included in their annual income tax statement and held by companies controlled directly or indirectly by these persons.

The communication shall include, at minimum, the following information: • the name and qualification of the person providing the information; • the issuer, amount, price, type and/or class, in the case of acquired shares, or characteristics, in the case of securities, and of the balance of the amount withheld before and after the trading; and • the form, price and date of transactions.

This information must be sent (i) in the first business day after their appointment; (ii) at the submission of the request to register us as a publicly held company, and (iii) five days after each trading occurred.

Pursuant to the rules of the Novo Mercado, our controlling shareholder must disclose to the BOVESPA information regarding the total amount and characteristics of securities owned, directly or indirectly, by them and issued by us, or any derivatives referenced in these securities, as well as any subsequent trading of these securities and derivatives. In case of individuals, this information shall also include securities held by the spouse, companion or dependents of these persons, included in the annual income tax statement of this controlling shareholder, officer, director or member of the fiscal council. This information must be communicated to the BOVESPA immediately upon acquiring control and thereafter within ten days following the end of each month in which trading occurred.

The company must send the mentioned above information to the CVM and, if applicable, to the stock exchanges and organized over-the-counter exchanges where the company’s securities are listed, within ten days after the end of the each month in which any change in this ownership occurred or after the end of each month in which any of the persons above invested in their positions.

The above mentioned information must be delivered individually and consolidated by each category of persons indicated therein, and the consolidated information will be available in the CVM electronic system (Informações Periódicas e Eventuais – IPE).

The investor relations officer is responsible for the transmission of the information received by the company to the CVM and, if applicable, to the stock exchanges and organized over-the-counter exchanges where the company’s securities are listed.

Whenever controlling shareholder, either direct or indirect, and shareholders who elect the members of our board of directors or fiscal council, as well as any individual or legal entity, or group of people working jointly or representing the same interest, obtain ownership, either directly or indirectly, equivalent to 5.0% or more of our shares, those shareholders or group of shareholders shall provide us, the BOVESPA and the CVM with the following information: • the name and qualification of the person providing the information, indicating the number of enrollment with the taxpayer’s registry; • the amount, price, type and/or class, in the case of acquired shares, or characteristics, in the case of securities; • the form of the transactions (private, stock exchange purchase, etc.); • purpose of the participation and amount aimed, containing, if applicable, statement given by the purchaser that his acquisitions are not aimed at changing the control composition or the administrative structure of the company;

134 • information about any agreement or contract governing the exercise of the right to vote or purchase and sale of securities issued by us; and • average share prices for the securities of the type and/or class acquired in the last 90 days, listed on BOVESPA.

This communication is also compulsory for the person or group of people representing the same interest, holding 5.0% of our shares or more, whenever this ownership increases or decreases by 5.0%.

Disclosure of material information According to Law No. 6,385, dated December 7, 1976, as amended, and the rules published by the CVM, we must disclose any material information (Fato Relevante) related to our business to the CVM and to the BOVESPA and must publish a notice of material information. Material information consists of any decision by the controlling shareholder, any resolution taken by our board of directors, by the executive officers or by the shareholders in a shareholders’ meetings, or any other act or fact of political, technical, managerial, economic or financial nature occurring or related to us that could materially influence (i) the price of our securities; (ii) the decision of investors to buy, sell or hold our securities; or (iii) the investors’ decision to exercise any rights deriving from our securities.

Under special circumstances, we may request confidential treatment of certain material developments from the CVM.

Policy for disclosure of material information CVM Instruction No. 358 regulates the disclosure and use of information related to material information of publicly held companies. Disclosure requirements include provisions that: • establish the concept of material information, which includes decisions made by the controlling shareholder, resolutions of the general shareholder’s meeting or of the management team of publicly held companies, or any other facts of a political, administrative, technical, business or financial and economic nature related to the company’s business and that may significantly influence (i) the price of its publicly traded securities; (ii) the decision of the investors to buy, sell or keep these securities; and (iii) the decision of investors to exercise any of these securities’ underlying rights; • require the investor relations officer to disclose and advise the CVM and the BOVESPA any information related to the company’s business that may be considered material, as well as oversee the full and immediate dissemination of the material information to the BOVESPA and the general public (i.e., through publication in newspapers, etc.); • immediate disclosure of material information is not required if the disclosure may affect our material interest; and • all affiliated persons (our controlling shareholder, our executive officers, our directors, members of our fiscal council, if installed, any other corporate body with technical or consulting duties created by our bylaws, our managers and our employees that have frequent access to material information, and others that we consider necessary and convenient) must sign an agreement related to disclosure of material information, and keep the confidentiality related to published information, being required to indemnify us and other people connected to us in case of default.

Public meeting with analysts Pursuant to the Novo Mercado regulations, at least once a year we must hold a public meeting with analysts and any other interested parties to disclose information regarding our projects and forecasts, as well as our economic and financial situation.

135 Annual calendar Pursuant to the Novo Mercado regulations, we must, by the end of January of each year, publicly disclose and send to the BOVESPA and CVM an annual calendar with a schedule of our corporate events. Any subsequent modification to this schedule must be immediately publicly disclosed and sent to the BOVESPA.

Duty to disclose related party transactions Pursuant to the Novo Mercado regulations, we must publicly disclose and send to the BOVESPA and the CVM information about any contract between us and our related parties or managers of our related parties, whenever the value of this contract in any one year-period reaches the greater of (i) R$0.2 million or (ii) 1.0% of our shareholders’ equity.

The disclosure must specify the contract’s object, term, amount, termination conditions and impact, if any, on our business and management. See “Related Party Transactions.”

136 DIVIDENDS AND DIVIDEND POLICY Amounts available for distribution At each annual general shareholders’ meeting, our board of directors is required to advise us on how to allocate our net income for the preceding year. The allocation is subject to approval by our shareholders. Brazilian Corporate Law defines “net income” for any fiscal year as the results in a given year after the deduction of accrued losses, the provisions for income and social contribution taxes for that year, accumulated losses from prior years, and any amounts allocated to profit-sharing payments to the employees and management, provided that management will be entitled to any profit-sharing payment only after the shareholders are paid the mandatory dividend.

Our bylaws provide that an amount equal to at least 25.0% of our adjusted net income, after deducting allocations to the legal reserve and contingency reserve, if any, or adding reversed contingency reserve amounts from prior years, if any, and unrealized profit reserve amounts, upon their realization and if not absorbed by subsequent losses, if any, and the allocation of profits to meet capital expenditures, should be available for distribution as mandatory dividend or interest attributable to shareholders’ equity. Our calculation of net income and allocations to reserves for any year, as well as the amounts available for distribution, are determined on the basis of our financial statements prepared in accordance with Brazilian Corporate Law.

Profit reserves Our profit reserve accounts are comprised of the legal reserve, unrealized profit reserve, retained profit reserve, contingency reserve, and statutory reserve.

Legal Reserve. Pursuant to Brazilian Corporate Law, we are required to maintain a legal reserve to which we must allocate 5.0% of our net income for each fiscal year until the aggregate amount of the reserve equals 20.0% of our capital stock. However, we are not required to make any allocations to our legal reserve in a year in which the legal reserve, when added to our other established capital reserves, exceeds 30.0% of our capital stock. Any net loss may be offset with the amounts allocated to the legal reserve. The amounts allocated to this reserve must be approved by our shareholders in a shareholders’ meeting, and may only be used to increase our capital stock or to offset losses. Therefore, they are not available for the payment of dividends. As of December 31, 2006, we did not have a legal reserve.

Unrealized Profit Reserve. Pursuant to Brazilian Corporate Law, the amount by which the mandatory dividend exceeds the “realized” net income in a given year may be allocated to an unrealized profit reserve account, and the mandatory dividends may be limited to the “realized” portion of the net income. Brazilian Corporate Law defines “realized” net income as the amount by which our net income exceeds the sum of: (1) our net positive results, if any, from the equity method of accounting; and (2) the profits, gains or income that will be received by us after the end of the next fiscal year. Profits recorded in the unrealized profit reserve, if realized and not absorbed by losses in subsequent years, must be added to the next mandatory dividend distributed after the realization. As of December 31, 2006, we did not have an unrealized profit reserve.

Contingency Reserve. Pursuant to Brazilian Corporate Law, a percentage of our net income may be allocated to a contingency reserve for anticipated losses that are deemed probable in future years, if their amount may be estimated. Any amount so allocated must be reversed in the fiscal year in which a loss that had been anticipated fails to occur as projected or charged off in the event that the anticipated loss occurs. As of December 31, 2006, we did not have a contingency reserve.

Statutory Reserve. Pursuant to Brazilian Corporate Law, we are permitted to provide for the allocation of part of our net income to discretionary reserve accounts that may be established in accordance with our bylaws, which must also indicate the purpose, allotment criteria and maximum amount of the reserve. The allocation of our net income to discretionary reserve accounts may not be made if it affects the payment of the minimum mandatory dividend. As of December 31, 2006 we did not have a statutory reserve.

137 Retained Profit Reserve (Investment Reserve). Pursuant to Brazilian Corporate Law, our shareholders may decide at the annual general shareholders’ meeting to retain a portion of our net income, as provided for in a capital expenditure budget that has been previously approved. The allocation of funds to this reserve cannot jeopardize the payment of the minimum mandatory dividends. As of December 31, 2006, we had not retained any amounts at the retained profit reserve as it has in the previous years.

The balance of our profit reserve accounts, except for the contingency reserve and the unrealized profits reserve, may not exceed our capital stock. If so, a shareholders’ meeting would vote on whether the excess should be used to pay in subscribed and unpaid capital, or to increase the capital stock or to distribute dividends.

Capital Reserves. Pursuant to Brazilian Corporate Law, we may maintain capital reserves in which we may record goodwill paid in connection with the subscription of our shares, mergers, sale of warrants, subscription bonds, or debentures, and tax incentives, donations and granting for investments. The balance of these capital reserves may only be used by us for capitalization, to off-set losses that exceed retained earnings and profit reserves or to redeem, repay or buy our common shares. The amounts destined to the capital reserve cannot be considered as part of the calculation of the mandatory dividend. As of December 31, 2006, we did not have amounts allocated to capital reserve.

Payment of dividends and interest attributable to shareholders’ equity Brazilian Corporate Law requires that the bylaws of a Brazilian company specify a minimum percentage of the available profits for the annual distribution of dividends, known as mandatory dividend, which must be paid to shareholders as either dividends or interest attributable to shareholders’ equity. The basis of the mandatory dividend is a percentage of the net income, as adjusted pursuant to Article 202 of the Brazilian Corporate Law. Under our bylaws and Brazilian Corporate Law, a minimum of 25.0% of our adjusted net income, as explained above under “—Amounts available for distribution,” should be intended for the distribution and payment of the mandatory dividend to our shareholders. However, the payment of mandatory dividends to our shareholders may be limited to the amount of realized net income in a given year, provided the difference should be recorded as unrealized profit reserve, as discussed above under “—Profit reserves—Unrealized profit reserve.” Our calculation of net income and allocations to reserves for any year, as well as the amounts available for distribution, are determined on the basis of our non-consolidated financial statements prepared in accordance with Brazilian Corporate Law. The payment of profit sharing to our management must not exceed the lower of their annual compensation or 10.0% of our profits.

Brazilian Corporate Law allows, however, a company to suspend a dividend distribution if its board of directors reports to our annual shareholders’ meeting that the distribution would not be advisable given the company’s financial condition.

The fiscal council, if in place at the time, reviews any suspension of the mandatory dividend. In addition, our management should submit a report to the CVM setting out the reasons for the suspension. Net income not distributed by virtue of a suspension is allocated to a separate reserve and, if not absorbed by subsequent losses, is required to be distributed as dividends as soon as the financial condition of the company should permit this payment.

Dividends We are required by Brazilian Corporate Law and our bylaws to hold an annual shareholders’ meeting no later than April 30 of each year, at which time the allocation of the results of operations in any year and the distribution of an annual dividend are reviewed. The payment of annual dividends is based on our unconsolidated, audited financial statements prepared for the immediately preceding fiscal year.

Any holder of record of shares at the time a dividend is declared is entitled to receive dividends. Under Brazilian Corporate Law, dividends are generally required to be paid within 60 days following the date on which

138 the dividend is declared, unless the shareholders’ resolution established another payment date, which, in any event, must occur before the end of the year in which the dividend is declared.

Shareholders have a three-year period from the date of the dividend payment to claim the dividends or interest attributable to shareholders’ equity with respect to their shares, after which the aggregate amount of any unclaimed dividend shall legally revert to us.

Pursuant to our bylaws, our board of directors may declare interim dividends or interest attributable to shareholders’ equity based on realized profits verified in semiannual financial statements. The board of directors may also declare dividends based on financial statements prepared in shorter periods, provided that the total amount of dividends paid in each semester does not exceed the amounts accounted for in our capital reserve account set forth in paragraph 1 of Article 182 of Brazilian Corporate Law. Interim dividends may also be paid from profit reserve accounts based on the latest annual or semiannual financial statements. Any payment of interim dividends may be set off against the amount of mandatory dividends relating to the net income earned in the year in which the interim dividends were paid. The interest attributable to shareholders’ equity or interim dividends can be considered as an advance of the mandatory dividend related to net earnings at the end of the year unless no dividends shall be paid. In addition, our bylaws establish that all net earnings not allocated to the legal reserves may constitute an investment reserve.

Interest attributable to shareholders’ equity Since January 1, 1996, Brazilian companies have been authorized to pay interest attributable to shareholders’ equity to holders of equity securities, and to treat those payments as a deductible expense for purposes of calculating corporate income tax and, since 1998, the social contribution tax. The amount of the tax deduction in each year is limited to the greater of: (i) 50.0% of our net income (after the deduction of any allowances for social contribution taxes but before taking into account allowances for income tax and the interest attributable to shareholders’ equity) for the period in respect of which the payment is made; and (ii) 50.0% of our accumulated profits and profit reserve at the beginning of the relevant period. The rate applied in calculating interest attributable to shareholders’ equity cannot exceed the pro rata die variation of the long-term interest rate (TJLP). Payments of interest attributable to shareholders’ equity, net of withholding income tax, may be considered as part of the mandatory dividend distribution. Under applicable law, we are required to pay to our shareholders an amount sufficient to ensure that the net amount they receive in respect of interest attributable to shareholders’ equity, after payment of any applicable withholding tax, plus the amount of distributed dividends, is at least equivalent to the minimum mandatory dividend amount.

Amounts paid as dividends or interest attributable to shareholders’ equity Our shareholders pursuant to voting on the shareholders’ general and extraordinary meeting held on July 26, 2007 approved an interim dividend distribution in the amount of R$35,362,496.00 related to the period of January 1 to June 30, 2007, the first dividend distribution approved since the incorporation of the company on August 15, 2006. We inform that up to the date of this offering circular no other interest attributable to shareholders’ equity have been approved or made. The shareholders that will purchase shares under this offering will not be entitled to the interest paid under the distribution approved in the shareholders’ general and extraordinary meeting held on July 26, 2007.

We believe that the distribution of these interim dividends will not jeopardize our capacity of paying our short-term debts because part of the short-term loans will be paid with our own cash and cash equivalent resources of 2007. As regards the loans to be paid after the end of the fiscal year of 2007, we intend to pay them on the respective maturity dates and with future cash and cash receivables.

139 TAXATION

The following discussion addresses the material Brazilian and United States federal income tax consequences of acquiring, holding and disposing of our common shares.

Although there presently is no income tax treaty between Brazil and the United States, the tax authorities of the two countries have had discussions that may culminate in a treaty. We cannot assure you, however, as to whether or when a treaty will enter into force or how it will affect holders of our common shares.

Each prospective purchaser is urged to consult its own tax advisor about the particular Brazilian and United States federal income tax consequences to it of an investment in our common shares.

Any discussion of U.S. tax issues set forth in this offering circular was written in connection with the promotion and marketing of the transactions described in this offering circular. This discussion was not intended or written to be used, and it cannot be used, by any person for the purpose of avoiding any tax penalties that may be imposed on a person. Each investor should seek advice based on its particular circumstances from an independent tax advisor.

Material Brazilian tax considerations The following discussion summarizes the principal Brazilian tax consequences of the acquisition, ownership and disposition of common shares by a holder that is not domiciled in Brazil (a “Non Resident Holder”). The following discussion summarizes the principal tax consequences applicable under Brazilian law to a Non Resident Holder of common shares in general, and, therefore, it does not specifically address all of the Brazilian tax considerations applicable to any particular Non Resident Holder. It is based upon the tax laws of Brazil as in effect on the date of this offering circular, which are subject to change, possibly with retroactive effect, and to differing interpretations. Any change in that law may change the consequences described below. Each prospective purchaser is urged to consult its own tax advisor about the particular Brazilian tax consequences to it of an investment in our common shares.

Income tax Dividends Dividends paid by a Brazilian corporation, such as ourselves, including stock dividends and other dividends paid to a Non Resident Holder of shares, are currently not subject to withholding income tax in Brazil to the extent that these amounts are related to profits generated as of January 1, 1996. Dividends paid from profits generated before January 1, 1996 may be subject to Brazilian withholding income tax at varying rates, according to the tax legislation applicable to each corresponding year.

Interest Attributable to Shareholders’ equity Law No. 9,249, dated December 26, 1995, as amended, permits a Brazilian corporation, such as ourselves, to make distributions to shareholders of interest attributable to shareholders’ equity and treat those payments as a deductible expense for purposes of calculating Brazilian income tax, and, since 1997, social contribution tax as well. These distributions may be paid in cash. For tax purposes, this interest is limited to the daily pro rata variation of the TJLP, as determined by the Central Bank from time to time, and the amount of the deduction may not exceed the greater of: • 50.0% of net income (after social contribution on profits and before the provision for corporate income tax and the interest attributable to shareholders’ equity) related to the period in respect of which the payment is made; and • 50.0% of the sum of retained profits and profit reserves as of the date of the beginning of the period in respect of which the payment is made.

140 Payment of interest attributable to shareholders’ equity to a Non Resident Holder is subject to withholding income tax at the rate of 15.0%, or 25.0% if the Non Resident Holder is domiciled in a Tax Haven – that is, a country or location that does not impose income tax or where the income tax rate is lower than 20.0% or where the laws of that country or location impose restrictions on the disclosure of shareholding composition or the ownership of the investment (“Tax-Haven Resident”). These payments attributable to shareholders’ equity may be included, at their net value, as part of any mandatory dividend. To the extent payment of interest is so included, the corporation is required to distribute to shareholders an additional amount to ensure that the net amount received by them, after payment of the applicable withholding income tax, is at least equal to the mandatory dividend.

Gains According to Law No. 10,833/03, the gains related to disposition or sale of assets located in Brazil, such as the common shares, are subject to income tax in Brazil, regardless of whether the sale or the disposition is made by the Non Resident Holder to a resident or person domiciled in Brazil or not.

Gains realized as a result of a transaction are the excess of the amount in reais realized on the sale or exchange of a security over its acquisition cost measured in reais (without correction for inflation).

Under Brazilian law, income tax rules on such gains can vary depending on the domicile of the Non Resident Holder, the type of registration of the investment by the Non Resident Holder with the Central Bank and how the disposition is carried out, as described below.

Capital gains realized by the Non Resident Holder on a disposition of common shares carried out on a Brazilian stock exchange (which includes the organized over-the-counter market) are: • exempt from income tax when realized by a Non Resident Holder that (1) has registered its investment in Brazil with the Central Bank under the rules of Resolution 2,689/00, or a “2,689 holder”, and (2) is not a Tax-Haven Resident; or • subject to income tax at a rate of 15.0% in any other case, including a case of gains realized by a Non Resident Holder that is not a 2,689 holder, or is a Tax-Haven Resident. In these cases, a withholding income tax of 0.005% of the sale value will be applicable and can be later offset with the income tax due on the capital gain.

Any other gains assessed on a disposition of the common shares that is not carried out on a Brazilian stock exchange are subject to income tax at the rate of 15.0%, except for a Tax-Haven Resident which, in this case, is subject to income tax at the rate of 25.0%. In the case that these gains are related to transactions conducted on the Brazilian non-organized over-the-counter market with intermediation, the withholding income tax of 0.005% shall also be applicable and can be offset against the income tax due on the capital gain.

In the case of redemption of securities or capital reduction by a Brazilian corporation, such as ourselves, the positive difference in reais between the amount effectively received by the Non Resident Holder and the corresponding acquisition cost is treated, for tax purposes, as capital gain derived from sale or exchange of common shares not carried out on a Brazilian stock exchange market, and is therefore subject to income tax at the rate of 15.0% or 25.0% (in case of a Tax-Haven Resident).

Tax on foreign exchange and financial transactions (“IOF TAX”) Foreign exchange transactions Brazilian law imposes a Tax on Foreign Exchange Transactions, or IOF/Exchange Tax, due on the conversion of reais into foreign currency and on the conversion of foreign currency into reais. Although the current applicable rate for almost all foreign currency exchange transactions is zero, the Ministry of Finance is permitted to increase the rate at any time, up to 25.0%. However, any increase in rates may only apply to future transactions.

141 Tax on transactions involving bonds and securities Brazilian law imposes a Tax on Transactions Involving Bonds and Securities, or IOF/Bonds Tax, on transactions involving bonds and securities, including those carried out on a Brazilian stock exchange. The rate of IOF applicable to transactions involving stocks is currently zero, although the Minister of Finance is permitted to increase this rate at any time up to 1.5% per day, but only in respect of future transactions.

Temporary contribution on financial transactions (“CPMF Tax”) Any transaction carried out by a holder of securities in Brazil that results in the transfer of reais from an account maintained by the holder (or its custodian) with a Brazilian financial institution may be subject to the CPMF tax, at the rate of 0.38%. Currently, the funds transferred for the acquisition of shares on a Brazilian stock exchange are exempt from the CPMF tax. In addition, according to Law No. 11,312/06, the CPMF rate is reduced to zero on withdrawals from bank accounts used to buy shares in a public offering whenever (1) the public offering is registered with the CVM; and (2) the issuer is listed on the Brazilian stock exchange.

The CPMF Tax will be in effect until December 31, 2007. However, it may be extended. When applicable, the CPMF Tax must be withheld from the amounts transferred from an account and must be collected in favor of the Brazilian government by the financial institution that carries out the relevant financial transaction.

Other Brazilian taxes There are no Brazilian inheritance, gift or succession taxes applicable to the ownership, transfer or disposition of stocks, except for gift and inheritance taxes imposed by some Brazilian states on gifts or bequests by individuals or entities not domiciled or residing in Brazil to individuals or entities domiciled or residing within these states. There are no Brazilian stamp, issue, registration or similar taxes or duties payable by holders of shares.

Material U.S. federal income tax consequences TO COMPLY WITH TREASURY DEPARTMENT CIRCULAR 230, YOU ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF U.S. FEDERAL TAX ISSUES CONTAINED OR REFERRED TO IN THIS OFFERING CIRCULAR AND RELATED MATERIALS IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED BY YOU, FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON YOU UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”); (B) ANY SUCH DISCUSSION IS BEING USED IN CONNECTION WITH THE PROMOTION OR MARKETING BY US OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (C) YOU SHOULD SEEK ADVICE BASED ON YOUR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.

The following discussion is a summary of the material U.S. federal income tax consequences of acquiring, holding and disposing of our common shares. This discussion applies only to beneficial owners of common shares that are “U.S. Holders,” as defined below, that hold our common shares as “capital assets” (generally, property held for investment). This discussion is based on the Code, its legislative history, existing final, temporary and proposed Treasury Regulations, administrative pronouncements by the U.S. Internal Revenue Service, or IRS, and judicial decisions, all as currently in effect and all of which are subject to change (possibly on a retroactive basis) and to different interpretations.

This discussion does not purport to address all U.S. federal income tax consequences that may be relevant to a particular holder and you are urged to consult your own tax advisor regarding your specific tax situation. The discussion does not address the tax consequences that may be relevant to U.S. Holders subject to special tax rules including, for example: • insurance companies; • tax exempt organizations;

142 • broker dealers; • traders in securities that elect to mark to market; • banks or other financial institutions; • partnerships or other pass through entities; • persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar; • U.S. expatriates; • real estate investment trusts; • regulated investment companies; • persons that hold our common shares as part of a hedge, straddle, conversion transaction or other integrated transaction; or • persons that own, directly, indirectly, or constructively, 10.0% or more of the total combined voting power of our common shares.

Except where specifically described below, this discussion assumes that we are not a passive foreign investment company, or PFIC, for U.S. federal income tax purposes. See the discussion under “—Passive foreign investment company rules” below. Further, this discussion does not address the alternative minimum, estate or gift tax consequences of holding common shares or the indirect consequences to holders of equity participations in partnerships or other entities that own our common shares. In addition, this discussion does not address the foreign, state and local tax consequences of holding our common shares.

You should consult your own independent tax advisor regarding the U.S. federal, state and local, as well as foreign income and other tax consequences of acquiring, holding and disposing of our common shares in light of your particular circumstances.

You are a “U.S. Holder” if you are a beneficial owner of common shares and you are for U.S. federal income tax purposes: • an individual who is a citizen or resident of the United States; • a corporation, or any other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state thereof or the District of Columbia; • an estate the income of which is subject to U.S. federal income tax regardless of its source; or • a trust if (1) a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) the trust has a valid election in effect under current Treasury regulations to be treated as a U.S. person.

If a partnership holds our common shares, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. A partner of a partnership holding our common shares should consult its own tax advisor.

Distributions on common shares Distributions of cash or property (including distributions paid in the form of interest attributable to shareholders’ equity for Brazilian tax purposes and amounts withheld to pay Brazilian tax, as described above under “—Material Brazilian tax considerations”) with respect to common shares generally will be treated as dividends for U.S. federal income tax purposes to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). A U.S. Holder of common shares generally will be taxed on dividends as ordinary income. Distributions in excess of our current and accumulated earnings and profits will be treated first as a non-taxable return of capital reducing the U.S. Holder’s adjusted tax basis in

143 our common shares (i.e., the initial cost of our common shares to the U.S. Holder), and, thereafter, as either long term or short term capital gain depending upon whether the U.S. Holder held our common shares for more than one year. Because we do not expect to maintain calculations of our earnings and profits in accordance with U.S. federal income tax principles, U.S. Holders should expect that a distribution generally will be treated as a dividend for U.S. federal income tax purposes. Distributions of additional common shares to U.S. holders that are part of a pro rata distribution to all our shareholders generally will not be subject to U.S. federal income tax. As used below, the term “dividend” means a distribution that constitutes a dividend for U.S. federal income tax purposes.

A U.S. Holder will be entitled, subject to a number of complex limitations and conditions, to claim a U.S. foreign tax credit in respect of any Brazilian taxes on dividends received on common shares. U.S. Holders who do not elect to claim a credit for any foreign taxes paid during the taxable year may instead claim a deduction in respect of these taxes provided that the U.S. Holder deducts (rather than credits) all foreign taxes for that tax year. Dividends received with respect to our common shares will be treated as foreign source income, subject to various classifications and other limitations. The rules relating to computing foreign tax credits or deducting foreign taxes are extremely complex, and U.S. Holders are urged to consult their own independent tax advisors regarding the availability of foreign tax credits with respect to any Brazilian taxes withheld from payment.

Dividends paid by us generally will not be eligible for the dividends received deduction available under the Code to certain U.S. corporate shareholders. Also, dividends paid by us generally will not be eligible for the preferential U.S. federal income tax rates available to U.S. individual shareholders for certain qualified dividend income.

The amount of any dividend paid in reais will equal the U.S. dollar value of the dividend, calculated by reference to the exchange rate in effect at the time the dividend is received by the U.S. Holder, regardless of whether the payment is in fact converted to U.S. dollars at that time. A U.S. Holder should not recognize any foreign currency gain or loss in respect of this dividend if these reais are converted into U.S. dollars on the date received by the U.S. Holder. If the reais are not converted into U.S. dollars on the date of receipt, however, gain or loss may be recognized upon a subsequent sale or other disposition of the reais. The foreign currency gain or loss, if any, will be U.S. source ordinary income or loss. U.S. Holders should consult with their independent tax advisors regarding the treatment of any foreign currency gain or loss if any reais received as a dividend on our common shares are not converted into U.S. dollars on the date of receipt.

Sale, exchange or other taxable disposition of common shares A U.S. Holder generally will recognize capital gain or loss upon the sale, exchange or other taxable disposition of common shares measured by the difference between the amount realized on the sale, exchange or other taxable disposition of our common shares and the U.S. Holder’s adjusted tax basis in our common shares. Any gain or loss will be long term capital gain or loss if our common shares have been held for more than one year. Certain U.S. Holders (including individuals) may be eligible for preferential rates of U.S. federal income tax in respect of long term capital gains under current law. The deductibility of capital losses is subject to limitations under the Code.

If a Brazilian tax is withheld on the sale or other disposition of common shares, the amount realized by a U.S. Holder will include the gross amount of the proceeds of that sale or other disposition before deduction of the Brazilian tax. Capital gain or loss, if any, realized by a U.S. Holder on the sale, exchange or other taxable disposition of common shares generally will be treated as U.S. source gain or loss for U.S. foreign tax credit purposes. Consequently, in the case of a gain from the disposition of a common share that is subject to Brazilian capital gain tax (see “—Material Brazilian tax considerations—Income tax—Gains”), the U.S. Holder may not be able to benefit from the foreign tax credit for that Brazilian capital gain tax (i.e., because the gain from the disposition would be U.S. source), unless the U.S. Holder can apply the credit against U.S. federal income tax

144 payable on other income from foreign sources. Alternatively, the U.S. Holder may take a deduction for the Brazilian capital gain tax if it does not elect to claim a foreign tax credit for any foreign taxes paid during the taxable year.

Passive foreign investment company rules Based on current estimates of our income and assets, we do not believe that we were classified for our most recently ended taxable year, or will be classified for our current taxable year, as a PFIC for U.S. federal income tax purposes, and we intend to continue our operations in a manner that we do not expect that we would become a PFIC in the future. However, there can be no assurance in this regard, because the PFIC determination is made annually and is based on the portion of our assets (including goodwill) and income that is characterized as passive under the PFIC rules. Moreover, the PFIC determination is complex. If we are or become a PFIC, unless a U.S. Holder elects to be taxed annually on a mark-to-market basis with respect to its common shares, any gain realized on a sale, exchange or other taxable disposition of our common shares and certain “excess distributions” (generally distributions in excess of 125.0% of the average distribution over the shorter of a three-year period or the U.S. Holder’s holding period for our common shares) would be treated as realized, ratably over the U.S. Holder’s holding period for our common shares, and amounts allocated to prior years while we are a PFIC would be taxed at the highest tax rate in effect for each respective year. An additional interest charge may apply to the portion of the U.S. federal income tax liability on the gains or distributions treated under the PFIC rules as having been deferred by the U.S. Holder. Amounts allocated to the current year and to any year before we became a PFIC would be taxed as ordinary income in the current year.

If we are treated as a PFIC, the rules above can be avoided by a U.S. Holder that makes a mark-to-market election. A U.S. Holder may make a mark-to-market election for our common shares, if our common shares constitute “marketable stock” as defined in the U.S. Treasury regulations. Our common shares will be “marketable stock” if they are “regularly traded” on a “qualified exchange or other market.” We cannot provide any assurance that our common shares are or will be considered “marketable stock” for this purpose. In particular, it is unclear whether BOVESPA would meet the requirements of a “qualified exchange or other market.” If a mark-to-market election is made, a U.S. Holder would take into account each year the appreciation or depreciation in value of its common shares as if our common shares were sold at fair market value at the end of the year. The appreciation or depreciation generally would be treated as ordinary income or (subject to limitations) ordinary loss, as would gains or losses on actual dispositions of common shares.

Any U.S. Holder who owns common shares during any year that we are a PFIC would be required to file an IRS Form 8621. U.S. Holders should consult their own independent tax advisors regarding the application of the PFIC rules to our common shares and the availability and advisability of making a mark-to-market election should we be considered a PFIC for any taxable year.

Backup withholding and information reporting In general, dividends on common shares, and payments of the proceeds of a sale, exchange or other disposition of common shares, paid within the United States or through certain United States related financial intermediaries to a U.S. Holder are subject to information reporting and may be subject to backup withholding at a current rate of 28.0% unless the holder (1) establishes that it is a corporation or other exempt recipient or (2) provides an accurate taxpayer identification number and certifies that it is a U.S. person and that no loss of exemption from backup withholding has occurred.

Backup withholding is not an additional tax. The amount of any backup withholding tax from a payment to a U.S. Holder will be allowed as a credit against the U.S. Holder’s U.S. federal income tax liability, provided that the required information is timely furnished to the IRS. A U.S. Holder generally may obtain a refund of any amounts withheld under the backup withholding rules that exceed its U.S. federal income tax liability by timely filing a refund claim with the IRS.

145 CERTAIN ERISA CONSIDERATIONS

This disclosure was written in connection with the promotion and marketing of our common shares by the issuer, the placement agent and the underwriter, and it cannot be used by any holder for the purpose of avoiding penalties that may be asserted against the holder under the U.S. Internal Revenue Code of 1986, as amended, or the Code. Prospective purchasers of our common shares should consult their own tax advisors with respect to the application of the U.S. federal income tax laws to their particular situations.

The U.S. Employee Retirement Income Security Act of 1974, as amended, or ERISA, imposes certain requirements on employee benefit plans subject to Title I of ERISA and on entities that are deemed to hold the assets of these plans, or ERISA Plans, and on those persons who are fiduciaries with respect to ERISA Plans.

Section 406 of ERISA and Section 4975 of the Code prohibit certain transactions involving the assets of an ERISA Plan (as well as those plans that are not subject to ERISA but which are subject to Section 4975 of the Code, such as individual retirement accounts (together with ERISA Plans, “Plans”)) and certain persons (referred to as “parties in interest” or “disqualified persons”) having certain relationships to these Plans, unless a statutory or administrative exemption is applicable to the transaction. A party in interest or disqualified person who engages in a non-exempt prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and the Code.

Prohibited transactions within the meaning of Section 406 of ERISA or Section 4975 of the Code may arise if common shares are acquired by a Plan with respect to which the Company, the placement agent, the underwriter or any of their respective affiliates is a party in interest or a disqualified person and such acquisition is not entitled to an appropriate exemption, of which there are many. Based on the nature of the issuer and its operations, we believe that the issuer is not a “party in interest” or a “disqualified person” with respect to any Plan.

EACH PURCHASER OF THE COMMON SHARES WILL BE DEEMED TO HAVE REPRESENTED AND AGREED EITHER: (A) THE PURCHASER IS NOT A (1) PLAN, (2) AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED “PLAN ASSETS” OF A PLAN WITHIN THE MEANING OF ERISA OR (B) THE PURCHASER’S PURCHASE OF THE COMMON SHARES WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE.

Due to the compexity of these rules and the potential penalties, we would advise any persons considering purchasing our common shares on behalf of, or with the assets of, any Plan to consult with their counsel regarding these matters.

146 PLAN OF DISTRIBUTION

We intend to offer common shares through the underwriters in Brazil and through the underwriters’ affiliates outside Brazil in an international offering.

General Under the Brazilian underwriting agreement dated October 18, 2007 by and among us and the underwriters, Banco de Investimentos Credit Suisse (Brasil) S.A. and Banco UBS Pactual S.A. have severally agreed to place the following respective numbers of common shares: Number of Underwriters Common Shares Banco de Investimentos Credit Suisse (Brasil) S.A...... 22,000,000 Banco UBS Pactual S.A...... 22,000,000 Total ...... 44,000,000

Credit Suisse Securities (USA) LLC and UBS Securities LLC are acting as placement agents on behalf of Banco de Investimentos Credit Suisse (Brasil) S.A. and Banco UBS Pactual S.A. for common shares sold to investors outside Brazil. All placements of common shares in the United States will be made by U.S. registered broker-dealers.

We have been advised by the underwriters that they propose initially to offer the common shares to the public in Brazil in reliance on Regulation S and, through the placement agents, to qualified institutional buyers (as defined in Rule 144A) in the United States in reliance on Rule 144A and elsewhere outside the United States and Brazil in reliance on Regulation S.

Our common shares have not been and will not be registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons, except to qualified institutional buyers, and to non-U.S. persons outside the United States in offshore transactions in reliance on Regulation S. Resales of the common shares are restricted as described under “Transfer Restrictions.”

Until 40 days after the commencement of the offering of the common shares, an offer or sale of common shares within the United States by a broker-dealer that is participating in the offering may violate the registration requirements of the Securities Act if this offer for sale is made otherwise than in accordance with Rule 144A.

The underwriting discounts, commissions and expenses per common share are 4.0% of the initial offering price per common share on the cover page of this offering circular.

The underwriters have informed us that the price at which the common shares are being offered has been based primarily on the demand they have encountered at various price levels in the course of the bookbuilding process.

Pursuant to the Brazilian underwriting agreement and a separate placement facilitation agreement, we have agreed to indemnify the underwriters and the placement agents against liabilities under the Securities Act or contribute to payments that the underwriters and the placement agents may be required to make in respect thereof.

In connection with this placement, Banco de Investimentos Credit Suisse (Brasil) S.A. may effect transactions with a view to supporting the market price of our common shares at a level higher than that which might otherwise prevail for a limited period of up to 34 days from the date of the underwriting agreement. However, there may be no obligation on Banco de Investimentos Credit Suisse (Brasil) S.A. to take any action to stabilize this market price. This stabilization, if commenced, may be discontinued at any time and must be brought to an end after a limited period. This stabilization shall be in compliance with all applicable laws, regulations and rules. See “—Price stabilization.”

147 The common shares will be listed on the Novo Mercado segment of BOVESPA under the symbol “MARI3.” Trading in our common shares on the São Paulo Stock Exchange will commence on October 24, 2007.

The common shares may be offered outside of Brazil only to investors registered with the CVM and acting through custody accounts managed by local agents pursuant to CMN Resolution No. 2,689 or as foreign direct investment pursuant to Law 4131/62.

The Brazilian underwriting agreement provides that the obligation of the underwriters to pay for the common shares is subject to, among other conditions, the delivery of certain legal opinions by their legal counsel. The underwriters have agreed to purchase any common shares placed outside of Brazil that are not taken up by purchasers who have agreed to do so, other than those common shares covered by the overallotment option described below. The common shares will initially be offered by the underwriters and the placement agents at the initial offering price indicated on the cover page of this offering circular.

Over-allotment option We have granted Banco UBS Pactual S.A. an option, exercisable upon consultation with Banco Credit Suisse de Investimentos (Brasil) S.A. for up to 34 days as from the date of the underwriting agreement, to purchase up to 4,888,888 additional common shares at the initial offering price, less the underwriting discounts and commissions. This option may be exercised to cover over-allotments of common shares, if any.

Price stabilization In connection with the offering, Banco de Investimentos Credit Suisse (Brasil) S.A., acting on behalf of the underwriters, may engage in transactions that stabilize, maintain or otherwise affect the price of the common shares. Specifically, Banco de Investimentos Credit Suisse (Brasil) S.A.’s representative may over-allot in connection with the offering, creating a syndicate short position. In addition, Banco de Investimentos Credit Suisse (Brasil) S.A.’s representative may bid for, and purchase, common shares in the open market to cover syndicate short positions or stabilize the price of the common shares. Finally, Banco de Investimentos Credit Suisse (Brasil) S.A.’s representative may reclaim selling concessions allowed for distributing the common shares in the offering, if it repurchases previously distributed shares in syndicate short positions covering transactions, in stabilization transactions or otherwise.

These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of the common shares or preventing or retarding a decline in the market price of the common shares. As a result, the price of the common shares may be higher than the price that might otherwise exist in the absence of these transactions. These transactions, if commenced, may be discontinued at any time. Reports on stabilization activity are required to be furnished to the CVM.

Brazilian requirements for the purchase of common shares The common shares are being offered in Brazil to U.S. and other international investors only if they are registered with the CVM and acting through custody accounts managed by local agents pursuant to Resolution No. 2,689.

Investors residing outside Brazil are authorized to purchase equity instruments, including the common shares, on the Brazilian stock exchanges provided that they comply with the registration requirements set forth in Resolution No. 2,689 and CVM Instruction No. 325.

With certain limited exceptions, Resolution 2,689 investors are permitted to carry out any type of transaction in the Brazilian financial capital markets involving a security traded on a stock, futures or organized over-the-counter market licensed by the CVM. Investments and remittances outside Brazil of gains, dividends, profits or other payments under the common shares are made through the exchange market.

148 In order to become a Resolution 2,689 investor, an investor residing outside Brazil must: • appoint a representative in Brazil with powers to take actions relating to the investment; • appoint an authorized custodian in Brazil for the investments, which must be a financial institution duly authorized by the Central Bank and the CVM; and • through its representative, register itself as a foreign investor with the CVM and the investment with the Central Bank.

Securities and other financial assets held by foreign investors pursuant to Resolution 2,689 must be registered or maintained in deposit accounts or under the custody of an entity duly licensed by the Central Bank or the CVM. In addition, securities trading by foreign investors is generally restricted to transactions on the Brazilian stock exchanges and organized over-the-counter markets licensed by the CVM.

Payment for the common shares will be required to be made to us through the facility of the CLBC.

Lock-up agreements and other restrictions We have agreed that, subject to certain exceptions, we will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, or file with the SEC or the CVM a registration statement relating to, any shares of our common stock, or securities convertible into or exchangeable or exercisable for any shares of our common stock, or publicly disclose our intention to make any offer, sale, pledge, disposition or filing, without the prior written consent of Credit Suisse Securities (USA) LLC and UBS Securities LLC, on behalf of the initial purchasers and placement agents and the Brazilian underwriters, for a period of 180 days after the date of this offering circular.

Our executive officers, members of our board of directors, Marcio Luiz Goldfarb, Décio Goldfarb, Denise Goldfarb Terpins and other shareholders have also agreed, subject to certain exceptions, that they will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any of our common shares, or securities convertible into or exchangeable or exercisable for any of our common shares, enter into a transaction which would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of our common shares, whether any of these transactions are to be settled by delivery of our common shares or other relevant securities, in cash or otherwise, or publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement, without, in each case, the prior written consent of Credit Suisse Securities (USA) LLC and UBS Securities LLC, on behalf of the placement agents and initial purchasers and the Brazilian underwriters, until 180 days after the date of this offering circular.

Additionally, according to the rules of the Novo Mercado segment of BOVESPA, our controlling shareholder and our directors and executive officers may not sell and/or offer to sell any of the common shares, or any securities or other derivatives linked to securities issued by us, for six months after the date our common shares begin trading in the Novo Mercado segment of BOVESPA. After the expiration of this six-month period, we, our controlling shareholder and our directors and executive officers may not, for an additional six-month period, sell and/or offer to sell more than 40.0% of the securities held by these parties.

Relationship between the Company and Banco de Investimentos Credit Suisse (Brasil) S.A. From time to time, certain of the initial purchasers, the placement agents, the Brazilian underwriters and their affiliates have provided, and may in the future provide, investment banking and commercial banking services to us and our affiliates for which they have received or may receive customary fees and commissions.

As of the date of this offering circular we have a commercial relationship with Banco de Investimentos Credit Suisse (Brasil) S.A. pursuant to which we issued bank credit notes and entered into swap transactions with Banco de Investimentos Credit Suisse (Brasil) S.A., or its affiliates (see “Management’s Discussion and Analysis of Financial Conditions and Results of Operations—Financing Activities—Financing Agreements”).

149 Credit Suisse Securities (Europe) Limited, or its affiliates may enter into derivative transactions in connection with the Shares, acting at the order and for the account of their clients. Credit Suisse Securities (Europe) Limited or its affiliates may also purchase some of the Shares as a hedge for these transactions. These transactions may have an effect on demand, price or other terms of the offering.

Relationship between the Company and UBS Pactual As of the date of this offering circular, we have a commercial relationship, in accordance with the financial market’s customary practices, with UBS Pactual, or its affiliates. We have outstanding financings and bank credit notes (with maturity in the year of 2009) transactions, and we may, in the future, enter into financial advisory transactions or in any other transaction necessary for the carry on of the Company’s activities.

As of the date of this offering circular, UBS AG, London Branch, or its affiliates may enter abroad, as requested by the Company, Marcio Luiz Goldfarb, Décio Goldfarb, Denise Goldfarb Terpins or subsidiaries, into derivative transactions with the Shares as backed assets (return swap transactions). UBS AG, London Branch, or its affiliates may also purchase some of the Shares as a hedge for these transactions. These transactions may have an effect on demand, price or other terms of the offering.

Relationship between the Company and Credit Suisse (Brasil) S.A. Corretora de Títulos e Valores Mobiliários As of the date of this offering circular, we have an investment account at Credit Suisse (Brasil) S.A. Corretora de Títulos e Valores Mobiliários, currently with no balance. We may, in the future, enter into brokerage, market maker or any other financial transactions with Credit Suisse (Brasil) S.A. Corretora de Títulos e Valores Mobiliários; any of the above mentioned financial transactions they may deem necessary for the carry on of our activities.

Relationship between the Company and Banco Safra de Investimentos S.A. Banco Safra de Investimento S.A. and its affiliates has a financing relationship with Marisa Lojas, Credi-21, or Marisa Card holders, through BNDES loans, CMN Resolutions 2270 or 3221 financings and leasing transactions, which amounted to R$181.0 million. Financing agreements have tenors ranging from 1 to 4 months and average interest rates of 11.02% per year. Marisa Lojas and Credi-21 are guarantors under financings entered into by and between Banco Safra de Investimento S.A., or any of its affiliates, and Marisa Card holders. Marisa Lojas and Credi-21 have investments in the total amount of R$91.7 million at Banco Safra de Investimento S.A., or its affiliates. Banco Safra de Investimento S.A. has granted sureties in the total amount of R$ 23.6 million on behalf of Marisa. These sureties have an average tenor of six years. Banco Safra de Investimento S.A. also renders Marisa services for the payment of suppliers with average income of R$18.0 million per month. Banco Safra de Investimento S.A., or its affiliates, may, in the future, enter into investment bank services, financial advisory transactions or in any other transaction to the Company for which Banco Safra de Investimento S.A., or its affiliates may receive customary fees and commissions.

Relationship between the Company and HSBC Corretora de Títulos e Valores Mobiliários As of the date of this offering circular, we have a commercial relationship, in accordance with the financial’s market customary practices, with HSBC Corretora de Títulos e Valores Mobiliários, and its affiliates, inclusive but not limited to HSBC Bank Brasil S.A.—Banco Múltiplo, or its affiliates. We have an approved credit line in the total amount of R$8.0 million, that has to be disbursed until March 30, 2008 for the purpose of financing our import transactions and for the opening of letters of credit, each with a maximum tenor of one year. As of the date of this offering circular, we hold quotas of investment fund in quotas with a balance of R$129,756.86, as of June 30, 2007.

150 TRANSFER RESTRICTIONS

Other than with respect to the public offering of the common shares listed on the Novo Mercado segment of BOVESPA, no action has been or will be taken in the United States, the United Kingdom or any country or jurisdiction by us, the underwriters or the agents that would permit a public offering of the common shares, or possession or distribution of any offering material in relation thereto, in any country or jurisdiction where action for that purpose is required. Accordingly, the common shares may not be offered or sold, directly or indirectly, and neither this offering circular nor any other offering material or advertisements in connection with the common shares may be distributed or published, in or from any country or jurisdiction, except in compliance with any applicable rules and regulations of such country or jurisdiction. The common shares have not been registered under the Securities Act nor may they be offered or sold within the United States, or to or for the account or benefit of U.S. persons (as defined in Regulation S) except to (a) qualified institutional buyers (as defined under Rule 144A) in reliance on the exemption from the registration requirements of the Securities Act provided by Section 4 and (b) non-U.S. persons in offshore transactions in reliance on Regulation S. This offering circular does not constitute an offer to sell or a solicitation of an offer to purchase in any jurisdiction where the offer or solicitation would be unlawful. Persons into whose possession this offering circular comes are advised to inform themselves about and to observe any restrictions relating to the offering of the common shares, the distribution of this offering circular and resale of the common shares.

Each purchaser of the common shares who is a U.S. person within the meaning of Regulation S under the Securities Act, including purchasers who are U.S. persons acquiring common shares in offshore transactions, will be deemed, by accepting delivery of the common shares, to represent, agree and acknowledge as applicable, as follows: • the offering and sale of the common shares have not been registered under the Securities Act and are intended to be exempt from registration under the Securities Act pursuant to Section 4 thereof; • the purchaser is acquiring the common shares for its own account (or, if it is acquiring the common shares as a fiduciary or agent for one or more investor accounts, the purchaser has the full power and authority to make the representations, warranties and agreements herein on behalf of each account); • the purchaser is not acquiring the common shares with a view to any distribution of the common shares within the meaning of the Securities Act; • the purchaser is (or, if it is acquiring the common shares as a fiduciary or agent for one or more investor accounts, each account is) a “qualified institutional buyer,” as the term is defined in Rule 144A; • the purchaser has sufficient knowledge and experience in financial and business matters so as to be capable of independently evaluating the merits and risks of an investment in the common shares, and the purchaser is able to bear the economic risk of the investment. The purchaser has made its own investment decision regarding the common shares based on its own knowledge; • the purchaser understands and agrees that the common shares may not be re-offered, resold, pledged or otherwise transferred except (i) (A) to a person who it reasonably believes is a qualified institutional buyer in a transaction exempt from registration under U.S. securities laws or (B) in an offshore transaction complying with Rule 903 or Rule 904 of Regulation S and, in either case, (ii) in accordance with all applicable securities laws of the states of the United States; • except with respect to transactions over the BOVESPA, the purchaser (i) will not transfer the common shares to any person or entity, unless the person or entity could itself truthfully make each of the foregoing representations, warranties and covenants and (ii) will provide notice of the transfer restrictions applicable to the common shares to any subsequent transferees; • the purchaser has had the opportunity to ask us questions, and receive answers from us, concerning us, our business and financial condition and the common shares to be acquired by the purchaser and other related matters. The purchaser further represents and warrants that we made available to the purchaser

151 or its agents all documents and information requested by the purchaser or on its behalf relating to an investment in the common shares, including this final offering circular. In evaluating the suitability of an investment in the common shares, the purchaser has not relied and will not rely on any other representations or other information (whether oral or written) made by us or on our behalf (or any of our agents, including, without limitation, the Brazilian underwriters and the placement agents) other than as contemplated by the two preceding sentences; • the purchaser agrees not to deposit the common shares into an unrestricted American or global depositary facility for so long as the common shares constitute restricted securities, as this term is defined in Rule 144 under the Securities Act; • the purchaser agrees that any transfer of the common shares, including to residents of jurisdictions outside Brazil, may be effected only in Brazil pursuant to Brazilian Resolution 2,689, dated January 26, 2000, of the CMN; and • the purchaser acknowledges that Marisa, the placement agents, the Brazilian underwriters and others will rely upon the truth and accuracy of the foregoing acknowledgments, representations and agreements. Pursuant to the terms of Resolution No. 2,689 of January 26, 2000 of the CMN for non-Brazilian holders, any U.S. person that acquires the common shares in this offering will be permitted to transfer the purchased common shares solely in a transaction effected on BOVESPA or another securities exchange in Brazil other than in a pre-arranged trade with a counter party. To the extent that the provisions of Resolution No. 2,689 are modified in the future to permit transfers by non-Brazilian holders other than on the BOVESPA or another securities exchange in Brazil, we will require, and each purchaser acknowledges and agrees, as a condition to any transfer by a U.S. person that acquires the common shares in this offering, that the transferee execute a document confirming each of the representations and agreements set forth above.

Each underwriter has represented and agreed that: • it has not offered or sold and, prior to the expiration of a period of six months from the closing date, will not offer or sell any common shares included in this offering to persons in the United Kingdom, except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; • it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in the investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000, or the FSMA) received by it in connection with the issue or sale of any common share included in this offering in circumstances in which Section 21(1) of the FSMA does not apply to our company; and • it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the common shares in, from or otherwise involving the United Kingdom.

152 NOTICE TO INVESTORS

Other than with respect to the public offering of the common shares listed on the BOVESPA, no action has been or will be taken in the United States, the United Kingdom or any country or jurisdiction by us or the Brazilian underwriter or the placement agents that would permit a public offering of the common shares, or possession or distribution of any offering material in relation thereto, in any country or jurisdiction where action for that purpose is required. Accordingly, the common shares may be offered or sold, directly or indirectly, and neither this offering circular nor any other offering material or advertisements in connection with the common shares may be distributed, published, in or from any country or jurisdiction, except in compliance with any applicable rules and regulations of any such country or jurisdiction. This offering circular does not constitute an offer to sell or a solicitation of an offer to purchase in any jurisdiction where such offer or solicitation would be unlawful. Persons into whose possession this offering circular comes are advised to inform themselves about and to observe any restrictions relating to the offering of the common shares, the distribution of this offering circular and resale of the common shares. See “Transfer Restrictions.”

European Economic Area In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State), each Manager has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date) it has not made and will not make an offer of the common shares to the public in that Relevant Member State prior to the publication of a prospectus in relation to the common shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of the common shares to the public in that Relevant Member State at any time: • to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities; • to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000; and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; or • in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of the common shares to the public” in relation to any of the common shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the common shares to be offered so as to enable an investor to decide to purchase or subscribe to the common shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

United Kingdom The placement agents: • have only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000, or the FSMA) to persons who have professional experience in matters relating to investments falling under Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or in circumstances in which section 21 of FSMA does not apply to us; and

153 • have complied and will comply with all applicable provisions of the FSMA with respect to anything done by them in relation to the common shares in, from or otherwise involving the United Kingdom.

France The common shares may not be offered or sold, directly or indirectly, to the public in France. Neither this offering circular nor any other offering material has been nor will be submitted to the clearance procedure of the “Commission des Operations de Bourse,” and it may not be released or distributed to the public in France. The common shares may only be offered to and purchased by investors in France acting for their own account and in accordance with article L. 411-2 of the French Monetary and Financial Code, and decree No. 98-880 dated October 1, 1998, provided they are “qualified investors” within the meaning of said article L. 411-2 and said decree. Any resale, directly or indirectly, to the public of the common shares offered may be effected only in compliance with article L. 411-1 of the French Monetary and Financial Code.

Germany The common shares will not be offered, sold or publicly promoted or advertised in the Federal Republic of Germany other than in compliance with the German Securities Prospectus Act (Gesetz über die Erstellung, Billigung und Veröffentlichung des Prospekts, der beim öffentlichen Angebot von Wertpapieren oder bei der Zulassung von Wertpapieren zum Handel an einem organisierten Markt zu veröffentlichen ist— Wertpapierprospektgesetz) as of June 22, 2005, effective as of July 1, 2005 as amended, or any other laws and regulations applicable in the Federal Republic of Germany governing the issue, offering and sale of securities. No selling prospectus (Verkaufsprospekt) within the meaning of the German Securities Selling Prospectus Act has been or will be registered within the Financial Supervisory Authority of the Federal Republic of Germany or otherwise published in Germany.

Italy The common shares may not be offered, sold or delivered in the Republic of Italy, and copies of this offering circular or any other document relating to the common shares may not be distributed in the Republic of Italy, other than to professional investors (operatori qualificati), as defined in article 31, second paragraph, of Consob Regulation No. 11522 of July 1, 1998, as amended (the “Broker-Dealers Regulation”). Any offer, sale or delivery of the common shares in the Republic of Italy must be (a) made by an investment firm, bank or financial intermediary permitted to conduct such activities in the Republic of Italy in accordance with Legislative Decree No. 58 of February 24, 1998 (the “Financial Services Act”) as implemented by the Broker-Dealers Regulation; and (b) in compliance with any other applicable laws and regulations.

The Netherlands The common shares may not be offered, sold, transferred or delivered, in or from the Netherlands, as part of the initial distribution or as part of any reoffering, and neither this offering circular nor any other document in respect of the offering may be distributed in or from the Netherlands, other than to individuals or legal entities who or which trade or invest in securities in the conduct of their profession or trade (which includes banks, investment banks, securities firms, insurance companies, pension funds, other institutional investors and treasury departments and finance companies of large enterprises), in which case, it must be made clear upon making the offer and from any documents or advertisements in which a forthcoming offering of common shares is publicly announced that the offer is exclusively made to said individuals or legal entities.

Spain The common shares have not been registered with the Spanish National Commission for the Securities Market and, therefore, no common share may be publicly offered, sold or delivered, nor any public offer in respect of the common shares made, nor may any offering circular or any other offering or publicity material relating to the common shares be distributed in Spain by the placement agents or any person acting on their behalf, except in compliance with Spanish laws and regulations.

154 NOTICE TO CANADIAN RESIDENTS

Resale restrictions The distribution of the common shares in Canada is being made only on a private placement basis exempt from the requirement that we prepare and file a prospectus with the securities regulatory authorities in each province where trades of the common shares are made. Any resale of the common shares in Canada must be made under applicable securities laws which will vary depending on the relevant jurisdiction, and which may require resales to be made under available statutory exemptions or under a discretionary exemption granted by the applicable Canadian securities regulatory authority. Purchasers are advised to seek legal advice prior to any resale of the common shares.

Representations of purchasers By purchasing the common shares in Canada and accepting a purchase confirmation, a purchaser is representing to us and the dealer from whom the purchase confirmation is received that: • the purchaser is entitled under applicable provincial securities laws to purchase the common shares without the benefit of a prospectus qualified under those securities laws; • where required by law, the purchaser is purchasing as principal and not as agent; • the purchaser has reviewed the text above under “—Resale restrictions;” and • the purchaser acknowledges and consents to the provision of specified information concerning its purchase of common shares to the regulatory authority that by law is entitled to collect the information. Further details concerning the legal authority for this information is available on request.

Rights of action—Ontario purchasers only Under Ontario securities legislation, certain purchasers who purchase a security offered by this offering circular during the period of distribution will have a statutory right of action for damages, or while still the owner of the common shares, for rescission against us in the event that this offering circular contains a misrepresentation without regard to whether the purchaser relied on the misrepresentation. The right of action for damages is exercisable not later than the earlier of 180 days from the date the purchaser first had knowledge of the facts giving rise to the cause of action and three years from the date on which payment is made for the common shares. The right of action for rescission is exercisable not later than 180 days from the date on which payment is made for the common shares. If a purchaser elects to exercise the right of action for rescission, the purchaser will have no right of action for damages against us. In no case will the amount recoverable in any action exceed the price at which the common shares were offered to the purchaser and if the purchaser is shown to have purchased the securities with knowledge of the misrepresentation, we will have no liability. In the case of an action for damages, we will not be liable for all or any portion of the damages that are proven to not represent the depreciation in value of the common shares as a result of the misrepresentation relied upon. These rights are in addition to, and without derogation from, any other rights or remedies available at law to an Ontario purchaser. The foregoing is a summary of the rights available to an Ontario purchaser. Ontario purchasers should refer to the complete text of the relevant statutory provisions.

Enforcement of legal rights All of our directors and executive officers as well as the experts named herein are located outside of Canada and, as a result, it may not be possible for Canadian purchasers to effect service of process within Canada upon us or those persons. All or a substantial portion of our assets and the assets of those persons are located outside of Canada and, as a result, it may not be possible to satisfy a judgment against us or those persons in Canada or to enforce a judgment obtained in Canadian courts against us or those persons outside of Canada.

155 Taxation and eligibility for investment Canadian purchasers of the common shares should consult their own legal and tax advisors with respect to the tax consequences of an investment in the common shares in their particular circumstances and about the eligibility of the common shares for investment by the purchaser under relevant Canadian legislation.

Canadian/real exchange rates The initial offering price, the financial statements and other financial information contained in this offering circular are presented in reais. As of October 18, 2007, the nearest practical date, the exchange rate for Canadian dollars was R$1.855 per C$1.00. The following table describes, for the periods and dates indicated, the period- end, annual average, low and high nominal rate in real to the Canadian dollar (R$/C$):

Average for Year Period-End Period Low High (real per Canadian dollar) 2002...... 2.241 1.796 1.425 2.521 2003...... 2.236 2.188 2.008 2.424 2004...... 2.207 2.247 2.138 2.380 2005...... 2.003 2.004 1.831 2.299 2006...... 1.832 1.917 1.824 2.107 2007 (through October 18, 2007)...... 1.855 1.843 1.828 1.863

Source: Bank of Canada

No representation is made that the real could have been or could be converted into Canadian dollars at the rates set forth above for the periods indicated.

156 LEGAL MATTERS

Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga, has advised us in connection with the offering, and will pass on the validity of the common shares. Shearman & Sterling LLP, U.S. counsel to us will pass on certain legal matters for us. Machado, Meyer, Sendacz, Opice e Advogados, Brazilian counsel to the underwriters, and Simpson Thacher & Bartlett LLP, U.S. counsel to the underwriters, will pass on certain legal matters for the underwriters.

INDEPENDENT ACCOUNTANTS

The financial statements of the Company as of and for the years ended December 31, 2004, 2005 and 2006 and as of and for the six-month periods ended June 30, 2006 and 2007 included in this offering circular have been audited and reviewed by Deloitte Touche Tohmatsu Auditores Independentes, independent accountants, as stated in their reports appearing herein.

157 ENFORCEMENT OF JUDGMENTS AGAINST FOREIGN PERSONS

Marisa S.A. is formed under the laws of the state of Brazil. All of our directors and officers and certain advisors named herein reside in Brazil. Substantially all of our assets and those of these other persons are located in Brazil. As a result, it may not be possible for investors to effect service of process within the United States upon these persons or to enforce against them or us in courts judgments of the countries in which they reside predicated upon the civil liability provisions of the federal securities laws of the countries in which they reside.

We have been advised by our Brazilian counsel, Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados, that judgments of non-Brazilian courts for civil liabilities based upon the securities laws of a country other than Brazil may be, subject to the requirements described below, enforced in Brazil. A judgment against us, or the persons described above obtained outside Brazil would be enforceable in Brazil without reconsideration of the merits, upon confirmation of that judgment by the Brazilian Superior Court of Justice. That confirmation will occur if the foreign judgment: • fulfills all formalities required for its enforceability under the laws of the country where the foreign judgment is granted, • is issued by a competent court after proper service of process on the parties, which service must be in accordance with Brazilian law if made in Brazil, or after sufficient evidence of the parties’ absence has been given, as requested under the laws of the country where the foreign judgment is granted, • is final and therefore is not subject to appeal, • is for the payment of a determined sum of money, • is authenticated by a Brazilian consular office in the country where the foreign judgment is issued and is accompanied by a sworn translation into Portuguese, and • is not against Brazilian public policy, good morals, national sovereignty or public morality.

Notwithstanding the foregoing, we cannot assure you that confirmation will be obtained, that the process described above will be conducted in a timely manner or that Brazilian courts will enforce a monetary judgment for violation of the U.S. securities laws with respect to the common shares.

We have also been advised that: • original actions based on the federal securities laws of the United States may be brought in Brazilian courts and that, subject to applicable law, Brazilian courts may enforce liabilities in these actions against us (provided that provisions of the federal securities laws of the United States do not contravene Brazilian policy, good morals or national sovereignty and provided further that Brazilian courts can assert jurisdiction over the particular action); and • the ability of a judgment creditor or the other persons named above to satisfy a judgment by attaching certain assets of ours or is limited by provisions of Brazilian law.

A plaintiff, whether Brazilian or non-Brazilian, who resides outside Brazil during the course of litigation in Brazil must grant a pledge/provide a bond to guarantee the payment of the defendant’s legal fees and court expenses if the plaintiff owns no real property in Brazil that could secure that payment, except in the case of collection claims based on an instrument that may be enforced in Brazilian courts without the review of its merit (título executivo extrajudicial) or counterclaims as established under Article 836 of the Brazilian Code of Procedure. The bond must have a value sufficient to satisfy the payment of court fees and the defendant’s attorney fees, as determined by a Brazilian judge. This requirement does not apply to the enforcement of foreign judgments which have been duly confirmed by the Brazilian Superior Court of Justice. Notwithstanding the foregoing, we cannot assure that confirmation of any judgment will be obtained, or that the process described above can be conducted in a timely manner.

158 INDEX TO FINANCIAL STATEMENTS

Financial Statements as of and for the six-month period ended June 30, 2007 and 2006 Independent Auditor’s Review of Deloitte Touche Tohmatsu Auditores Independentes ...... F-1 Combined balance sheets as of June 30, 2007 and December 31, 2006 ...... F-3 Combined statements of operations for the six-month period ended June 30, 2007 and 2006 ...... F-4 Combined notes to the financial statements for the six-month period ended June 30, 2007 and 2006 ...... F-5 Combined statements of cash flows for the six-month period ended June 30, 2007 and 2006 ...... F-32

Financial statements as of and for the years ended December 31, 2005 and 2004 Independent Auditor’s Report of Deloitte Touche Tohmatsu Auditores Independentes ...... F-34 Combined balance sheets at December 31, 2006, 2005 and 2004 ...... F-36 Combined statements of operations for the years ended December 31, 2006, 2005 and 2004 ...... F-37 Combined statements of changes in shareholders’ equity for the years ended December 31, 2006, 2005 and 2004 ...... F-38 Combined statements of changes in financial position for the years ended December 31, 2006, 2005 and 2004 ...... F-39 Combined statements of cash flows for the years ended December 31, 2006, 2005 and 2004 ...... F-41 Notes to the financial statements for the years ended December 31, 2006, 2005 and 2004 ...... F-43 [THIS PAGE INTENTIONALLY LEFT BLANK] (Convenience Translation into English from the Original Previously Issued in Portuguese) Marisa S.A. and Subsidiaries and Marisa Group Companies

Financial Statements for the Six-Month Periods Ended June 30, 2007 and 2006 and Independent Accountants’ Review Report

Deloitte Touche Tohmatsu Auditores Independentes

Deloitte louche Tohmatsu Rua Alexandre Dumas, 1981 04717-906 -Sao Paulo - SP Brasil Tel.: +55(11) 5186-1000 Fax: +55(11)5181-2911 www.deloitte.com.br

(Convenience Translation into English from the Original Previously Issued in Portuguese)

INDEPENDENT ACCOUNTANTS’ REVIEW REPORT

To the Shareholders and Management of Marisa S.A. São Paulo - SP

1. We have performed a special review of the accompanying financial statements of Marisa S.A. (the “Company”) and subsidiaries, consisting of the individual (Company) and consolidated balance sheets as of June 30, 2007 and the combined balance sheets as of June 30, 2006 of the Marisa Group companies, as described in note 4 (“Company”), all expressed in Brazilian reais and prepared in accordance with Brazilian accounting practices under the responsibility of the Management of the Company and its subsidiaries, and the related statements of operations for the six-month period then ended. These financial statements have been prepared in accordance with the rules applicable to interim financial statements required by the Brazilian Securities Commission - CVM.

2. Our review was conducted in accordance with specific standards established by the Brazilian Institute of Independent Auditors (IBRACON), together with the Federal Accounting Council, and consisted principally of: (a) inquiries of and discussions with the managers of the Company and its subsidiaries who have responsibility for accounting, financial and operating matters about the criteria adopted in the preparation of the financial statements; 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. As mentioned in note 2 to the financial statements mentioned in paragraph 1, these financial statements have been prepared for inclusion in the Company’s initial public offering prospectus.

4. Based on our special review, we are not aware of any material modifications that should be made to the aforementioned financial statements for them to be in conformity with Brazilian accounting practices and standards established by the Brazilian Securities Commission (CVM), specifically applicable to the preparation of mandatory interim financial statements.

5. The accompanying individual, consolidated and combined statements of cash flows, which are presented to provide additional information on the Company, are not required as an integral part of the basic financial statements in conformity with Brazilian accounting practices. Such information has been subjected to the review procedures described in paragraph 2 and, based on our special review, we are not aware of any material modifications that should be made to these individual, consolidated and combined statements of cash flows for them to be in conformity with Brazilian accounting practices.

6. As mentioned in note 27, the financial statements are being restated to reflect the changes in the individual, consolidated and combined statements of cash flows.

F-1 Deloitte Touche Tohmatsu

7. The accompanying financial statements have been translated into English for the convenience of readers outside Brazil.

São Paulo, July 25, 2007, except for notes 26, items c) and d), and 27, as to which the dates are August 1, 2007 and August 24, 2007, respectively

DELOITTE TOUCHE TOHMATSU Edimar Facco Auditores Independentes Engagement Partner

F-2 (Convenience Translation into English from the Original Previously Issued in Portuguese)

MARISA S.A. AND SUBSIDIARIES AND MARISA GROUP COMPANIES BALANCE SHEETS AS OF JUNE 30, 2007 AND 2006 (In thousands of Brazilian reais - R$)

Company Consolidated Combined Note 06/30/2007 06/30/2007 06/30/2006 ASSETS CURRENT ASSETS Cash and cash equivalents 5 4,290 162,311 79,580 Marketable securities 6 — 81,817 76,148 Trade accounts receivable 7 — 431,570 240,616 Inventories 8 — 135,161 93,840 Recoverable taxes 9 4 18,639 10,282 Deferred income and social contribution taxes 10 — 24,661 — Other receivables — 11,684 21,301 Total current assets 4,294 865,843 521,767 NONCURRENT ASSETS Intercompany receivables 11 — 1,933 14,793 Deferred income and social contribution taxes 10 — 48,485 44,908 Recoverable taxes 9 — 9,793 2,135 Investments 12 77,661 2 2 Property and equipment, net (except spun-off portion) 13 — 160,528 82,378 Intangible assets 13 — 15,020 12,509 Deferred charges — 5,042 669 Total noncurrent assets 77,661 240,803 157,394 Investment in real estate companies 12 — — 60,786 Property and equipment, net (spun off) 13 — — 37,985 TOTAL ASSETS 81,955 1,106,646 777,932 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES Trade accounts payable 14 — 150,906 97,812 Intercompany payables 11 — 2,314 17,399 Loans and financing 15 — 491,329 310,419 Accrued payroll and related charges 18 19,565 12,312 Taxes payable 17 21 35,443 27,107 Dividends payable 11 35,362 35,468 728 Other payables 54 11,063 7,018 Total current liabilities 35,455 746,088 472,795 NONCURRENT LIABILITIES Loans and financing 15 — 223,521 9,455 Reserve for contingencies 18 — 78,787 78,049 Taxes in installments 19 — 10,651 2,784 Total noncurrent liabilities — 312,959 90,288 MINORITY INTEREST — 1,099 358 SHAREHOLDERS’ EQUITY Capital 20 44,634 44,634 244,364 Capital reserves — — 192 Legal reserve 1,866 1,866 — Accumulated deficit — — (30,065) Total shareholders’ equity 46,500 46,500 214,491 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 81,955 1,106,646 777,932

The accompanying notes are an integral part of these financial statements.

F-3 (Convenience Translation into English from the Original Previously Issued in Portuguese)

MARISA S.A. AND SUBSIDIARIES AND MARISA GROUP COMPANIES STATEMENT OF OPERATIONS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2007 AND COMBINED STATEMENT OF OPERATIONS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2006 (In thousands of Brazilian reais - R$, except earnings per thousand shares for the six-month period)

Company Consolidated Combined Note 06/30/2007 06/30/2007 06/30/2006 REVENUE FROM PRODUCTS SOLD — 713,404 479,426 REVENUE FROM SERVICES PROVIDED — 30,167 17,685 GROSS OPERATING REVENUE — 743,571 497,111 Deductions — (232,787) (158,535) NET OPERATING REVENUE — 510,784 338,576 Cost of resale of products — (236,820) (160,142) Cost of services — (26,066) (14,488) GROSS PROFIT — 247,898 163,946 OPERATING (EXPENSES) INCOME Selling expenses — (178,648) (128,670) General and administrative expenses (1,266) (35,874) (27,867) Other operating income 21 — 5,006 10,185 Equity in subsidiaries 12 40,930 — — INCOME FROM OPERATIONS BEFORE FINANCIAL INCOME (EXPENSES), DEPRECIATION OF SPUN-OFF PROPERTY AND EQUIPMENT, EQUITY IN REAL ESTATE COMPANIES AND INCOME FROM RENTAL OF SPUN-OFF PROPERTY 39,664 38,382 17,594 FINANCIAL (EXPENSES) INCOME Financial expenses 22 (24) (74,492) (84,692) Financial income 22 65 40,570 41,231 Exchange variation, net — 11,129 973 INCOME (LOSS) FROM OPERATIONS BEFORE DEPRECIATION OF SPUN-OFF PROPERTY AND EQUIPMENT, EQUITY IN REAL ESTATE COMPANIES AND INCOME FROM RENTAL OF SPUN-OFF PROPERTY 39,705 15,589 (24,894) NON OPERATING (EXPENSES) INCOME, NET 23 (2,374) (307) 4,152 INCOME (LOSS) BEFORE INCOME AND SOCIAL CONTRIBUTION TAXES, DEPRECIATION OF SPUN-OFF PROPERTY AND EQUIPMENT, EQUITY IN REAL ESTATE COMPANIES AND INCOME FROM RENTAL OF SPUN-OFF PROPERTY 37,331 15,282 (20,742) INCOME AND SOCIAL CONTRIBUTION TAXES Current 10 — (5,250) (10,065) Deferred 10 — 27,832 20,769 INCOME (LOSS) BEFORE MINORITY INTEREST, DEPRECIATION OF SPUN-OFF PROPERTY AND EQUIPMENT, EQUITY IN REAL ESTATE COMPANIES AND INCOME FROM RENTAL OF SPUN-OFF PROPERTY 37,331 37,864 (10,038) MINORITY INTEREST IN NET INCOME (LOSS) BEFORE DEPRECIATION OF SPUN-OFF PROPERTY AND EQUIPMENT, EQUITY IN REAL ESTATE COMPANIES AND INCOME FROM RENTAL OF SPUN-OFF PROPERTY — (533) (18,794) INCOME (LOSS) BEFORE DEPRECIATION OF SPUN-OFF PROPERTY AND EQUIPMENT, EQUITY IN REAL ESTATE COMPANIES AND INCOME FROM RENTAL OF SPUN-OFF PROPERTY 37,331 37,331 (28,832) Equity in real estate companies — — 2,090 Expense on depreciation of spun-off property and equipment — — (1,260) Income from rental of spun-off property — — 895 INCOME (LOSS) AFTER DEPRECIATION OF SPUN-OFF PROPERTY AND EQUIPMENT, EQUITY IN REAL ESTATE COMPANIES AND INCOME FROM RENTAL OF SPUN-OFF PROPERTY 37,331 37,331 (27,107) EARNINGS PER THOUSAND SHARES FOR THE SIX-MONTH PERIOD - R$ 0.84 NUMBER OF SHARES AT THE END OF THE SIX-MONTH PERIOD (IN THOUSANDS) 20 44,634

The accompanying notes are an integral part of these financial statements.

F-4 (Convenience Translation into English from the Original Previously Issued in Portuguese) MARISA S.A. AND SUBSIDIARIES AND MARISA GROUP COMPANIES NOTES TO THE INDIVIDUAL, CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2007 AND 2006 (Amounts in thousands of Brazilian reais - R$, unless otherwise stated)

1. OPERATIONS Marisa S.A. (the “Company”) was established on August 15, 2006 to be the holding company of the following companies: Marisa Lojas Varejistas Ltda., Fix Participações Ltda. and subsidiaries and Due Mille Participações Ltda. (“Companies”).

This group of Companies, of which the Company is the controlling shareholder, is engaged in the retail of clothing in general and other department store products, management of own credit cards (Private Label type), and logistics.

The Companies have converging interests and the centralization of their management in the Company renders them more efficient regarding the achievement of their business purposes, helping management in decision making.

The Company holds ownership interests in the direct and indirect subsidiaries mentioned in note 4 to the financial statements, the corporate purposes of which are as follows:

1.1. Marisa Lojas Varejistas Ltda. (“Marisa Lojas”) - primarily engaged in the retail of clothing in general and other department store products. In addition to these activities, Marisa Lojas is also engaged in the import of merchandise and sale of products on the Internet.

Tax incentives ICMS (state VAT) Marisa Lojas benefits from incentives granted by the Pernambuco State Development Program (PRODEPE) for an indefinite period of time, in the form of deemed tax credits corresponding to 3% of the total amount of interstate shipments made by the distribution center located in Jaboatão dos Guararapes, Pernambuco State. The effect of these incentives is recorded in the statement of operations under the caption “Other operating income”.

Marisa Lojas benefits from a special regime agreed with the Goiás State Finance Department by way of an agreement entered into with that State (TARE No. 014/2003 - GSF) granted for an indefinite period of time, in the form of a granted tax credit corresponding to 3% of the total amount of interstate shipments of footwear, fabric, clothing, and bed, table and bath linens for sale, production or manufacturing made by the distribution center located in Goiânia, Goiás State. The effect of these incentives is recorded in the statement of operations under the caption “Other operating income”.

1.2. Due Mille Participações Ltda. (“Due Mille”) - primarily engaged in providing any type of product handling, stowage, loading and unloading services, general management of product distribution centers, and clothe hanging and hanger logistics.

1.3. Fix Participações Ltda. (“Fix”) - operates as a holding company, investing in other companies in charge of managing own credit cards called “Cartão Marisa”.

F-5 Marisa S.A. and Subsidiaries and Marisa Group Companies

Currently, Fix has the following direct and indirect subsidiaries:

1.3.1. Credi-21 Participações Ltda. (“Credi-21”) - started its operations on November 9, 1999 and is primarily engaged in managing own credit cards called “Cartão Marisa” and holding ownership interests in other companies. Sales of this card represented approximately 66.2% and 61.7% of Marisa Lojas sales in June 2007 and 2006, respectively.

1.3.1.1. Primos Participações Ltda. (“Primos”) - established on February 25, 2000, is primarily engaged in managing the purchase of personal insurance by holders of the “Cartão Marisa” cards from insurers.

1.3.1.2. TCM Participações Ltda. (“TCM”) - founded on April 14, 2004, is primarily engaged in providing collection, credit advisory, and “Cartões Marisa” collection portfolio management services. Since April 1, 2007, TCM has been inoperative, and ceased to perform its activities, which, from that date, have been conducted by Credi-21.

1.3.1.3. TEF Serviços de Processamento de Dados Ltda. (“TEF”) - established on March 16, 2005, is primarily engaged in printing and mailing the “Cartão Marisa” bills. Since April 1, 2007, TEF has been inoperative, and ceased to perform its activities, which, from that date, have been conducted by Credi-21.

1.4. As of June 30, 2006, the Company also holds ownership interest in Special Purpose Entities (SPEs):

1.4.1. Actio Participações Ltda. (“Actio”), established on February 12, 1999, is primarily engaged in providing processing services of own credit card “Cartão Marisa”. Since March 1, 2007, Actio has been inoperative, and ceased to perform its activities, which, from that date, have been conducted by Credi-21.

1.4.2. Athol Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. (“Athol”), Lógica Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. (“Lógica”), Racional Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. (“Racional”), Ativa Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. (“Ativa”), Fax Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. (“Fax”), and Transfer Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. (“Transfer”), which are primarily engaged in the wholesale of clothing and notions in general, and can also import or export this merchandise, and hold interests in other companies, as partner or shareholder. Since January 1, 2007, the Companies have been inoperative, and ceased to perform their activities, which, from that date, have been conducted by Marisa Lojas.

2. PRESENTATION OF FINANCIAL STATEMENTS The financial statements have been prepared in accordance with Brazilian accounting practices and standards established by the Brazilian Securities Commission (CVM), using criteria that are consistent with those adopted for the preparation of the financial statements as of December 31, 2006.

The individual and consolidated information related to balance sheet accounts and result for the six-month period ended June 30, 2007 is presented in comparison with the individual and combined balances for the six-month period ended June 30, 2006, respectively, according to the balances determined in accordance with the Brazilian corporate law.

F-6 Marisa S.A. and Subsidiaries and Marisa Group Companies

Due to the initial public offering of the Company’s shares that is in progress, the Company’s management is presenting the combined financial statements for the six-month period ended June 30, 2006, as if the shareholders of the related companies that are under common control and management had contributed their interests in investees to the Company’s capital since January 1, 2004, which occurred in December 2006, as proposed and approved at the shareholders’ meeting.

For the purpose of allowing the users a better understanding of the Company’s operations and the financial statements for the six-month period ended June 30, 2007, included in the prospectus of the initial public offering of the Company’s shares that is in progress, we are presenting these financial statements in comparison with the balance sheet balances for the six-period ended June 30, 2006.

3. SIGNIFICANT ACCOUNTING PRACTICES a) Results of operations

Income and expenses are recorded on the accrual basis.

Resale revenue and related costs are recorded upon the delivery of products to customers and credit card service revenue is recorded upon the provision of the service. Revenue from services provided is recognized in the statement of operations when earned.

b) Accounting estimates

The preparation of financial statements requires the Companies’ management to make estimates and assumptions that affect the reported amounts of assets and liabilities and other transactions. Accordingly, the financial statements include several estimates related to adjustments to present value, allowance for doubtful accounts, provision for inventory losses, useful lives of property and equipment and required reserves for contingent liabilities, to make projections and determine the impairment of fixed assets, deferred charges and deferred income tax assets, as well as to determine the provision for income tax. As the Company’s judgment involves estimates related to the likelihood of future events, actual results could differ from those estimates.

c) Cash and cash equivalents

Represented by highly liquid investments, with original maturities of up to 90 days, stated at cost plus income earned through the balance sheet dates and adjusted, when applicable, to their equivalent fair value.

d) Marketable securities

Represented by investments in shares of other companies purchased to be actively and frequently traded, stated at cost plus income earned, and adjusted to fair value at the balance sheet dates, with unrealized gains and losses recorded in results for the six-month periods.

e) Allowance for doubtful accounts

Recorded based on an analysis of risks on realization of receivables, in an amount considered sufficient to cover possible losses.

f) Inventories

Stated at average cost of acquisition, adjusted to market value and including a provision for losses, when applicable.

F-7 Marisa S.A. and Subsidiaries and Marisa Group Companies

g) Investments

Represented by investments in subsidiaries accounted for under the equity method, as mentioned in notes 4 and 12.

h) Property and equipment

Stated at acquisition or construction cost, less accumulated depreciation. Depreciation is calculated under the straight-line method, at rates based on the useful lives of the assets, as shown in note 13.

i) Other current and noncurrent assets

Stated at net realizable value.

j) Current and noncurrent liabilities

Stated at known or estimated amounts, plus, if applicable, related charges and monetary and exchange variations incurred through the balance sheet dates.

k) Foreign currency-denominated amounts subject to exchange variation

Monetary assets and liabilities denominated in foreign currencies were translated into Brazilian reais at the exchange rate prevailing at the balance sheet dates.

l) Income and social contribution taxes

The provision for income tax was recorded by the companies Marisa Lojas and Credi-21 at the rate of 15%, plus a 10% surtax on taxable income exceeding R$240. The provision for social contribution tax was calculated at the rate of 9% on taxable income. Deferred income and social contribution taxes recorded in current and noncurrent assets arise from temporarily nondeductible expenses. Additionally, deferred income and social contribution taxes for tax loss carryforwards were recognized.

Pursuant to CVM Resolution No. 273/98 and CVM Instruction No. 371/02, deferred taxes are recorded at probable realizable values. The details are disclosed in note 10.

For the companies Fix, Primos, TCM, TEF, Due Mille, Actio, Athol, Lógica, Racional, Ativa, Fax and Transfer, income and social contribution taxes are calculated under the criteria established by prevailing tax legislation, using the deemed income method. m) Loans and financing

Adjusted based on interest, monetary and exchange variations and financial charges incurred through the balance sheet dates, as established in contracts and shown in note 15.

n) Reserve for contingencies

Monetarily adjusted through the balance sheet dates, by the probable amount of loss, according to the nature of each contingency and based on the opinion of the Companies’ legal counsel. The basis and nature of the reserve for contingencies are described in note 18.

o) Financial instruments - derivatives

F-8 Marisa S.A. and Subsidiaries and Marisa Group Companies

Recorded on the accrual basis. Gains earned and losses incurred as a result of these contracts are recognized as adjustments to financial income and expenses.

p) Financial income and expenses

Financial income and expenses basically include interest on loans, net of interest receivable on cash investments, monetary variation and exchange gains and losses, discounts granted by suppliers on prepayment of trade notes, and gains and losses on derivative financial instruments, which are recognized in results for the six-month periods.

q) Adjustments to present value

Purchase and sales transactions in fixed installments have been adjusted to their present value because of their maturities, using the average rate of the financial charges incurred by the Companies on the funds raised, both for customers and suppliers.

The recognition of the adjustment to present value of purchases is made under the captions “Trade accounts payable” and “Inventories” (note 8) and its reversal is made against the caption “Financial income” (note 22), according to maturity, in the case of trade accounts payable, and realization of inventories in relation to the recorded amounts. The adjustment to present value of sales in installments has a corresponding entry in the caption “Trade accounts receivable” (note 7) and its realization is recorded as financial income (note 22) according to maturity.

r) Statements of cash flows

The Company is presenting in the Appendix, as supplemental information, the individual, consolidated and combined statements of cash flows prepared in accordance with Accounting Standard and Procedure 20 (NPC 20) - “Statement of Cash Flows”, issued by the Brazilian Institute of Independent Auditors (IBRACON).

s) Earnings per share

Calculated based on the number of shares outstanding at the balance sheet dates.

4. CONSOLIDATED FINANCIAL STATEMENTS The consolidated and combined financial statements have been prepared in accordance with the consolidation criteria set forth by Brazilian accounting practices and CVM regulations, and include the financial statements of the Company and its direct subsidiaries and SPEs, described below:

% ownership interest Subsidiaries 06/30/2007 06/30/2006 Marisa Lojas Varejistas Ltda. 99.99 99.99 Due Mille Participações Ltda. 99.91 99.97 Fix Participações Ltda. 99.99 92.82 Credi-21 Participações Ltda.(*) 99.99 92.80 Primos Participações Ltda.(*) 96.08 92.44 TCM Participações Ltda.(*) 99.37 92.81 TEF Serviços de Processamento de Dados Ltda.(*) 94.34 87.57 (*) Indirect subsidiaries.

F-9 Marisa S.A. and Subsidiaries and Marisa Group Companies

As of June 30, 2006, the following SPEs (*) were combined: • Actio Participações Ltda. • Athol Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. • Lógica Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. • Racional Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. • Ativa Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. • Fax Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. • Transfer Comércio Atacadista de Artigos do Vestuário e Complementos Ltda.

(*) In essence, considering their relationship with Marisa Lojas, the operations of the SPEs are indirectly controlled by the Company, and these Companies are fully owned by Begoldi Comércio, Participação e Administração S.A.

The results of the operations of the SPEs, which are engaged in providing “Cartão Marisa” data processing services and the wholesale of clothing and notions in general, are directly or indirectly impacted by Marisa Lojas and have therefore been included in the consolidated financial statements, as established by CVM Instruction No. 408/04.

Since March 31, 2007, the SPEs have not been consolidated, as established by CVM Instruction No. 408/04, considering that since March 1, 2007, Actio ceased to provide own credit card data processing services to Credi-21, which, from that date, performs this activity using its own funds. Since January 1, 2007, the SPEs, which were engaged in the wholesale of clothing and notions in general, have discontinued their operations. Beginning that date, Marisa Lojas purchases all products for resale directly from its suppliers.

In the preparation of the consolidated and combined financial statements, financial statements as of the same dates and consistent with the accounting practices described in note 3 were used. The Company’s investments in proportion to the investor’s interest in the subsidiaries’ shareholders’ equity and results, intercompany balances and transactions, and unrealized profits, net of income and social contribution taxes, have been eliminated. The minority interest in the Companies controlled by the Company has been recorded in a separate caption. The net equity balances of the SPEs have been recorded as payables to the holding company Begoldi Comércio, Participação e Administração S.A. in current liabilities, as shown in item (b) of note 11, since the Company has no direct ownership interest in these SPEs. The classification was maintained in current liabilities because of their nature.

5. CASH AND CASH EQUIVALENTS

Company Consolidated Combined 06/30/2007 06/30/2007 06/30/2006 Cash — 5,624 3,201 Banks(a) — 14,233 4,501 Temporary cash investments(b) 4,290 142,454 71,878 4,290 162,311 79,580

(a) See note 15, guarantees on loans and financing.

F-10 Marisa S.A. and Subsidiaries and Marisa Group Companies

(b) As of June 30, 2007 and 2006, the balance of “Temporary cash investments” is as follows:

Yield rate in Consolidated Combined 2007 - % 06/30/2007 06/30/2006 Fixed income - Safra(i) 5.92 80,642 — Fixed income X-21 - Calyon(ii) 2.50 40,785 — Flowers Multimercado - Calyon(iii) — — 52,254 Fox - FIA(iv) — — 12,066 Credit Suisse - portfolio(v) 6.25 7,890 — Multigestão - Safra — — 4,641 Other — 13,137 2,917 142,454 71,878

(i) Refers to 473,591 shares held as of June 30, 2007 in a financial investment fund managed by Crédit Agricole Private Capital Management, recorded at fair value. As of June 30, the portfolio is basically composed of Bank Certificates of Deposit (CDBs) and 78% invested in Government Debt Securities. (ii) Refers to 7,887,369 shares held as of June 30, 2007 in a financial investment fund managed by Crédit Agricole Private Capital Management, recorded at fair value. As of June 30, the portfolio is basically composed of Bank Certificates of Deposit (CDBs) and 89.45% invested in Government Debt Securities (National Treasury Bills - LTNs and Treasury Bills - LFTs). (iii) Refers to 11,929,286 shares held as of June 30, 2006 in a financial investment fund, composed of shares in several other balanced and equity funds, managed by Crédit Agricole Private Capital Management, recorded at fair value. (iv) Refers to 6,662 shares held as of June 30, 2006 in an investment fund in shares of other companies, managed by Banco Itaú S.A., recorded at fair value. (v) Refers to 815,776 shares held as of June 30, 2007 in a financial investment fund, composed of 68% invested in National Treasury Bills (LTNs) and 32% in National Treasury Notes (NTNs).

As of June 30, 2007, R$246 of the total amount of the caption “Banks” and R$5,815 of the caption “Temporary cash investments” were legally frozen.

6. MARKETABLE SECURITIES Yield rate in Consolidated Combined 2007 - % 06/30/2007 06/30/2006 Austrian bonds(*) 91.20 of CDI 81,524 72,826 Other companies’ shares: Companhia Vale do Rio Doce S.A. — 941 Banco Unibanco S.A. — 100 Petróleo Brasileiro S.A. - Petrobras — 408 Perdigão S.A. — 411 Cosan S.A. — 523 Blasken S.A. 276 — Other shares 17 939 81,817 76,148

(*) Refers to Austrian government debt securities, adjusted based on 91.20% of the interbank deposit rate (CDI) as of June 30, 2007 and 2006. On January 13, 2006, the subsidiary Marisa Lojas acquired Austrian

F-11 Marisa S.A. and Subsidiaries and Marisa Group Companies

government bonds, the so - called “Austrian Bonds”, with maturity on July 11, 2007. These bonds are issued by state companies, all owned by the Austrian Government, to raise funds for their projects. Specifically in this transaction, Marisa Lojas acquired bonds issued by an Austrian federal highway called OeBB Infrastruktur Bau AG.

7. TRADE ACCOUNTS RECEIVABLE

Consolidated Combined 06/30/2007 06/30/2006 Trade accounts receivable - Cartão Marisa: Current: From 211 to 240 days 21,973 6,610 From 181 to 210 days 10,142 5,194 From 151 to 180 days 17,795 15,343 From 121 to 150 days 24,507 20,822 From 91 to 120 days 37,272 25,161 From 61 to 90 days 50,765 27,537 From 31 to 60 days 56,652 32,749 Up to 30 days 24,403 40,123

Consolidated Combined 06/30/2007 06/30/2006 Past-due: Up to 30 days 104,742 46,036 From 31 to 60 days 17,213 5,806 From 61 to 90 days 14,420 4,880 From 91 to 120 days 22,432 4,716 From 121 to 150 days 16,241 4,975 From 151 to 180 days 19,114 6,911 437,671 246,863 Credit card companies - third parties 27,402 18,303 Other receivables 192 489 Allowance for doubtful accounts (30,504) (19,809) Adjustment to present value (3,191) (5,230) 431,570 240,616

8. INVENTORIES Consolidated Combined 06/30/2007 06/30/2006 Goods for resale 139,075 98,203 Adjustment to present value (1,801) (1,300) Provision for inventory losses (2,113) (3,063) 135,161 93,840

F-12 Marisa S.A. and Subsidiaries and Marisa Group Companies

9. RECOVERABLE TAXES

Consolidated Combined 06/30/2007 06/30/2006 Income tax for offset 11,910 5,460 COFINS (tax on revenue) 1,718 690 PIS (tax on revenue) 396 86 ICMS (state VAT) 3,920 3,656 CSLL (social contribution on net profit) 590 184 Other 105 206 Current assets 18,639 10,282 Recoverable ICMS 9,793 1,208 COFINS — 694 PIS — 233 Noncurrent assets 9,793 2,135

10. INCOME AND SOCIAL CONTRIBUTION TAXES

a) Deferred income and social contribution taxes

Consolidated Combined 06/30/2007 06/30/2006 IRPJ CSLL IRPJ CSLL Noncurrent: Tax contingencies 66,295 66,295 81,670 81,670 Labor contingencies 15,123 15,123 8,316 8,316 Civil contingencies 10,210 10,210 2,540 2,540 Provision for inventory losses 613 613 3,064 3,064 Provision for adjustment to present value 2,764 2,764 4,970 4,970 Provision for swap losses 16,779 16,779 — — Other 5,159 5,159 1,039 2,863 Allowance for doubtful accounts 29,038 29,038 70 70 Social contribution tax loss carryforwards — 79,292 — 67,796 Tax loss 65,503 — 16,297 — 211,484 225,273 117,966 171,289 Statutory rate 25% 9% 25% 9% 52,871 20,275 29,492 15,416 Current assets 17,220 7,441 — — Noncurrent assets 35,651 12,834 29,492 15,416

F-13 Marisa S.A. and Subsidiaries and Marisa Group Companies

Based on projections of future taxable income of the Company’s subsidiaries, the estimated recovery of the consolidated deferred income and social contribution tax assets on tax loss carryforwards is as follows:

Consolidated 06/30/2007 2009 7,511 2010 9,816 2011 14,427 2012 16,731 48,485

The asset amount recorded is limited to amounts whose offset is based on projected taxable income, discounted to present value, realized by the Company’s subsidiaries for the next five years, also considering that the offset of tax loss carryforwards is limited to 30% of the annual taxable income before income tax, as determined by Brazilian tax legislation.

The balance of deferred income tax as of June 30, 2007 and 2006 includes the total effect of tax losses of the subsidiary Marisa Lojas and, as of June 30, 2007, of the subsidiary Credi-21, which can be carried forward indefinitely and can be offset against future taxable income.

On the temporary difference amount, as of June 30, 2006, totaling R$59, of the subsidiary Credi-21, the deferred charges amount of R$20 was not recorded because, for that six-month period, there were no projections of future taxable income supporting its realization.

It is estimated that the balance referring to deferred taxes arising from temporary differences as of June 30, 2007 will be realized by 2012. However, we are unable to accurately estimate the years over which these temporary differences will be realized, as most of them are subject to court decisions over which the Company has no control or for which the Company is unable to predict when a final and unappealable decision will be issued.

Future taxable income projections include various estimates as to the performance of the Brazilian and international economies, selection of exchange rates, sales volume, sales prices, tax rates, among others, which may differ from actual data and amounts.

As the income and social contribution tax balance results not only from taxable income, but also from the tax and corporate structure of the Company’s subsidiaries, the existence of nontaxable revenues, nondeductible expenses, tax exemptions and incentives and various other variables, there is no material relation between the net income of the Company’s subsidiaries and the income and social contribution tax balance. Accordingly, the evolution of the tax loss offset should not be considered an indication of future profits of the Company’s subsidiaries.

F-14 Marisa S.A. and Subsidiaries and Marisa Group Companies

b) Reconciliation of effective income and social contribution tax expenses:

Consolidated Combined 06/30/2007 06/30/2006 Income (loss) before income and social contribution taxes, depreciation of spun-off property and equipment, equity in real estate companies and income from rental of spun-off property 15,282 (20,742) Equity in real estate companies — 2,090 Expense on depreciation of spun-off property and equipment — (1,260) Income from rental of spun-off property — 895 Income (loss), basis for calculation of income and social contribution taxes 15,282 (19,017) Statutory rate 34% 34% Expected income and social contribution (expense) income, at statutory rate (5,196) 6,466 i) Effect of income and social contribution taxes on permanent differences: Fine on tax deficiency notices — (88) Equity in subsidiaries 17,932 2,267 Loss on variable income investments higher than gains (471) (5,825) Interest - Austrian bonds 1,057 1,099 Other permanent additions (deductions) (1,171) 1,618 Income (loss), except financial income, of subsidiaries taxed based on deemed income: Reversal of taxation effect - taxable income (11,596) 10,994 Taxation based on deemed income, using gross revenue from sales as tax basis (2,767) (5,654) ii) Effect of income and social contribution taxes on temporary differences and tax losses for the six-month period, for which deferred taxes were recorded as there was no strong evidence of their realization in the period: Temporary differences 8,502 1,461 Tax loss carryforwards 16,272 2,934 iii) Effect of income and social contribution taxes on temporary differences and tax losses for the six-month period, for which deferred taxes were not recorded as there was no strong evidence of their realization in the period: Temporary differences 20 300 iv) Credits arising from income tax - related contingencies(*) — (4,868) 22,582 10,074 Income and social contribution taxes - current (5,250) (10,065) Deferred income and social contribution taxes 27,832 20,769 (*) Amounts related to the payment in installments of an income tax deficiency notice (see note 19) and income tax-related contingencies - Law No. 8200/91 (see note 18.(c)).

Under prevailing tax legislation, the accounting and tax records for the past 5 years, related to income and social contribution taxes, are open to review by tax authorities. Other taxes and contributions are open to review and approval by tax authorities for varying statutory periods.

F-15 Marisa S.A. and Subsidiaries and Marisa Group Companies

11. RELATED PARTIES The balances and transactions with related parties are as follows:

Company Consolidated Combined 06/30/2007 06/30/2007 06/30/2006 Noncurrent assets - Related party: Begoldi Comércio, Participação e Administração S.A.(a) — 1,895 11,124 Begoldi Comércio, Participação e Administração S.A.(c) — — 3,605 Other related parties — 38 64 — 1,933 14,793 Current liabilities: Related party - Begoldi Comércio, Participação e Administração S.A. (b) — — 12,556 Advance for future capital increase granted by Begoldi Comércio, Participação e Administração S.A.(d) — — 3,815 Rentals payable(e): Nix Administração e Participação Ltda. — 869 286 Mareasa Participações Ltda. — 216 171 Novay Participações Ltda. — 814 571 Actio Participações Ltda. — 415 — Other — — — — 2,314 17,399 Dividends: Begoldi Comércio, Participação e Administração S.A. and Flin Participações Ltda.(f) 33,318 33,318 — Individuals 2,044 2,150 728 35,362 35,468 728 Income (expenses) - Rentals of Group real estate properties(g) — 11,095 5,803

(a) Refers to advances granted by Begoldi to subsidiaries and SPEs for the payment of taxes and administrative expenses in general, which are not subject to interest. Balances are classified in noncurrent assets because they have undetermined maturity dates. (b) As of June 30, 2006, the amount payable to the parent company Begoldi is added by the net equities of the SPEs, which were combined into the Company, as shown in notes 1 and 4, and the amounts of assets and liabilities of these entities are as follows:

Athol Lógica Racional Ativa Fax Total Cash and cash equivalents 633 2,016 614 — — 3,263 Trade accounts receivable 7,705 7,529 7,988 586 449 24,257 Other receivables 546 491 551 139 156 1,883 Noncurrent assets 12 — — — — 12 Property and equipment 84 — — — — 84 Total assets 8,980 10,036 9,153 725 605 29,499 Trade accounts payable 4,315 4,129 4,410 660 521 14,035 Taxes payable 817 982 997 32 27 2,855 Other payables 4 7 5 27 10 53 Total liabilities 5,136 5,118 5,412 719 558 16,943 Shareholders’ equity 3,844 4,918 3,741 6 47 12,556

F-16 Marisa S.A. and Subsidiaries and Marisa Group Companies

(c) Remaining balance of the assignment of Marisa Lojas credit card receivables to Begoldi, with the approval of Credi-21, through a current account agreement. (d) Advance for future capital increase granted by Begoldi to Marisa Lojas. (e) Refers to rentals payable to related companies, as shown in note 24.f. (f) Refers to dividends due by the holding company Marisa S.A. (g) Refers to rentals paid by the Group companies.

06/30/2007 06/30/2006 Nix Administrações e Participações Ltda. 3,321 1,677 Mareasa Participações Ltda. 1,158 958 Actio Participações Ltda. 2,485 — Novay Participações Ltda. 4,131 3,168 11,095 5,803

12. INVESTMENTS Company and consolidated investments are as follows:

Investment Equity in subsidiaries Shareholders’ equity Ownership interest % Company Consolidated Combined Company Combined 06/30/2007 06/30/2006 06/30/2007 06/30/2006 06/30/2007 06/30/2007 06/30/2006 06/30/2007 06/30/2006 (b) Marisa Lojas Varejistas Ltda. 40,057 — 99.99 — 40,057 — — 5,968 — Due Mille Participações Ltda. 4,925 — 99.91 — 4,921 — — 3,462 — Fix Participações Ltda. 32,684 — 99.99 — 32,683 — — 31,500 — Investment in real estate companies: Traditio Participações Ltda. 7,671 26.68 — — 2,047 — (32) Compar Participações Ltda. 1,496 99.99 — — 1,496 — 61 Mareasa Participações Ltda. 47,911 97.55 — — 46,737 — 831 Nix Administração e Participação Ltda.(a) 34,841 30.15 — — 10,506 — 1,230 77,661 — 60,786 — 2,090 Other — 2 2 — — Total investments 77,661 2 60,788 40,930 2,090

(a) Indirect ownership interest through Actio Participações Ltda. (SPE) and Primos Participações Ltda. as of June 30, 2006. As of 30 June 30 2007, Actio Participações Ltda. (SPE) was not consolidated because, beginning March 1, 2007, it ceased to provide own credit card data processing services to Credi-21, which, from that date, performs this activities using its own funds. (b) Equity in real estate companies.

F-17 Marisa S.A. and Subsidiaries and Marisa Group Companies

13. PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS

Average annual Combined depreciation Consolidated 06/30/2007 06/30/2006 rate - % Cost Depreciation Net Net Property and equipment: Installations 10 30,584 (15,474) 15,110 11,373 Leasehold improvements 20 164,456 (59,282) 105,174 50,360 IT equipment 20 24,563 (13,055) 11,508 10,108 Furniture and fixtures 10 21,983 (5,864) 16,119 9,929 Vehicles 20 182 (169) 13 168 Construction in progress — 12,185 — 12,185 54 Other property and equipment 10 460 (41) 419 386 254,413 (93,885) 160,528 82,378 Intangible assets - Goodwill(*) — 15,020 — 15,020 12,509 Spun-off property and equipment Land — — — — 15,668 Buildings 6 — — — 22,317 37,985

(*) Represented by goodwill acquired by the subsidiary Marisa Lojas and based on commercial locations where the Marisa and Marisa Família stores are located, which is an intangible asset that can be sold and is not impaired with time. However, the subsidiary Marisa Lojas tests this asset for impairment annually.

14. TRADE ACCOUNTS PAYABLE As of June 30, 2007 and 2006, the Company had 550 suppliers, all located in Brazil. At the balance sheet date, the five main suppliers accounted for approximately 17% (23% in 2006) of total trade accounts payable and none represented individually more than 5% (8% in 2006). Individually, other suppliers do not represent more than 2% (3% in 2006) of total trade accounts payable.

F-18 Marisa S.A. and Subsidiaries and Marisa Group Companies

15. LOANS AND FINANCING

As of June 30, 2007 and 2006, the Company’s subsidiaries had the following loans in Brazilian reais:

Consolidated Combined Principal Interest 06/30/2007 06/30/2006 Charges Maturity Current liabilities: Banco Alfa - working capital 2,000 61 2,061 3,060 Interest of 106% of CDI(a) July 2007 Banco Bradesco - working capital 3,900 249 4,149 3,948 Interest of 108.5% of CDI(a) July 2007 Banco Bradesco - secured account — — — 6,212 — — Banco Bradesco - BNDES Interest of 6.5% p.a. + 1,886 399 2,285 1,055 TJLP(b) April 2009 Banco Safra - buyer financing — — — 10,941 — — Banco Safra - working Interest from 0.60% p.a. to From July 2007 to January capital 162,118 2,009 164,127 20,885 2.00% p.a. + CDI(a) 2008 Banco Safra - FINAME 812 35 847 517 Interest from 4.5% p.a. to From August 2007 to January 9.3% p.a. + TJLP(b) 2010 Banco Santander - Resolutions No. 2,770 and 3,221(*) 37,139 936 38,075 43,004 Interest of 118% of CDI(a) From August to October 2007 Unibanco S.A. - buyer financing 7,656 238 7,894 7,777 Interest of 1.5% p.a. + CDI(a) July 2007 Unibanco S.A. - Resolution Interest from 2.83% p.a. to No. 2,770(*) 13,733 614 14,347 10,606 3.17% p.a. + CDI(a) September 2007 Unibanco S.A. - BNDES 1,430 24 1,454 2,373 Interest from 4.5% p.a. to From December 2007 to 5.5% p.a. + TJLP(b) February 2009 Banco Itaú - Resolutions Interest from 2.70% p.a. to No. 2,770 and 3,221(*) 19,752 622 20,374 12,168 2.88% p.a. + CDI(a) September 2007 Banco Itaú - Resolutions Interest from 2.61% p.a. to No. 2,770 and 3,221(*) 15,293 223 15,516 11,942 2.80% p.a. + CDI(a) September to December 2007 Banco J. Safra S.A. - loan Interest from 1.81% p.a. to 25,000 121 25,121 26,319 2.00% p.a. + CDI(a) July 2007 Banco Credit Suisse S.A.(*) 62,430 15,247 77,677 18,677 Interest of 111% of CDI(a) July 2007 Banco Credit Suisse S.A.(*) — 1,760 1,760 65,594 Interest of 106% of CDI(a) August 2011 Banco Credit Suisse S.A.(*) From August 2007 to 27,546 445 27,991 65,341 Interest of 108% of CDI(a) February 2009 BNDES financing 13,829 1,389 15,218 — Interest of 2.8% p.a. + From April 2011 to April TJLP(b) 2012 UBS Pactual 48,404 1,349 49,753 — Interest of 1.20% p.a. + February 2009 CDI(a) Banco Citibank - Resolution No. 2,770(*) 22,378 302 22,680 — Interest of 13.58% p.a. September 2007 465,306 26,023 491,329 310,419 Noncurrent liabilities: Financing - BNDES 95,827 — 95,827 — Interest of 2.8% p.a. + From April 2011 to April TJLP(b) 2012 Banco Credit Suisse S.A.(*) Interest of 106% to 108% of From August 2007 to April 93,258 — 93,258 1,996 CDI(a) 2012 Safra S.A. - FINAME 843 — 843 670 Interest from 4.5% p.a. to From April 2008 to December 9.3% p.a. + TJLP(b) 2009 Banco Bradesco S.A. - Interest of 6.5% p.a. + BNDES 1,809 — 1,809 5,214 TJLP(b) April 2009 UBS Pactual 31,596 — 31,596 — Interest of 1.20% p.a. + February 2009 CDI(a) Unibanco S.A. - BNDES 188 — 188 1,575 Interest from 4.5% p.a. to5.5 December 2007 % p.a. + TJLP(b) 223,521 — 223,521 9,455

(a) CDI - Interbank certificate of deposit. (b) TJLP - Long-term interest rate.

F-19 Marisa S.A. and Subsidiaries and Marisa Group Companies

Quarterly rate - % Index 06/30/2007 06/30/2006 TJLP - Long-term interest rate 6.50 8.15 CDI - Interbank certificate of deposit 11.37 15.15 (*) On the same date this fund was raised, the subsidiaries Marisa Lojas and Credi-21 entered into swap transactions to hedge their exposure to market, currency, and interest rate risks. As of June 30, 2007 the swap balance recorded under loans and financing in current liabilities, with a corresponding entry in financial expenses, was R$34,280 (R$ 8,151 in 2006).

As of June 30, 2007 and 2006, loans and financing in non current liabilities mature as follows:

Consolidated Combined 06/30/2007 06/30/2006 2008 — 6,722 2009 78,550 2,733 2010 29,093 — 2011 26,344 — 2012 89,534 — 223,521 9,455

Covenants As of June 30, 2007 and 2006, the subsidiaries have loans and financing with covenants under the loan agreements entered into with banks. Some of these covenants have been met and others have not. The covenants related to the financial indicators required in the loan agreements entered into with Banco Credit Suisse S.A. and Unibanco S.A. - BNDES for the six-month periods then ended are as follows:

Banco Credit Suisse S.A. Indebtedness should not exceed R$350,000 (not met).

Payment of dividends and interest on capital should not exceed 40% of net income (not met in 2006).

Disclose annual or quarterly financial reports.

Unibanco S.A - BNDES Transfer of funds (“loan agreements”) between subsidiaries and affiliates cannot exceed R$30,000 (not met).

Total indebtedness should exceed 150% of EBITDA or 15% of shareholders’ equity (not met).

Financial expenses for the period should not exceed 40% of EBITDA.

Dividends paid should be limited to 15% of net income, and interest on capital to 5% of shareholders’ equity, as long as the amount does not exceed half the amount of the inventory profit reserve (not met).

On April 30, 2007, the Company’s subsidiaries signed an amendment to the financing agreements entered into with Unibanco S.A. - BNDES, under which the creditors excluded the abovementioned covenants from such agreements.

F-20 Marisa S.A. and Subsidiaries and Marisa Group Companies

Guarantees on loans and financing The loans and financing are guaranteed by the following related parties:

Consolidated Combined 06/30/2007 06/30/2006 Company Financial institution Type of guarantee R$ R$ Nix Administração e Participação Ltda. Banco Credit Suisse S.A. Promissory note 64,618 142,439 Marisa Lojas Varejistas Ltda. BNDES financing Bank guarantees 109,656 3,900 Begoldi Comércio, Participação e Banco Citibank - Administração S.A. Resolution No. 2,770 Promissory note 30,544 — Nix Administração e Participação Ltda. Banco Santander Promissory note 37,139 42,633 Nix Administração e Participação Ltda. Banco Safra S.A. Promissory note 162,363 31,576 Begoldi Comércio, Participação e Administração S.A. and Nix Banco Itaú - Resolutions Administração e Participação Ltda. No. 2,770 and 3,221 Promissory note 35,044 24,223 Nix Administração e Participação Ltda. Real estate Banco Bradesco S.A. property(a) 5,315 5,569 Begoldi Comércio, Participação e Unibanco - União de Real estate Administração S.A. and Nix Bancos Brasileiros property(a) + Administração e Participação Ltda. S.A. pledge 2,872 3,523 Nix Administração e Participação Ltda. Banco Alfa S.A. Promissory note 2,400 3,600 Begoldi Comércio, Participação e Administração S.A. Banco UBS Pactual Guarantee — — Banco Safra S.A. - Marisa Lojas Varejistas Ltda. FINAME Promissory note 1,740 1,579 Nix Administração e Participação Ltda. Banco J. Safra Promissory note 25,000 20,800 Fiduciary Marisa Lojas Varejistas Ltda. Banco Credit Suisse S.A. transfer(b) 6,078 — 482,769 279,842

(a) As of June 30, 2007 and 2006, the real estate properties offered in guarantee were recorded at the net book value of R$3,948 and R$4,807, respectively. (b) Private agreement for the fiduciary transfer of receivables and other covenants, under which Marisa Lojas fiduciarily transferred to Banco Credit Suisse S.A., 75% of all its receivables from billings of its stores related to sales carried out with two credit card companies, Redecard S.A. and Companhia Brasileira de Meios de Pagamento, which is effective until the repayment of the loan. Marisa Lojas shall keep in the account where the revenues given in guarantee are deposited an amount at least three times higher than the amount required to pay an installment of the debt to Banco Credit Suisse S.A.

F-21 Marisa S.A. and Subsidiaries and Marisa Group Companies

16. LEASE The subsidiaries Marisa Lojas and Credi-21 have lease commitments for equipment, for periods ranging from 24 to 36 months and bearing an average interest rate equal to CDI plus 1.73% per year, whereby assets are to be purchased at the end of the lease agreements for a symbolic residual value. These future lease commitments, which are treated as expense as payments are made, total approximately R$9,974 as of June 30, 2007 (R$6,575 in 2006).

As of June 30, 2007 and 2006, lease commitments are as follows:

Consolidated Combined 06/30/2007 06/30/2006 Year R$ R$ 2007 — 2,366 2008 4,863 3,587 2009 3,558 622 2010 1,326 — 2011 227 — Total 9,974 6,575

Had such transactions been recorded as purchase of property and equipment for payment in installments, the balance of property and equipment as of June 30, 2007 would be increased by R$11,659, liabilities would be increased by R$9,974, and shareholders’ equity as of that date would be increased by R$1,685 (R$7,549, R$6,575 e R$973, respectively as of June 30, 2006).

17. TAXES PAYABLE

Company Consolidated Combined 06/30/2007 06/30/2007 06/30/2006 IRPJ 2 14,917 11,295 CSLL — 3,511 2,887 COFINS — 4,488 3,022 PIS — 974 656 ICMS — 9,806 7,933 Other 19 1,747 1,314 21 35,443 27,107

F-22 Marisa S.A. and Subsidiaries and Marisa Group Companies

18. RESERVE FOR CONTINGENCIES The Company’s subsidiaries are parties to tax, civil and labor lawsuits and in civil administrative proceedings. Management, based on the opinion of its legal counsel and advisors, believes that the reserve for contingencies is sufficient to cover probable losses. The balances of the reserves for contingencies are as follows:

Combined Consolidated 06/30/2006 03/31/2007(1) Additions Write-offs Charges 06/30/2007 Tax: COFINS(a) 37,714 39,743 — — 597 40,340 COFINS(b) 5,612 5,898 — — 99 5,997 IRPJ - Law No. 8,200/9(c) 7,482 7,482 — — — 7,482 FGTS (severance pay fund)(d) 3,314 3,944 86 — 74 4,104 13th salary injunction(e) 3,659 3,659 — — — 3,659 State Poverty Alleviation Fund (FECP) - RJ(f) 1,885 1,750 1,676 — — 3,426 Taxable income computation book (LALUR) 3,342 1,671 1,671 CSLL(g) 1,597 934 — — 77 1,011 Other tax contingencies 18,663 3,262 — — 13 3,275 83,268 68,343 1,762 — 860 70,965 Labor(h) 10,046 14,646 477 — — 15,123 Civil(i) 2,540 7,950 2,275 — — 10,225 Total contingencies 95,854 90,939 4,514 — 860 96,313 Escrow deposits (17,805) (15,385) (2,141) — — (17,526) 78,049 75,554 78,787

(1) In compliance with CVM Resolution No.489, the Company is disclosing the change in the reserve for contingencies for the six-month period ended June 30, 2007, based on the balance as of March 31, 2007. (a) Law No. 9,718, of November 27, 1998, increased the COFINS rate from 2% to 3%, and allowed this 1% difference to be offset in 1999 against the tax payable in the same year. However, in 1999, the subsidiary Marisa Lojas filed a lawsuit and was granted an injunction suspending the payment of the tax (1% rate difference). (b) In 1999, the subsidiary Marisa Lojas filed a lawsuit and was granted an injunction suspending the expansion of the tax basis and challenging articles 3 and 8, respectively, of said Law, and authorizing the payment of COFINS based on Supplementary Law 70/91. As regards items (a) and (b), as of June 30, 2007, the court records were closed for judgment by the 3rd Region Regional Federal Court (TRF). Previous decisions of the Federal Supreme Court (STF) on the matter, based on article 195 of the Federal Constitution, prior to Constitutional Amendment 20/98, considered the expressions gross revenue and billings synonyms, making them equivalent to product, service or product and service sales. Therefore, paragraph 1 of article 3 of Law No. 9,718/98 is unconstitutional because it extended the concept of gross revenue to all revenues earned by legal entities, regardless of their activity and the accounting classification adopted. Based on the opinion of its legal counsel, the Company classified the likelihood of an unfavorable outcome on this lawsuit as probable. (c) This lawsuit requests the court to declare that there is no legal or tax requirement to apply to the financial statements issued in 1991, for 1990, of the subsidiary Marisa Lojas, the fiscal National Treasury Bond (BTN) variation, adjusted according to the tax adjustment index, and, instead, the fiscal BTN adjusted by

F-23 Marisa S.A. and Subsidiaries and Marisa Group Companies

the Consumer Price Index (IPC) should be applied on income and social contribution taxes and tax on net income (ILL) falling due. The initial lawsuit was numbered No. 91.0653835-5 and unfolded into several lawsuits. The court records are awaiting the issuance of the court decision that rejected the special appeal filed. Previous court decisions consider this Law fully constitutional; accordingly, the likelihood of an unfavorable outcome is probable. (d) The subsidiary Marisa Lojas filed a lawsuit against the Federal Government, distributed on September 26, 2001 under No. 2001.61.00.024399-6, requesting the unconstitutionality of Supplementary Law No. 110/01, arguing it fails to comply with the precedence principle set forth in article 150, III, “b”, of the Federal Constitution. An appeal was filed against this court decision that partially granted the request; numbered No. 490790-9, which is currently awaiting judgment by the STF. Marisa Lojas made escrow deposits until December 2006 based on its monthly payroll. Currently, the STF is judging the special appeal filed. There is a partially favorable decision that prevents the levy of the tax during the first three months. Among the related lawsuits we highlight the direct action of unconstitutionality (ADIN) No. 2,568, being judged by the STF. The injunction granted to this direct action of unconstitutionality declares the constitutionality of Supplementary Law No. 110/01, except for the heading of article 14, related to the ninety-day grace period before which the tax cannot be levied. Previous lower and appeal court decisions are uniform; accordingly, this position, which until now has been unfavorable to taxpayers, can be reversed. (e) Lawsuit requesting the court to declare that the subsidiary Marisa Lojas is not legally bond to pay social security contribution on Christmas bonuses and to authorize the Company to offset the amount it considers unduly paid. Marisa Lojas made several escrow deposits and, currently, it is regularly paying the 13th salary, however, the deposit period is still under discussion. As of June 30, 2007, the Company is awaiting the judgment of the lawsuit by a lower court. Previous court decisions, including by the STF, are unfavorable, although there were no lower court decisions; accordingly, the likelihood of an unfavorable outcome is probable. (f) Lawsuit filed against the Rio de Janeiro State Government to have the unconstitutionality of the Poverty Alleviation Fund - Law No. 4,056/02 declared. After the claim was dismissed by the Rio Janeiro Justice Court (TJRJ), an extraordinary appeal was filed, which is awaiting judgment, and a special appeal has been definitely dismissed. The subsidiary Marisa Lojas makes a monthly escrow deposit of the ICMS difference calculated in this State; accordingly, the likelihood of an unfavorable outcome is probable. (g) Lawsuit filed under No. 2004.61.00.019379-9 is challenging the increase in the social contribution tax basis, when approved based on deemed income. This lawsuit challenges paragraph 62, which sets forth the amounts calculated on the tax basis difference, increasing it from 12% to 32%. The subsidiaries TCM and Primos make a monthly escrow deposit of these amounts. Lawsuits are filed with the 17th Federal Court, and there is no consensual understanding on this matter; accordingly, the likelihood of an unfavorable outcome is probable because of the arguments presented. (h) As of June 30, 2007, the Company’s subsidiaries are parties to 648 labor lawsuits filed by former employees and third parties demanding the payment of severance pay, salary premiums, overtime, and amounts payable due to joint liability. (i) As of June 30, 2007, the Company’s subsidiaries are parties to 1,868 civil lawsuits and administrative proceedings, filed with civil courts, special civil courts and the consumer protection agency PROCON by consumers, suppliers, and former employees, most of which claiming indemnities.

As of June 30, 2007, the Company’s subsidiaries are parties to other lawsuits, for which the likelihood of loss, according to the analysis of their legal counsel, is possible, in the approximate amount of R$24,108 (R$32,332 as of June 30, 2006), and for which the Company’s management, supported by the opinion of its legal counsel, understands that the recognition of a provision for loss is not necessary.

F-24 Marisa S.A. and Subsidiaries and Marisa Group Companies

19. TAXES IN INSTALLMENTS

Law 10,684, of May 30, 2003, provides for, among other issues, the tax debt refinancing program (PAES) that allows the payment of tax debts to the Federal Revenue Service, the National Treasury Attorney General, and National Institute of Social Security (INSS) in installments. In July 2003, the subsidiary Marisa Lojas decided to include in this program some tax debts that were discussed in courts. In the six-month period of 2007, the amount of R$242 (R$229 in June 2006) was amortized, presenting a debit balance of R$2,932 (R$3,248 in June 2006) (R$1,832 - principal, R$220 - fine and R$880 - interest) at the end of the six-month period, and the amounts of R$489 (R$464 in June 2006) and R$2,443 (R$2,784 in June 2006) were classified in current and noncurrent liabilities, respectively, to be paid in monthly installments, adjusted based on the TJLP, with final maturity in 2013.

Additionally, on September 1, 2006 the subsidiary Marisa Lojas requested the payment in installments of the income tax deficiency notice raised on alleged undue offset of 1997-1999 tax loss carryforwards, and the recognition of a tax credit because of an alleged failure to add to net income for the abovementioned periods in the determination of taxable income of gains earned abroad by a subsidiary and remitted to Brazil. This payment was divided into 59 monthly installments. In the six-month period, the amount of R$1,239 was amortized, presenting a debit balance of R$10,733 (R$2,951 - principal, R$2,213 - fine and - R$5,569 interest) at the end of the six-month period, and the amounts of R$2,525 and R$8,208 were classified in current and noncurrent liabilities, respectively, to be paid in monthly installments, adjusted based on the TJLP, with final maturity in 2011.

The regular payment of taxes and other obligations is mandatory to maintain the payment terms and conditions of this program.

These payments in installments are recorded under the caption “Reserve for contingencies”.

Installments in noncurrent liabilities as of June 30, 2007 and 2006 mature as follows:

Consolidated Combined 06/30/2007 06/30/2006 2008 — 464 2009 3,014 464 2010 3,014 464 2011 3,014 464 2012 1,122 464 2013 487 464 10,651 2,784

Had this subsidiary recognized its financial liabilities at fair value, it would have recognized a gain before income and social contribution taxes of R$1,668 as of June 30, 2007, as shown below:

Carrying Fair amount value Gain Taxes in installments 13,665 11,997 1,668

F-25 Marisa S.A. and Subsidiaries and Marisa Group Companies

20. SHAREHOLDERS’ EQUITY Subscribed and paid-up capital as of June 30, 2007 is R$44,634, represented by 44,634,410 common shares without par value and with voting rights at the Shareholders’ Meetings as follows:

a) Capital

Number of Ownership shares interest % Begoldi Comércio, Participação e Administração S.A. 33,401,633 74.83 Flin Participações Ltda. 8,652,777 19.38 Other shareholders resident in Brazil 2,580,000 5.79 44,634,410 100.00

The Company is authorized to increase its capital up to the limit of 150,000,000 common shares without par value.

On June 29, 2007, Flin Participações Ltda. became a shareholder of the Company through the transfer of 8,652,777 common shares held by the individual shareholders resident in Brazil, corresponding to 19.38% of the Company’s voting capital, in an increase of Flin Participações Ltda’s capital. b) The reconciliation of the combined shareholders’ equity and accumulated income (loss) combined with the related shareholders’ equity and income (loss) of the individual Companies, as of June 30, 2006, is as follows:

Shareholders’ equity Marisa Lojas Varejistas Ltda. 199,967 Fix Participações Ltda. 11,626 Due Mille Participações Ltda. 2,898 214,491

Loss for the six-month period Marisa Lojas Varejistas Ltda. (36,294) Fix Participações Ltda. 15,223 Due Mille Participações Ltda. 2,874 (18,197) Unrealized profits on inventories(*) (8,910) Combined loss (27,107)

(*) Refers to adjustments to unrealized profits on inventories (net of taxes) of Marisa Lojas arising from transactions with the Group’s wholesales companies (SPEs), which have been eliminated in the caption “Minority interest”, as the Company has no ownership interest in these companies.

F-26 Marisa S.A. and Subsidiaries and Marisa Group Companies c) Allocation of net income

In accordance with the Company’s by-laws, shareholders are entitled to a mandatory minimum dividend of 25% of net income with the following adjustments: (i) addition of the amounts arising from the reversal, in the six-month period, of previously recognized reserves for contingencies; (ii) reduction of the amounts allocated, in the six-month period, to the legal reserve and reserves for contingencies; and (iii) whenever the amount of the mandatory minimum dividend exceeds the realized portion of net income for the six-month period, Management may propose, and the Shareholders’ Meeting may approve, the allocation of the exceeding amount to the unrealized profit reserve (article 197 of Brazilian Corporate Law). d) Legal reserve

As of June 30, 2007, the Company recognized a legal reserve in the amount of R$1,866 as provided for in article 193 of the Brazilian Corporate Law. e) Stock option plan

On April 25, 2007, the Company’s Board of Directors established a stock option plan, through a Stock Option Agreement, appointing eligible employees in power positions and highly qualified contractors of the Company or its subsidiaries in order to align the interests and goals of these individuals with strategies and results expected by the Company. The option may be partially or totally exercised during the period defined in the Stock Option Agreement according to the plan’s effective period. Under the plan, on April 25, 2007 the total number of common shares underlying the options that can be granted was 892,688 common shares of authorized capital stock, and they cannot exceed 2% of the total number of common shares issued by the Company at any time during the plan’s effective plan. Under the plan, all shares acquired with the exercise of vested options shall have the same rights and advantages granted to the common shares issued by the Company.

The exercise price of the options will be equivalent to the average market price of the Company’s common shares in the last five trading sessions of the São Paulo Stock Exchange (BOVESPA) prior to the date of the Stock Option Agreement, and the Board of Directors can, at its sole discretion, apply a discount on this price, as determined for each specific case. The exercise price established in the Stock Option Agreement will be monetarily adjusted based on the IPCA (Extended Consumer Price Index) variation for the period between the date of the Stock Option Agreement and the subscription date.

Until the date of this report, no stock options had been granted or exercised; accordingly, no effects were produced on the statement of operations or shareholders’ equity.

The exercise of all of these options would generate a dilution in relation to the number of Company’s shares of approximately 2%.

F-27 Marisa S.A. and Subsidiaries and Marisa Group Companies

21. OTHER OPERATING INCOME (EXPENSES) For a better understanding of the performance and contribution of Cartão Marisa financial services to the Company’s results, we present below the breakdown of other operating income (expenses), net.

Consolidated Combined 06/30/2007 06/30/2006 Result from financial services: Income from financial services 64,061 34,824 Expenses on financial services (14,772) (4,029) Losses on receivables, net (53,426) (15,449) (4,137) 15,346 Other operating income (expenses): Recorded reserves (4,396) (10,289) Tax credits 6,123 4,452 Recovered expenses 8,129 1,579 Other (713) (903) 9,143 (5,161) 5,006 10,185

22. FINANCIAL (EXPENSES) INCOME

Company Consolidated Combined 06/30/2007 06/30/2007 06/30/2006 Financial expenses: Loss on variable-income investments — (35,885) (47,551) Interest — (22,340) (12,753) CPMF (tax on banking transactions) (24) (4,223) (3,773) Banking expenses — (2,358) (1,462) Monetary loss — (2,862) (13,836) Adjustment to present value — (4,246) (3,573) Other — (2,578) (1,744) (24) (74,492) (84,692) Financial income: Temporary cash investments 65 34,323 33,375 Monetary gain — 533 287 Adjustment to present value — 4,383 6,687 Other — 1,331 882 65 40,570 41,231

F-28 Marisa S.A. and Subsidiaries and Marisa Group Companies

23. OTHER NON OPERATING INCOME (EXPENSES)

Company Consolidated Combined 06/30/2007 06/30/2007 06/30/2006 Nonoperating income: Gains on investments 5 1,511 6,682 Other — 582 244 5 2,093 6,926 Nonoperating expenses: Losses on investments (2,379) (2,398) (2,615) Other — (2) (159) (2,379) (2,400) (2,774) (2,374) (307) 4,152

Gains (losses) on investments refer to the percentage variation in investments made in subsidiaries during the six-month periods.

24. FINANCIAL INSTRUMENTS

The Company’s subsidiaries carry out transactions involving the usual financial instruments described below. There were no material differences between the estimated fair values of financial instruments, assets and liabilities, of subsidiaries as of June 30, 2007 and 2006 recorded in balance sheet accounts, and their carrying amounts.

a) Credit risk

The sales and credit policies of the subsidiaries are subject to the credit policies established by their Management and are intended to minimize possible problems with the default of customers. This goal is attained by the subsidiaries’ Management through a careful selection of customer portfolio, which considers their ability to pay (credit rating) and diversification of their operations (risk dilution). The subsidiaries recognized an allowance for doubtful accounts in the amount of R$30,504 as of June 2007 (R$19,809 as of June 30, 2006) to cover credit risks.

b) Loans and financing in foreign currency

There are amounts payable denominated in foreign currency, which are thus exposed to exchange risks. As of June 30, 2007 and 2006, the subsidiaries had financial instruments to hedge these liabilities denominated in foreign currency. The main balances denominated in foreign currency refer to loans and financing and are mentioned in note 15. The exchange gain or loss as of June 30, 2007 and 2006 is recorded in current assets or liabilities.

c) Fair value of financial instruments

The fair value of cash and cash equivalents (cash, banks, temporary cash investments and marketable securities), trade accounts receivable and current liabilities approximates their carrying amount, as the maturity of a significant portion of these balances occurs close to the balance sheet date. Loans and financing are monetarily adjusted based on inflation indices and variable interest rates due to market conditions and, therefore, the debt balance as of the balance sheet dates approximates the fair value.

F-29 Marisa S.A. and Subsidiaries and Marisa Group Companies

d) Concentration of risk

Financial instruments that potentially subject the subsidiaries to concentration of credit risk consist mainly of bank accounts, temporary cash investments and trade accounts receivable, mainly related to transactions carried out with the subsidiary Credi-21. The balance of accounts receivables is distributed among the credit card companies. As of June 30, 2007, transactions with Credi-21 account for approximately 94% (93% as of June 30, 2006) of total credit card sales transactions. The total balance of trade accounts receivable is denominated in Brazilian reais.

e) Interest rate

The Company’s subsidiaries are exposed to normal market risks arising from changes in interest rates on its long-term obligations.

f) Future commitments

As of June 30, 2007 and 2006, the subsidiaries had lease agreements entered into with related companies and third parties. The lease amount of the real estate properties of related companies is always the higher of: (i) the amount equivalent to 3.65% of the monthly gross sales of the store; or (ii) a minimum monthly amount annually adjusted based on several indices of inflation and average monthly expenses of rentals paid to related companies, of R$1,198. These lease agreements are effective for five years and can be contractually and automatically renewed for up to two five-year periods. The lease amount of the real estate properties of third parties is always the higher of: (i) the amount equivalent to 3% of the monthly gross sales of the store; or (ii) a minimum monthly amount annually adjusted based on several indices of inflation and average monthly expenses of rentals paid to third parties, of R$2,279. These lease agreements are effective for five to fifteen years, and can be renewed.

25. INSURANCE COVERAGE (UNAUDITED)

The Company’s subsidiaries have an insurance policy that considers mainly risk concentration and its materiality, contracted at amounts considered sufficient by Management according to the type of their activities and advice of the insurance brokers.

As of June 30, 2007 and 2006, insurance coverage is as follows:

Consolidated Combined 06/30/2007 06/30/2006 Civil liability 1,000 1,000 Sundry risks - inventories and property and equipment 44,200 44,200 National and international transportation 2,500 2,500 Vehicles 728 728 48,428 48,428

F-30 Marisa S.A. and Subsidiaries and Marisa Group Companies

26. SUBSEQUENT EVENTS

a) Extension of loan maturity dates

Loans that had their maturity dates extended are as follows:

Maturity date of the Date of the Principal Charges agreement amendment Banco Bradesco 3,900 Interest of 108.5% of CDI July 2007 January 2008 Banco Safra - loan 48,500 Interest of 2% p.a. + CDI July 2007 August 2007

b) Settled loans

In July 2007, we settled a total amount of R$79,960 related to working capital agreements with Banco Alfa - R$2,000 and Banco Credit Suisse - R$77,960. For the settlement of these loans we redeemed approximately R$81,723 from the investment in Austrian Bonds (see note 6).

c) Payment of dividends

The Annual Shareholders’ Meeting held on July 26, 2007 approved the payment of dividends to the Company’s shareholders that held shares on that date. Dividends amounting to R$35,362 (R$0.792 per share) were calculated based on retained earnings for the six-month period ended June 30, 2007, less the amount to be allocated to the legal reserve, as provided for in the Company’s by-laws, and corresponded to 94.7% of net income for the six-month period then ended. Said dividends will be fully paid to shareholders by October 10 of the current year (see note 11).

d) Covenants

On July 31, 2007, the Company’s subsidiaries obtained a waiver from Banco Credit Suisse of the rights to demand the immediate or accelerated payment of the amounts due on that date until February 28, 2008. With respect to the payment of dividends, the subsidiaries obtained a waiver, exempting them from the limit for the payment of dividends.

27. RESTATEMENT OF THE FINANCIAL STATEMENTS

On August 24, 2007, the Company’s Management decided to voluntarily restate the financial statements to reflect the changes in the consolidated and combined statements of cash flows for the six-month periods ended June 30, 2007 and 2006.

F-31 APPENDIX (Convenience Translation into English from the Original Previously Issued in Portuguese) MARISA S.A. AND SUBSIDIARIES AND MARISA GROUP COMPANIES STATEMENT OF CASH FLOWS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2007 AND COMBINED STATEMENT OF CASH FLOWS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2006 (In thousands of Brazilian reais - R$) Company Consolidated Combined 06/30/2007 06/30/2007 06/30/2006 CASH FLOWS FROM OPERATING ACTIVITIES Income (loss) after depreciation of spun-off property and equipment, equity in real estate companies and income from rental of spun-off property 37,331 37,331 (27,107) Adjustments to reconcile net income (loss) to cash provided by operating activities before depreciation of spun-off property and equipment, equity in real estate companies and income from rental of spun-off property: Depreciation and amortization — 16,856 9,708 Allowance for doubtful accounts — (53,426) (15,449) Equity in subsidiaries (40,930) — — Net book value of property and equipment written off — 10,291 341 Write-off of investments 6,874 — — Minority interest — 533 18,794 Financial charges and exchange variation on intercompany balances, loans and financing and taxes payable — 137,397 30,284 Deferred income and social contribution taxes — (27,832) (20,769) Taxes in installments — (1,156) (131) Reserve for contingencies — 4,584 27,626 3,275 124,578 23,297 Adjustments to reconcile net income (loss) to cash provided by operating activities after depreciation of spun-off property and equipment, equity in real estate companies and income from rental of spun-off property: Depreciation of spun-off property and equipment — — 1,260 Equity in real estate companies — — (2,090) 3,275 124,578 22,467 Increase (decrease) in assets: Trade accounts receivable — (23,696) 16,654 Inventories — (45,824) (19,193) Recoverable taxes (4) (3,186) 822 Other receivables 400 (10,104) (15,097) Intercompany receivables — 153 26,333 Increase (decrease) in liabilities: Trade accounts payable — 12,663 (8,430) Taxes payable 19 (36,632) (19,607) Accrued payroll and related charges 18 827 1,178 Intercompany payables — (778) (20,838) Income and social contribution taxes 2 2,223 (14,023) Other payables (446) (372) 124 Net cash provided by (used in) operating activities 3,264 19,852 (29,610) CASH FLOWS FROM INVESTING ACTIVITIES Marketable securities — 30 (72,716) Acquisition of investments in related companies (2,320) — — Acquisition of property and equipment and increase in deferred charges — (45,933) (42,658) Dividends received — — 2,709 Minority interest in shareholders’ equity — (8) 260 Net cash provided by (used in) investing activities (2,320) (45,911) (112,405) CASH FLOWS FROM FINANCING ACTIVITIES Fund raising - loans and financing — 358,895 359,135 Capital increase 3,319 3,319 — Repayment of financing — (293,859) (190,405) Payment of dividends — (25,765) (7,685) Net cash provided by (used in) financing activities 3,319 42,590 161,045 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,263 16,531 19,030

CASH AND CASH EQUIVALENTS At beginning of period 27 145,780 60,550 At end of period 4,290 162,311 79,580 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,263 16,531 19,030

The accompanying notes are an integral part of these financial statements.

F-32 (Convenience Translation into English from the Original Previously Issued in Portuguese)

Marisa Group Companies

Combined Financial Statements for the Years Ended December 31, 2006, 2005 and 2004 and Independent Auditors’ Report

Deloitte Touche Tohmatsu Auditores Independentes Deloitte Touche Tohmatsu Rua Alexandre Dumas, 1981 04717-906-São Paulo - SP Brasil Tel.: +55 (11) 5186-1000 Fax: +55(11) 5181-2911 www.deloitte.com.br

(Convenience Translation into English from the Original Previously Issued in Portuguese)

INDEPENDENT AUDITORS’ REPORT

To the Shareholders and Management of Marisa S.A. São Paulo - SP

1. We have audited the accompanying combined balance sheets of the companies forming the Marisa Group, as described in note 4, (the “Companies”) as of December 31, 2006, 2005 and 2004, and the related combined statements of operations, changes in shareholders’ equity, and changes in financial position for the years then ended, all expressed in Brazilian reais and prepared under the responsibility of the Companies’ management. The combined financial statements have been prepared based on the historical financial statements derived from the individual financial statements of the Companies mentioned in note 4, which were audited by us. These Companies are under common control and management. Our responsibility is to express an opinion on these combined financial statements.

2. Our audit was conducted in accordance with auditing standards in Brazil and comprised: (a) planning of the work, taking into consideration the significance of the balances, volume of transactions, and the accounting and internal control systems of the Companies, (b) checking, on a test basis, the evidence and records that support the amounts and accounting information disclosed, and (c) evaluating the significant accounting practices and estimates adopted by Management, as well as the presentation of the financial statements taken as a whole.

3. In our opinion, the combined financial statements referred to in paragraph 1 present fairly, in all material respects, the combined financial positions of the Companies mentioned in paragraph 1 as of December 31, 2006, 2005 and 2004, and the combined results of their operations, the combined changes in shareholders’ equity, and the combined changes in their financial positions for the years then ended in conformity with Brazilian accounting practices.

4. The purpose of these combined financial statements is to present the combined financial statements of the Companies described in paragraph 4 as if Marisa S.A. had ownership interest in these Companies since January 1, 2004, as described in note 2. Accordingly, the combined financial statements have been prepared to present the combined financial positions of Marisa S.A. and the companies mentioned in paragraph 1, and the combined results of their operations, the combined changes in shareholders’ equity, and the combined changes in their financial positions, as described in note 4, and do not necessarily represent the conditions that would exist or the results of their operations, the changes in shareholders’ equity, and the changes in their financial positions if the operations of Marisa S.A. and subsidiaries were represented by the activities of the Companies listed herein.

5. Our audits were conducted for the purpose of forming an opinion on the basic combined financial statements referred to in paragraph 1 taken as a whole. The accompanying combined statements of cash flows are presented for purposes of additional analysis and are not a required part of the basic financial

F-34 Deloitte Touche Tohmatsu

statements in conformity with Brazilian accounting practices. Such information has been subjected to the auditing procedures described in paragraph 2 and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements for the years ended December 31, 2006, 2005 2004 and taken as a whole.

6. The accompanying interim financial statements have been translated into English for the convenience of readers outside Brazil.

São Paulo, April 30, 2007

DELOITTE TOUCHE TOHMATSU Edimar Facco Auditores Independentes Engagement Partner

F-35 (Convenience Translation into English from the Original Previously Issued in Portuguese)

MARISA GROUP COMPANIES

COMBINED BALANCE SHEETS AS OF DECEMBER 31, 2006, 2005 AND 2004 (In thousands of Brazilian reais - R$)

Combined Note 2006 2005 2004 ASSETS CURRENT ASSETS Cash and cash equivalents 5 186,089 60,550 33,862 Securities 6 81,901 3,432 1,232 Trade accounts receivable 7 388,307 241,821 153,654 Inventories 8 92,815 74,647 43,525 Recoverable taxes 9 16,099 11,104 1,539 Dividends receivable 11 — 1,242 — Deferred income and social contribution taxes 10 6,610 — — Other receivables 10,157 6,675 6,180 Total current assets 781,978 399,471 239,992 NONCURRENT ASSETS Intercompany receivables 11 9,233 41,126 11,747 Deferred income and social contribution taxes 10 38,704 23,621 20,348 Other receivables 3,949 1,664 388 Investments (except in real estate companies) 12 2 2 2 Property and equipment (except spun-off portion) 13 144,330 52,647 37,870 Intangible assets 13 16,045 9,666 3,171 Deferred charges 1,507 633 262 Total noncurrent assets 213,770 129,359 73,788 Investment in real estate companies 12 13,115 60,163 54,697 Property and equipment (spun off) 13 16,357 39,246 43,270 TOTAL ASSETS 1,025,220 628,239 411,747 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES Trade accounts payable 14 156,576 106,242 62,392 Intercompany payables 11 97,097 19,444 14 Loans and financing 15 341,556 120,195 55,794 Accrued payroll and related charges 18,762 11,134 8,967 Taxes payable 16 72,825 60,737 35,432 Dividends payable 11 25,871 3,704 — Other payables 11,449 6,894 4,241 Total current liabilities 724,136 328,350 166,840 NONCURRENT LIABILITIES Loans and financing 15 176,453 5,328 4,108 Reserve for contingencies 18 76,631 50,423 40,737 Taxes in installments 19 11,806 2,915 2,732 Total noncurrent liabilities 264,890 58,666 47,577 MINORITY INTEREST 1,107 98 100 SHAREHOLDERS’ EQUITY Capital 41,315 207,595 207,595 Treasury shares — (2,660) (2,660) Capital reserves — 143 1 Revaluation reserves —5052 Accumulated deficit (6,228) (3,432) (7,758) Total shareholders’ equity 35,087 201,696 197,230 Funds for capital increase — 39,429 — Total shareholders’ equity and funds for capital increase 20 35,087 241,125 197,230 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 1,025,220 628,239 411,747

The accompanying notes are an integral part of these financial statements.

F-36 (Convenience Translation into English from the Original Previously Issued in Portuguese) MARISA GROUP COMPANIES COMBINED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004 (In thousands of Brazilian reais - R$)

Combined Combined Combined Note 2006 2005 2004 PRODUCT SALES REVENUE 1,258,954 948,053 701,747 REVENUE FROM SERVICES 40,435 29,605 19,576

GROSS OPERATING REVENUE 1,299,389 977,658 721,323 Sales deductions (423,997) (310,174) (221,012) NET OPERATING REVENUE 875,392 667,484 500,311 Cost of sales (406,233) (305,574) (267,628) Cost of services (33,327) (32,094) (14,934) GROSS PROFIT 435,832 329,816 217,749 OPERATING (EXPENSES) INCOME Selling expenses (305,316) (204,323) (171,751) General and administrative expenses (69,871) (57,230) (47,469) Other operating income (expenses) 21 (13,928) (17,566) 597 INCOME (LOSS) FROM OPERATIONS BEFORE FINANCIAL INCOME (EXPENSES), DEPRECIATION OF SPUN-OFF PROPERTY AND EQUIPMENT, EQUITY IN REAL ESTATE COMPANIES AND REVENUE FROM RENTAL OF SPUN-OFF PROPERTY 46,717 50,697 (874) FINANCIAL INCOME (EXPENSES) Financial expenses 22 (161,640) (41,697) (24,684) Financial income 22 93,382 31,979 19,675 Exchange variation, net 5,125 408 126 INCOME (LOSS) FROM OPERATIONS BEFORE DEPRECIATION OF SPUN-OFF PROPERTY AND EQUIPMENT, EQUITY IN REAL ESTATE COMPANIES AND REVENUE FROM RENTAL OF SPUN-OFF PROPERTY (16,416) 41,387 (5,757) NON OPERATING INCOME (EXPENSES), NET 23 5,406 5,332 (8,597) INCOME (LOSS) BEFORE INCOME AND SOCIAL CONTRIBUTION TAXES , DEPRECIATION OF SPUN-OFF PROPERTY AND EQUIPMENT, EQUITY IN REAL ESTATE COMPANIES AND REVENUE FROM RENTAL OF SPUN-OFF PROPERTY (11,010) 46,719 (14,354) INCOME AND SOCIAL CONTRIBUTION TAXES Current 10 (18,396) (22,810) (10,227) Deferred 10 22,007 3,539 5,343 NET INCOME (LOSS) BEFORE MINORITY INTEREST, DEPRECIATION OF SPUN-OFF PROPERTY AND EQUIPMENT, EQUITY IN COMPANIES AND REVENUE FROM RENTAL OF SPUN-OFF PROPERTY (7,399) 27,448 (19,238) MINORITY INTEREST IN NET INCOME BEFORE DEPRECIATION OF SPUN-OFF PROPERTY AND EQUIPMENT, EQUITY IN REAL ESTATE COMPANIES AND REVENUE FROM RENTAL OF SPUN-OFF PROPERTY (56,391) (18,428) (312) INCOME (LOSS) BEFORE DEPRECIATION OF SPUN-OFF PROPERTY AND EQUIPMENT, EQUITY IN REAL ESTATE COMPANIES AND REVENUE FROM RENTAL OF SPUN-OFF PROPERTY (63,790) 9,020 (19,550) Equity in real estate companies 6,196 5,737 (18,530) Depreciation of spun-off property and equipment (1,625) (2,684) (3,361) Revenue from rental of spun-off property 1,735 1,751 1,450 INCOME (LOSS) AFTER DEPRECIATION OF SPUN-OFF PROPERTY AND EQUIPMENT, EQUITY IN REAL ESTATE COMPANIES AND REVENUE FROM RENTAL SPUN-OFF PROPERTY (57,484) 13,824 (39,991)

The accompanying notes are an integral part of these financial statements.

F-37 (Convenience Translation into English from the Original Previously Issued in Portuguese)

MARISA GROUP COMPANIES COMBINED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004 (In thousands of Brazilian reais - R$)

Total Retained shareholders’ earnings Total Funds and funds for Treasury Capital Revaluation (accumulated shareholders’ capital capital Note Capital shares reserve reserve deficit) equity increase increase BALANCES AS OF DECEMBER 31, 2003 (UNAUDITED) 123,881 — 1 56 36,035 159,973 — 159,973 Prior year adjustments 2 — — — — (1,706) (1,706) — (1,706) 2003 OPENING BALANCES (ADJUSTED AND UNAUDITED) 123,881 — 1 56 34,329 158,267 — 158,267 Capital contribution in cash 24,410 — — — — 24,410 — 24,410 Capital contribution from of the assignment and transfer of other companies’ shares 59,304 59,304 — 59,304 Realization of revaluation reserve — — — (4) 4 — — — Acquisition of own shares — (2,660) — — — (2,660) — (2,660) Payment of dividends (2,100) (2,100) (2,100) Loss after depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property — — — — (39,991) (39,991) — (39,991) BALANCES AS OF DECEMBER 31, 2004 207,595 (2,660) 1 52 (7,758) 197,230 — 197,230 F-38 Advance for future capital increase — — — — — — 39,429 39,429 Realization of revaluation reserve — — — (2) 2 — — — Negative goodwill on acquisition of own shares — — 142 — — 142 — 142 Payment of dividends — — — — (9,500) (9,500) (9,500) Income after depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property — — — — 13,824 13,824 — 13,824 BALANCES AS OF DECEMBER 31, 2005 207,595 (2,660) 143 50 (3,432) 201,696 39,429 241,125 Capital contribution due to advance for future capital increase 20 39,429 — — — — 39,429 (39,429) — Capital contribution from of the assignment and transfer of receivables from Credi-21 owned by Begoldi Comércio, Participação e Administração S.A. 22,514 — — — — 22,514 — 22,514 Capital decrease due to the assignment and transfer of other companies’ shares as of December 31, 2006 20 (95,285) — — — — (95,285) — (95,285) Capital decrease due to the assignment and transfer of receivables from Credi-21 Participações Ltda. to Begoldi Comércio, Participação e Administração S.A. 20 (22,514) — — — — (22,514) — (22,514) Capital decrease due to the assignment and transfer of receivables from Nix Administração e Participações Ltda. 20 (19,342) — — — — (19,342) — (19,342) Capital decrease in cash, in favor of Begoldi Comércio, Participação e Administração S.A. 20 (3,227) — — — — (3,227) — (3,227) Realization of revaluation reserve — — — (47) 47 — — — Payment of dividends, net — — — — (30,730) (30,730) — (30,730) Loss after depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property — — — — (57,484) (57,484) — (57,484) Capital contribution in Marisa S.A. on August 15, 2006 30 — — — — 30 — 30 Capital decrease by merger (87,885) 2,660 (143) (3) 85,371 — — — BALANCES AS OF DECEMBER 31, 2006 41,315 — — — (6,228) 35,087 — 35,087

The accompanying notes are an integral part of these financial statements. (Convenience Translation into English from the Original Previously Issued in Portuguese) MARISA GROUP COMPANIES COMBINED STATEMENTS OF CHANGES IN FINANCIAL POSITION FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004 (In thousands of Brazilian reais - R$) Combined Note 2006 2005 2004 SOURCES OF FUNDS From operations: Funds from operations after depreciation of spun-off property and equipment, equity real estate companies and revenue from rental of spun-off property (see below) 159,332 63,080 (9,419) Prior year adjustments affecting working capital — — 7,562 From shareholders: Treasury shares — — (2,660) Capital contribution 61,973 — 83,714 Advance for future capital increase — 39,429 — From operations 221,305 102,509 79,197 From third parties: Dividends paid by investees 1,467 1,405 — Decrease in noncurrent assets - related parties 31,893 — — Decrease in noncurrent assets - escrow deposits 1,929 — — Transfer from noncurrent to current assets - deferred taxes 5,712 — — Increase in noncurrent liabilities - loans and financing 171,125 1,220 813 Increase in noncurrent liabilities - taxes payable 8,891 183 — Minority interest — 2 — Other — — 492 Total sources 442,322 105,319 80,502 USES OF FUNDS Increase in noncurrent assets - deferred taxes 15,083 3,273 5,613 Increase in noncurrent assets - escrow deposits — 4,608 5,458 Increase in noncurrent assets - related parties — 29,379 — Increase in noncurrent assets - other receivables 2,285 1,276 5,474 Investment acquisition 37,954 8,123 61,288 Additions to property and equipment 111,944 26,645 15,188 Additions to deferred charges 1,771 566 126 Additions to intangible assets 13 6,379 6,495 — Decrease in noncurrent liabilities 8,891 183 5,240 Transfer from noncurrent to current liabilities 11 94,005 17,304 — Capital decrease 140,368 — — Payment of dividends 35,912 9,500 2,100 Minority interest 1,009 (2) — Total uses 455,601 107,350 100,487 DECREASE IN WORKING CAPITAL (13,279) (2,031) (19,985)

The accompanying notes are an integral part of these financial statements.

F-39 (Convenience Translation into English from the Original Previously Issued in Portuguese) MARISA GROUP COMPANIES COMBINED STATEMENTS OF CHANGES IN FINANCIAL POSITION FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004 (In thousands of Brazilian reais - R$) — (Continued)

Combined Note 2006 2005 2004 REPRESENTED BY Current assets: At beginning of year 399,471 239,992 324,843 At end of year 781,978 399,471 239,992 382,507 159,479 (84,851) Current liabilities: At beginning of year 328,350 166,840 231,706 At end of year 724,136 328,350 166,840 (395,786) (161,510) 64,866 DECREASE IN WORKING CAPITAL (13,279) (2,031) (19,985) STATEMENTS OF FUNDS PROVIDED BY OPERATIONS Income (loss) after depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property (57,484) 13,824 (39,991) Items not affecting working capital: Depreciation and amortization 21,158 12,063 9,461 Exchange and monetary variation, net, of noncurrent assets 5,998 151 3,799 Reserve for contingencies 18,991 14,924 3,834 Gains (losses) on investments in subsidiaries 5,272 5,403 (9,049) Write-off of property and equipment 21,264 1,340 324 Write-off of investments 92,313 — — Minority interest 56,391 18,428 312 Total funds from operations before http://tpb.tracker.thepiratebay.org depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property 163,903 66,133 (31,310) Equity in subsidiaries, net of dividends received from real estate companies (6,196) (5,737) 18,530 Depreciation of spun-off property and equipment 1,625 2,684 3,361 Total funds from operations after depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property 159,332 63,080 (9,419)

The accompanying notes are an integral part of these financial statements.

F-40 (Convenience Translation into English from the Original Previously Issued in Portuguese) MARISA GROUP COMPANIES COMBINE STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004 (In thousands of Brazilian reais - R$) Note 2006 2005 2004 CASH FLOWS FROM OPERATING ACTIVITIES Income (loss) after depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property (57,484) 13,824 (39,991) Adjustments to reconcile net income (loss) to cash provided for by operating activities before depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property: Depreciation and amortization 21,158 12,063 9,461 Allowance for doubtful accounts 14,094 8,524 30,387 Loss on investments 5,272 5,403 (9,049) Net book value of property and equipment written off 21,264 1,340 324 Write-off of investments 92,313 — — Minority interest 56,391 18,428 312 Securities transactions 6,734 186 1,909 Financial charges and exchange variation on intercompany balances, financing, loans and taxes payable 63,988 13,997 11,633 Deferred income and social contribution taxes 22,007 3,539 5,343 Taxes in installments 12,102 — 3,400 Reserve for contingencies 18,991 14,924 3,834 276,830 92,228 17,563 Adjustments to reconcile net income (loss) to cash provided for by operating activities after depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property: Depreciation of spun-off property and equipment 1,625 2,684 3,361 Equity in real estate companies (6,196) (5,737) 18,530 272,259 89,175 39,454 INCREASE (DECREASE) IN ASSETS Current assets: Trade accounts receivable (146,486) (88,167) (50,607) Inventories (18,168) (31,122) (12,983) Recoverable taxes (4,995) (9,565) (675) Dividends receivable 1,242 (1,242) — Deferred income and social contribution taxes (6,610) — — Other receivables (3,482) (495) (2,341) Noncurrent assets: Intercompany receivables 31,893 (29,379) 19,611 Deferred income and social contribution taxes (15,083) (3,273) — Other receivables (2,285) (1,276) (8,016) Escrow deposits 1,929 (4,608) (5,458) INCREASE (DECREASE) IN LIABILITIES Current liabilities: Trade accounts payable 50,334 43,850 5,436 Intercompany receivables 77,653 19,430 14 Accrued payroll and related charges 7,628 2,167 536 Taxes payable 12,088 25,305 19,421 Dividends payable 22,167 3,704 — Other payables 4,555 2,653 1,455 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 284,639 17,157 5,847

The accompanying notes are an integral part of these financial statements.

F-41 (Convenience Translation into English from the Original Previously Issued in Portuguese) MARISA GROUP COMPANIES COMBINE STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004 (In thousands of Brazilian reais - R$) — (Continued)

Note 2006 2005 2004 CASH FLOWS FROM INVESTING ACTIVITIES Temporary cash investments 5 (111,168) (17,528) 4,494 Securities 6 (78,469) (2,200) (1,909) Acquisition of investments in related companies (41,286) (1,250) (77,038) Additions to property and equipment (111,944) (26,645) (15,188) Additions to deferred charges (1,771) (566) (126) Additions to intangible assets (6,379) (6,495) — Dividends received 1,467 1,405 — NET CASH USED IN INVESTING ACTIVITIES (349,550) (53,279) (89,767) CASH FLOWS FROM FINANCING ACTIVITIES Fund raising - loans and financing 953,717 459,122 267,033 Decrease in loans and financing (725,222) (387,414) (221,150) Decrease in taxes in installments 1,064 460 448 Capital increase 30 — 24,410 Treasury shares — — 2,660 Negative goodwill on acquisition of own shares — 142 — Capital decrease (3,227) — — Payment of dividends (35,912) (9,500) (2,100) CASH PROVIDED BY FINANCING ACTIVITIES 190,450 62,810 71,301 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 125,539 26,688 (12,619) CASH AND CASH EQUIVALENTS Beginning balance 60,550 33,862 46,481 Ending balance 186,089 60,550 33,862 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 125,539 26,688 (12,619)

The accompanying notes are an integral part of these financial statements.

F-42 (Convenience Translation into English from the Original Previously Issued in Portuguese)

MARISA GROUP COMPANIES

NOTES TO THE COMBINED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004 (Amounts in thousands of Brazilian reais—R$, unless otherwise stated)

1. OPERATIONS

Marisa S.A. (the “Company”) was incorporated on August 15, 2006 to be the holding company of the following companies: Marisa Lojas Varejistas Ltda., Fix Participações Ltda. and subsidiaries, and Due Mille Participações Ltda. (collectively the “Companies”). As shown in note 20, the Minutes of the Extraordinary Shareholders’ Meeting that increased the capital of the Company through the assignment and transfer of the subsidiaries’ ownership interests, at book value based on an appraisal report issued by an independent expert, were approved.

These group of companies, of which the Company is the controlling shareholder, are engaged in the retail of clothing in general and other department store products, management of own credit cards (Private Label type), and logistics.

The Companies have converging interests and by centralizing their management in the Company renders them more efficient to attain their business purposes, and streamlines decision making.

The Company holds ownership interests in the direct and indirect subsidiaries shown in note 4 to the financial statements, the corporate purposes of which are as follows:

1.1. Marisa Lojas Varejistas Ltda. (“Marisa Lojas”) - mainly engaged in the retail of clothing in general and other department store products. In addition to these operations, Marisa Lojas also engages in the import of merchandise and the sale of products over the Internet.

Tax incentives ICMS (state VAT) Marisa Lojas benefits from incentives granted by the Pernambuco State Development Program (PRODEPE), for an indefinite period of time, as deemed tax credits equal to 3% of the amount of all state shipments made by the distribution center located in Jaboatão dos Guararapes, PE. The benefit of these incentives is recorded in the statement of income under caption “Other operating income (expenses)”.

Marisa Lojas benefits from a special system agreed with the Goiás State Finance Department, under an agreement entered into with this State (TARE No. 014/2003 - GSF) granted for an indefinite period of time, as a granted tax credit equal to 3% of the amount of all interstate footwear, fabric, clothing, and bed, table and bath linens shipments for sale, production or manufacturing made by the distribution center located in Goiânia, GO. The benefit of these incentives is recorded in the statement of income under caption “Other operating income (expenses)”.

1.2. Due Mille Participações Ltda. (“Due Mille”) - mainly engaged in providing any type of product handling, stowage, loading and unloading services, general management of product distribution centers, and clothe hanging and hanger logistics.

F-43 Marisa Group Companies

1.3. Fix Participações Ltda. (“Fix”) - operates as a holding company by investing in other companies in charge of managing an own credit card called “Cartão Marisa”.

Currently, Fix has the following direct and indirect subsidiaries:

1.3.1. Credi-21 Participações Ltda. (“Credi-21”) - started its operations on November 9, 1999 and is mainly engaged in managing an own credit card called “Cartão Marisa” and holding ownership interests in other companies. Sales with this card, as of December 31, 2006, 2005 and 2004 represented approximately 66%, 62% and 52% of Marisa Lojas sales, respectively.

1.3.1.1. Primos Participações Ltda. (“Primos”) - established on February 25, 2000, is mainly engaged in managing the purchase of personal insurance by holders of the “Cartão Marisa” cards from insurers.

1.3.1.2. TCM Participações Ltda. (“TCM”) - founded on April 14, 2004, it is mainly engaged in providing collection, credit advisory, and “Cartões Marisa” collection portfolio management services.

1.3.1.3. TEF Serviços de Processamento de Dados Ltda. (“TEF”) - established on March 16, 2005, it is mainly engaged in printing and mailing the “Cartão Marisa” bills.

1.4. The Company also holds ownership interest in Special Purpose Entities (SPEs):

1.4.1. Actio Participações Ltda. (“Actio”), established on February 12, 1999, it is engaged in providing processing services of the own credit card “Cartão Marisa” data and leasing assets to affiliated and third parties.

1.4.2. Athol Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. (“Athol”), Lógica Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. (“Lógica”), Racional Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. (“Racional”), Ativa Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. (“Ativa”), Fax Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. (“Fax”), and Transfer Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. (“Transfer”), which are mainly engaged in the wholesale of clothing and notions in general, and may also import or export this merchandise, and hold interests in other companies, as partner or shareholder.

2. PRESENTATION OF FINANCIAL STATEMENTS

The combined financial statements are the responsibility of the Management of the Companies and the affiliates that are under common control and management, and have been prepared in conformity with Brazilian accounting practices and standards established by the Brazilian Securities Commission (CVM). These financial statements reflect the changes introduced by the following accounting standards: Accounting Standard and Procedure 27 (NPC 27), “Presentation and Disclosures”, and Accounting Standard and Procedure 22 (NPC 22) “Provisions, Liabilities, Contingent Liabilities and Contingent Assets”, both issued by the Brazilian Institute of Independent Auditors (IBRACON) on October 3, 2005, and approved by CVM Resolutions No. 488 and 489, respectively, on the same date.

F-44 Marisa Group Companies

Because of the intention to go public, the Management of the Companies is presenting the combined financial statements for the years ended December 31, 2006, 2005, and 2004 as if the shareholders of the affiliates that are under common control and management had contributed their interests in investees to the Company’s capital since January 1, 2004, which occurred in December 2006, as proposed and approved at the shareholders’ meeting. Some adjustments have been made to the year ended December 31, 2003, arising from the effects of the change in accounting practice and the correction of errors in prior years. The effects of these adjustments are being retrospectively reflected in these financial statements under the caption “Prior year adjustments”. A summary of the effects is as follows:

Credi-21 Marisa Lojas Combined Adjustment to trade accounts receivable(a) 10,329 — 10,329 Write-off of recoverable taxes(b) (2,056) — (2,056) Recognition of reserve for contingencies — (6,519) (6,519) Recognition of allowance for inventory losses — (520) (520) Other (2,980) 40 (2,940) 5,293 (6,999) (1,706)

(a) Refers to trade accounts receivable incorrectly written off and receivables under settlement in prior years. (b) Refers to the reversal of recoverable taxes considered unrealizable by Management, such as INSS (social security contribution), IRRF (Withholding Income Tax), PIS (tax on revenue), and IRPJ (Corporate Income Tax).

This information is presented solely for purposes of additional analyses to Management and is not necessarily indicative of future results.

The combined financial statements do not represent the financial statements of a legal entity on a stand- alone basis.

3. SIGNIFICANT ACCOUNTING PRACTICES a) Results of operations Income and expenses are recorded on the accrual basis.

Resale revenue and costs is recorded when the merchandise is delivered to the customer and credit card service revenue is recorded when the service is provided. Revenue from services is recognized in income when rendered.

b) Accounting estimates The preparation of financial statements requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and other transactions. Accordingly, the financial statements include several estimates related to adjustments to present value, allowance for doubtful accounts, allowance for inventory losses, useful lives of property and equipment and required reserves for contingent liabilities, to calculate projections to determine the impairment of fixed assets, deferred charges, and deferred income tax assets, as well as to determine the provision for income tax. Since the Company’s judgment involves estimates related to the likelihood of future events, actual results could differ from those estimates.

F-45 Marisa Group Companies c) Cash and cash equivalents Represented by highly liquid investments, with maturities of up to 90 days, stated at cost plus income earned to balance sheet dates and, when applicable, adjusted to their equivalent fair value. d) Securities Represented by investments in equity of other companies purchased to be actively and frequently traded. They are stated at cost, plus income earned, and are adjusted to fair value on balance sheet dates, with unrealized gains and losses included in income for the year. e) Allowance for doubtful accounts Recorded based on an analysis of risks on realization of receivables, in an amount considered sufficient to cover potential losses. f) Inventories Stated at average cost of acquisition, adjusted to fair value and possible impairment, when applicable. g) Investments Represented by indirect investments in real estate companies, through Actio Participações Ltda. (EPE), accounted for under the equity method, as shown in note 12. h) Property and equipment Stated at acquisition or construction cost, less accumulated depreciation. Depreciation is calculated under the straight-line method, at rates based on the estimated useful lives of the assets, as shown in note 13. i) Other current and noncurrent assets Stated at net realizable value. j) Current and noncurrent liabilities Stated at known or estimated amounts, plus, if applicable, related charges and monetary and exchange variations incurred through the balance sheet dates. k) Foreign currency-denominated amounts subject to exchange variation Monetary assets and liabilities denominated in foreign currencies are translated into Brazilian reais at the exchange rates prevailing at the balance sheet dates. l) Income and social contribution taxes The provision for income tax was recorded by the companies Marisa Lojas and Credi-21 at the rate of 15% plus a 10% surtax on taxable income exceeding R$240. Social contribution tax was calculated at the rate of 9% on taxable income. Deferred income and social contribution taxes recorded in current and noncurrent assets are derived from temporarily nondeductible expenses. Additionally, deferred income and social contribution taxes for tax loss carryforwards were recognized.

F-46 Marisa Group Companies

Pursuant to CVM Resolution No. 273/98 and CVM Instruction No. 371/02, deferred taxes are recorded at realizable values. The details are disclosed in note 10.

For the companies Fix, Primos, TCM, TEF, Due Mille, Actio, Athol, Lógica, Racional, Ativa, Fax and Transfer income and social contribution taxes are calculated under the criteria established by prevailing tax legislation, using the deemed income taxation regime. m) Loans and financing Adjusted based on interest, monetary and exchange variations and financial charges incurred through the balance sheet dates, as established in contracts and shown in note 15.

n) Reserve for contingencies Monetarily adjusted through the balance sheet dates, by the probable amount of loss, according to the nature of each contingency and based on the opinion of the Companies’ legal counsel. The basis and nature of the reserve for contingencies are described in note 18.

o) Derivatives Recorded on the accrual basis. Gains earned and losses incurred as a result of these contracts are recognized as adjustments to financial income and expenses.

p) Financial income and expenses Financial income and expenses basically include interest on loans, net of interest receivable on cash investments, monetary variation and exchange gains and losses, discounts granted by suppliers on prepayment of trade notes, and gains and losses on derivatives, recognized in the statements of operations on the accrual basis.

q) Adjustments to present value Purchase and sales transactions in fixed installments have been brought to their present value because of their maturities, using the average rate of financial charges incurred by the Companies on the funds raised, both for customers and suppliers.

The recognition of the adjustment to present value of purchases is made under captions “Trade accounts payable” and “Inventories” (note 8) and its reversal is made against the caption “Financial income” (note 22), due to maturity, in the case of trade accounts payable, and realization of inventories in relation to the amounts recorded. The adjustment to present value of sales in installments has a corresponding entry in the caption “Trade accounts receivable” (note 7) and realization is recorded as financial income (note 22) after maturity.

F-47 Marisa Group Companies

4. COMBINATION CRITERIA

The combined financial statements have been prepared in accordance with the consolidation criteria set forth by Brazilian accounting practices and CVM regulations, and include the financial statements of the Company and its direct subsidiaries and SPEs, comprising the Marisa Group companies, consisting of the following companies:

% ownership interest 2006 2005(b) 2004(b) Marisa Lojas Varejistas Ltda. 99.99 99.99 99.99 Due Mille Participações Ltda. 99.98 99.97 99.97 Fix Participações Ltda. 95.59 92.82 100.00 Credi-21 Participações Ltda.(a) 95.59 92.80 99.95 Primos Participações Ltda.(a) 91.84 92.45 99.60 TCM Participações Ltda.(a) 95.00 92.81 99.99 TEF Serviços de Processamento de Dados Ltda.(a) 90.18 87.57 —

(a) Indirect subsidiaries (b) The ownership interest percentages in these years are presented only for comparative purposes, since in theses years ownership was held by other companies or individuals.

SPEs (*)

Actio Participações Ltda. Athol Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. Lógica Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. Racional Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. Ativa Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. Fax Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. Transfer Comércio Atacadista de Artigos do Vestuário e Complementos Ltda.

(*) In substance considering their relationship with Marisa Lojas, the operations of the SPEs, are indirectly controlled by the Company, and the entire equity of these entities is held by Begoldi Comércio, Participação e Administração S.A.

The results of the operations of the SPEs, which are engaged is providing “Cartão Marisa” data processing services and the wholesale of clothing and notions in general, are directly or indirectly impacted by Marisa Lojas and have therefore been included in the combined financial statements, as established by CVM Instruction No. 408/04.

In the preparation of the combined financial statements, financial statements as of the same dates and consistent with the accounting practices described in note 3 were used. Intercompany balances, transactions and investments have been eliminated. The minority interest in the companies controlled by the Company has been separately disclosed. The net equity balances of the SPEs have been recorded as payables to the holding company Begoldi Comércio, Participação e Administração S.A. in current liabilities, as shown in item (b) of note 11, since the Company has no direct ownership interest in these SPEs. The classification was maintained in current liabilities because of their nature.

F-48 Marisa Group Companies

5. CASH AND CASH EQUIVALENTS

2006 2005 2004 Cash 6,755 4,284 2,540 Banks(a) 23,289 11,389 3,973 Temporary cash investments(b) 156,045 44,877 27,349 186,089 60,550 33,862

(a) See note 15, guarantees on loans and financing. (b) As of December 31, 2006, 2005 and 2004, the balance of “Temporary cash investments” is as follows:

Yield in 2006 - % 2006 2005 2004 Flowers Multimercado - Calyon(i) 20.07 122,746 18,162 13,342 Fox - FIA(ii) 34.01 15,167 11,547 8,634 Credit Suisse - portfolio(iii) 15.64 7,487 — — Other — 10,645 15,168 5,373 156,045 44,877 27,349

(i) Refers to 25,389,050 shares held as of December 31, 2006 (4,510,750 in 2005 and 3,984,236 in 2004) in a financial investment fund, consisting of shares in several other balanced and equity funds, managed by Crédit Agricole Private Capital Management, recorded at fair value. At the yearend, the fund invested 77% in fixed income, basically in Certificates of Bank Deposit (CDBs), Domestic Supply (DI) - Future and National Treasury Notes (NTN-B), and 23% in variable income, consisting of US dollar, euro, options and shares. (ii) Refers to 6,662 shares held as of December 31, 2006 (6,684 in 2005 and 4,998 in 2004) in other companies’ investment funds, managed by Banco Itaú S.A., recorded at fair value, where approximately 28% concentrate in investments in the companies Bradespar S.A., Banco Bradesco S.A., Usinas Siderúrgicas de Minas Gerais S.A. - Usiminas, and Petróleo Brasileiro S.A. - Petrobras. The remaining shares are diluted among approximately 30 public companies, none of which exceeding 6% of the total fund. (iii) Refers to 823,213 shares held as of December 31, 2006 in a financial investment fund, consisting of 84% invested in National Treasury bills (LTN) and 16% in other government securities.

6. SECURITIES

Yield in the year - % 2006 2005 2004 Austrian bonds(*) 91.20 of CDI 77,298 — — Options market — 1,892 1,232 Other companies’ equity: Companhia Vale do Rio Doce S.A. 1,349 941 — Banco Unibanco S.A. 492 — — Petróleo Brasileiro S.A. - Petrobras 721 408 — Siderúrgica Nacional S.A. 480 — — Other equity 1,561 191 — 4,603 1,540 — 81,901 3,432 1,232

(*) Refers to Austrian public debt securities, adjusted based on 91.20% of the interbank deposit rate (CDI) as of December 31, 2006. On January 13, 2006, Marisa Lojas acquired Austrian government bonds, the so-called

F-49 Marisa Group Companies

“Austrian Bonds”, with maturity on July 11, 2007. These bonds are issued by state companies, all owned by the Austrian Government, to raise funds for their projects. Specifically in this transaction, Marisa Lojas acquired bonds issued by an Austrian federal highway called OeBB Infrastruktur Bau AG.

7. TRADE ACCOUNTS RECEIVABLE

2006 2005 2004 Trade accounts receivable - Cartão Marisa: Current: From 211 to 240 days 13,450 — — From 181 to 210 days 27,740 3,089 2,808 From 151 to 180 days 30,908 5,855 5,323 From 121 to 150 days 40,317 13,497 12,270 From 91 to 120 days 46,986 18,143 16,494 From 61 to 90 days 61,784 24,035 21,850 From 31 to 60 days 46,056 30,198 27,453 Up to 30 days 16,912 51,328 44,873

2006 2005 2004 Past-due: Up to 30 days 72,104 59,187 4,431 From 31 to 60 days 9,294 7,629 2,923 From 61 to 90 days 8,068 6,623 1,246 From 91 to 120 days 8,890 7,297 743 From 121 to 150 days 7,961 6,535 584 From 151 to 180 days 8,697 7,139 689 399,167 240,555 141,687 Credit card companies - third parties 29,667 25,356 21,360 Other receivables 1,997 1,064 5,292 Allowance for doubtful accounts (34,950) (20,856) (12,332) Adjustment to present value (7,574) (4,298) (2,353) 388,307 241,821 153,654

8. INVENTORIES

2006 2005 2004 Goods for resale 101,445 80,640 47,206 Adjustment to present value (1,252) (1,075) (644) Allowances for inventory losses (7,378) (4,918) (3,037) 92,815 74,647 43,525

F-50 Marisa Group Companies

9. RECOVERABLE TAXES

2006 2005 2004 Income tax 9,329 8,192 584 COFINS (tax on revenue) 146 192 574 PIS (tax on revenue) 26 53 194 Recoverable ICMS (state VAT) 6,171 1,558 84 CSLL (social contribution on net income) 386 1,067 88 Other 41 42 15 Current assets 16,099 11,104 1,539

Recoverable ICMS (state VAT) 1,940 796 388 COFINS 1,488 694 — PIS 353 174 — Noncurrent assets(*) 3,781 1,664 388

(*) Balances stated in combined noncurrent assets are recorded under the caption “Other receivables”.

10. INCOME AND SOCIAL CONTRIBUTION TAXES

a) Deferred income and social contribution taxes

2006 2005 2004 IRPJ CSLL IRPJ CSLL IRPJ CSLL Noncurrent: Tax contingencies 67,085 67,085 51,801 51,801 40,088 40,088 Labor contingencies 10,881 10,881 11,611 11,611 7,875 7,875 Civil contingencies 6,226 6,226 439 439 3,712 3,712 Allowance for inventory losses 7,378 7,378 4,918 4,918 3,037 3,037 Provision for swap losses 8,076 8,076 ———— Other 9,190 9,190 704 704 1,381 1,381 Social contribution tax loss carryforwards — 35,094 — — — 14,181 Tax loss 20,603 ————— 129,439 143,930 69,473 69,473 56,093 70,274 Statutory rate 25% 9% 25% 9% 25% 9% 32,360 12,954 17,368 6,253 14,023 6,325

Current assets 4,860 1,750 ———— Noncurrent assets 27,500 11,204 17,368 6,253 14,023 6,325

Based on the projection of future taxable income of the subsidiary, the estimated recovery of the consolidated deferred income and social contribution tax assets on tax loss carryforwards is as follows:

2008 11,623 2009 9,027 2010 9,027 2011 9,027 38,704

F-51 Marisa Group Companies

The asset amount recorded is limited to the amounts whose offset is based on projected taxable income, discounted to present value, realized by the Company for the coming five years, also considering that the offset of tax loss carryforwards is limited to 30% of taxable income for the year, as determined by Brazilian tax legislation.

The balance of deferred income tax as of December 31, 2006 includes the total effect of tax losses of subsidiary Marisa Lojas, which do not expire and can be offset against future taxable income. Deferred charges in the amount of R$14,730 were not recorded on tax loss carryforwards, totaling R$21,512, and temporary differences, totaling R$21,812 of subsidiary Credi-21 because there were no future taxable income projections in the period to support their realization.

It is estimated that the balance referring to deferred taxes arising from temporary differences as of December 31, 2006 will be realized by 20011. However, we were unable to accurately estimate the years in which these temporary differences will be realized, since most of them are subject to court decisions over which the Company has no control or regarding which the Company is unable to predict when a final, unappealable decision will be issued.

As the income and social contribution taxes balance results not only from the taxable income, but also from the tax and corporate structure of the Company’s subsidiaries, the existence of nontaxable revenues, nondeductible expenses, tax exemptions and incentives and various other variables, there is no material relation between the net income of the Company’s subsidiaries and the income and social contribution taxes balance. Accordingly, the evolution of the tax loss offset should not be considered an indication of future profits of the Company’s subsidiaries.

F-52 Marisa Group Companies

b) Reconciliation of income and social contribution taxes at effective rate

2006 2005 2004 Net income (loss) before income and social contribution taxes social, depreciation of spun-off property and equipment, equity in real estate companies and revenue from rental of spun-off property (11,010) 46,719 (14,354) Equity in real estate companies 6,196 5,737 (18,530) Depreciation of spun-off property and equipment (1,625) (2,684) (3,361) Revenue from rental of spun-off property 1,735 1,751 1,450 Book income (loss) used as income and social contribution tax basis (4,704) 51,523 (34,795) Statutory rate 34% 34% 34% Expected income and social contribution credit (expense), at statutory rate 1,599 (17,518) 11,830 i) Effect of income and social contribution taxes on permanent differences: Fine on tax deficiency notices (2,776) (525) (392) Equity in subsidiary 5,442 9,250 (2,999) Loss on investments in subsidiaries — (93) (1,681) Loss on variable income investments higher than gains (5,840) (472) (477) Interest - Austrian bonds 2,217 — — Other permanent additions (deductions) 1,638 34 (101) Income (except financial income) of subsidiaries taxed based on deemed income: Reversal of taxation effect - taxable income 34,457 11,268 727 Taxation based on deemed income, using gross revenue from sales as tax basis (13,528) (7,062) (2,071) ii) Effect of income and social contribution taxes on temporary differences and tax losses for the year, for which deferred taxes were not recorded as there was no strong evidence, in the year, of realization: Temporary differences (7,416) (7,336) (8,006) Tax loss carryforwards (7,314) (6,817) (1,714) iv) Credits because of income tax contingencies(*) (4,868) — — Benefit (charge) recorded 3,611 (19,271) (4,884)

Income and social contribution taxes - current (18,396) (22,810) (10,227) Deferred income and social contribution taxes 22,007 3,539 5,343

(*) Amounts related to the payment in installments of income tax deficiency notice (see note 19) and income tax-related contingencies - Law No. 8200/91 (see note 18.(c)).

Under prevailing tax legislation, the accounting and tax records for the last 5 years of income and social contribution taxes are open to review by tax authorities. Other taxes and contributions are open to review and approval by tax authorities for varying statutory periods.

F-53 Marisa Group Companies

11. INTERCOMPANY RECEIVABLES

The main balances and transactions with related parties are as follows:

2006 2005 2004 Current assets - Dividends receivable:(a) Mareasa Participações Ltda. — 1,047 — Compar Participações Ltda. — 195 — — 1,242 — Noncurrent assets: Related party - Begoldi Comércio, Participação e Administração S.A.(b) 9,174 11,006 11,426 Begoldi Comércio, Participação e Administração S.A.(c) — 30,000 — Other related parties 59 120 321 9,233 41,126 11,747 Current liabilities: Related parties - Begoldi Comércio, Participação e Administração S.A.(d) 94,005 17,307 — Rentals payable(e): Nix Administração e Participações Ltda. 873 628 — Mareasa Participações Ltda. 444 306 — Novay Participações Ltda. 1,758 1,190 — Other 17 13 14 97,097 19,444 14 Dividends: Begoldi Comércio, Participação e Administração S.A.(f) 25,468 3,699 — Individuals 403 5 — 25,871 3,704 — Statement of income - Rentals of Group properties(g) 14,370 11,064 8,284

(a) Dividends receivable from Mareasa Participações Ltda. and Compar Participações Ltda. (b) Refers to advances granted by Begoldi to subsidiaries and SPEs for the payment of taxes and administrative expenses in general, which are not subject to interest. Balances are classified in noncurrent assets because they have infinite maturities. (c) Assignment of Marisa Lojas credit card receivables to Begoldi, with the approval of Credi-21, through a current account agreement.

F-54 Marisa Group Companies

(d) As of December 31, 2006 and 2005, the amount payable to the parent company Begoldi is added to the net equities of the SPEs, which were combined into the Company, as shown in noted 1 and 4, and the amounts of assets and liabilities of these entities are as follows:

2006 Company Athol Lógica Racional Ativa Fax Transfer Actio Total Cash and cash equivalents 382 305 375 4,246 312 138 24 5,782 Securities 8,052 6,875 8,200 1,099 8 — 10,347 34,581 Trade accounts receivable 6,970 6,221 7,048 6,709 6,874 39 — 33,861 Other receivables 1,097 990 628 1,210 95 50 2,920 6,990 Noncurrent assets 12 — — — — — 7,968 7,980 Investment — — — — — — 13,115 13,115 Property and equipment 78 — — — — — 16,357 16,435 Total assets 16,591 14,391 16,251 13,264 7,289 227 50,731 118,744

Trade accounts payable 3,254 1,580 3,756 7,256 2,472 15 — 18,333 Taxes payable 1,085 1,133 1,247 426 371 10 842 5,114 Other payables 3 2 3 4 4 — 21 37 Noncurrent liabilities — — — — — — 1,255 1,255 Total liabilities 4,342 2,715 5,006 7,686 2,847 25 2,118 24,739 Shareholders’ equity 12,249 11,676 11,245 5,578 4,442 202 48,613 94,005

2005 Company Athol Lógica Racional Total Cash 2 3 5 10 Banks 25 19 22 66 Notes receivable 8,969 9,893 10,590 29,452 Securities 1,520 179 1,143 2,842 Inventories 58 10 77 145 Other receivables 28 5 10 43 Noncurrent assets 12 — — 12 Property and equipment 87 — — 87 Total assets 10,701 10,109 11,847 32,657 Trade accounts payable 3,707 4,034 4,460 12,201 Payroll and related charges 2 2 2 6 Taxes payable 507 672 745 1,924 Accounts payable 1,210 4 8 1,222 Total liabilities 5,426 4,712 5,215 15,353 Shareholders’ equity 5,275 5,397 6,632 17,304

(e) Refer to rentals payable to related companies, as shown in note 24.f). (f) Dividends payable by Marisa Lojas, Athol Comércio Atacadista de Artigos do Vestuário e Complementos Ltda. and Due Mille Participações Ltda.

F-55 Marisa Group Companies

(g) Refers to intercompany rental payable:

2006 2005 2004 Nix Administrações e Participações Ltda. 4,184 3,394 2,756 Mareasa Participações Ltda. 2,293 1,863 1,295 Novay Participações Ltda. 7,893 5,807 4,233 14,370 11,064 8,284

12. INVESTMENTS

Investments are represented by:

Shareholders’ equity Ownership interest - % Investment Equity in subsidiaries 2006 2005 2004 2006 2005 2004 2006 2005 2004 2006 2005 2004 Investment in real estate companies: Traditio Participações Ltda. 4,243 8,059 8,198 — 26.28 26.68 — 2,150 2,187 (753) (37) (505) Compar Participações Ltda. 1,790 1,435 1,501 — 100.00 100.00 — 1,435 1,501 265 323 (279) Mareasa Participações Ltda. 52,765 48,259 46,179 — 97.55 97.55 — 47,077 45,048 3,258 3,054 (9,864) Nix Administração e Participação Ltda.(*) 61,962 31,509 20,248 21.17 30.15 29.44 13,115 9,501 5,961 3,430 2,397 (7,882) 13,115 60,163 54,697 6,200 5,737 (18,530) Other 2 2 2 — — — Total investments 13,117 60,165 54,699 6,200 5,737 (18,530)

(*) Indirect ownership interest through Actio Participações Ltda. (SPE).

On December 30, 2006, the shareholders’ meeting approved a capital decrease in Marisa Lojas and Fix in the amount of R$51,991 because of the assignment and transfer to Begoldi Comércio, Participação e Administração S.A. of the ownership interests held in this companies:

Number of shares R$ Marisa Lojas Varejistas Ltda.: Compar Participações Ltda. 1,400,745 1,700 Mareasa Participações Ltda. 59,282,000 49,161 Fix Participações Ltda. - Traditio Participações Ltda. 2,348,787 1,130

The capital decrease due to the assignment and transfer of the companies’ shares was made at book value on then and is supported by an appraisal report issued by independent experts.

F-56 Marisa Group Companies

13. PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS

2006 Annual average depreciation rate - % Cost Depreciation Net Installations 10 31,721 (14,409) 17,312 Leasehold improvements 20 92,320 (46,940) 45,380 IT equipment 20 23,716 (11,704) 12,012 Furniture and fixtures 10 23,020 (4,607) 18,413 Vehicles 20 543 (450) 93 Construction in progress — 50,815 — 50,815 Other property and equipment 10 582 (277) 305 222,717 (78,387) 144,330 Intangible assets Goodwill(*) — 16,045 — 16,045 Spun-off property and equipment Land 8,154 — 8,154 Buildings 13,757 (5,554) 8,203 21,911 (5,554) 16,357

2005 Annual average depreciation rate - % Cost Depreciation Net Installations 10 19,819 (12,567) 7,252 Leasehold improvements 20 67,113 (32,669) 34,444 IT equipment 20 13,832 (9,370) 4,462 Furniture and fixtures 10 9,328 (3,485) 5,843 Vehicles 20 808 (540) 268 Other property and equipment 10 413 (35) 378 111,313 (58,666) 52,647 Intangible assets Goodwill(*) — 9,666 — 9,666 Spun-off property and equipment Land 15,668 — 15,668 Buildings 33,790 (10,212) 23,578 49,458 (10,212) 39,246

F-57 Marisa Group Companies

2004 Annual average depreciation rate - % Cost Depreciation Net Installations 10 17,687 (11,544) 6,143 Leasehold improvements 20 47,589 (25,346) 22,243 IT equipment 20 12,398 (7,946) 4,452 Furniture and fixtures 10 6,983 (2,761) 4,222 Vehicles 20 861 (429) 432 Other property and equipment 10 412 (34) 378 85,930 (48,060) 37,870 Intangible assets Goodwill(*) — 3,171 — 3,171 Spun-off property and equipment Land 16,504 — 16,504 Buildings 34,294 (7,528) 26,766 50,798 (7,528) 43,270

(*) Represented by goodwill acquired by subsidiary Marisa Lojas and based on commercial locations where the Marisa and Marisa Família stores are located, which is an intangible asset that can be sold and is not impaired with time. However, the subsidiary Marisa Lojas tests this asset for impairment annually.

14. TRADE ACCOUNTS PAYABLE

As of December 31, 2006, the Company has 550 suppliers, all located in Brazil. At balance sheet dates, the five main suppliers accounted for approximately 12% of total trade accounts payable and none represented individually more than 4%. Other suppliers do not represent individually more than 2% of total trade accounts payable total at balance sheet date.

F-58 Marisa Group Companies

15. LOANS AND FINANCING The Company’s subsidiaries as of December 31, 2006 had the following loans:

Principal Interest 2006 2005 2004 Charges Maturity Current liabilities: Interest of 106% of Banco Alfa - working capital 5,000 116 5,116 2,999 6,478 CDI(a) April-May 2007 Banco Bradesco - working capital 3,900 124 4,024 3,895 — Interest of 108.5% of CDI(a) July 2007 Banco Bradesco - BNDES 2,059 171 2,230 2,989 — Interest of 6.5% p.a. + TJLP(b) April 2009 Interest of 102% of Banco Safra - buyer financing 8,574 26 8,600 14,690 26,110 CDI(a) April 2007 Interest of 108% of Banco Safra - working capital 19,000 1,074 20,074 — — CDI(a) April 2007 Interest of 1.50% to 2.50% p.a. Banco Safra - working capital 9,045 119 9,164 1,220 — + CDI(a) June 2007 Interest of 4.5% to 6% p.a. + April 2007- Banco Safra S.A. - FINAME 538 16 554 — — TJLP(b) October 2009 Banco Santander - Resolutions Interest of 118% of 2770 and 3221(*) 34,600 128 34,728 19,852 — CDI(a) April 2007 Banco Santander - Resolutions Interest of 112% to 118% of 2770 and 3221(*) 5300 31 5,331 — — CDI(a) April 2007 Unibanco S.A. - buyer financing 7,700 91 7,791 5,015 21,312 Interest of 1.5% p.a. + CDI(a) April 2007 Unibanco S.A. - Resolution 2770(*) 11,900 41 11,941 2,009 — Interest of 2.96% p.a. + CDI(a) September 2007 Interest of 4.5% to 5.5% p.a. + December 2007 - Unibanco S.A. - BNDES 2,221 66 2,287 4,037 1,894 TJLP(b) December 2008 Banco Santander - Resolutions 2770 and 3221(*) 10,000 255 10,255 9,012 — Interest of 2.30% p.a. + CDI(a) September 2007 Banco Santander - Resolutions Interest of 111.6% to 112% of 2770 and 3221(*) 10,793 71 10,864 — — CDI(a) June 2007 March- Banco J. Safra S.A. - Loan 49,500 1,131 50,631 34,200 — Interest of 1.81% p.a. + CDI(a) May 2007 Interest of 111% of Banco Credit Suisse S.A.(*) 56,506 16,559 73,065 — — CDI(a) July 2007 Interest of 106% of Banco Credit Suisse S.A.(*) — 1,629 1,629 20,277 — CDI(a) August 2011 Interest of 108% of May 2008- Banco Credit Suisse S.A.(*) 26,513 333 26,846 — — CDI(a) February 2009 BNDES financing 10,783 149 10,932 — — Interest of 2.8% p.a. + TJLP(b) April 2011 Banco Citibank - Resolution Fixed interest of May- 2770(*) 45,000 494 45,494 — — 14.26% p.a. June 2007 318,932 22,624 341,556 120,195 55,794 Noncurrent liabilities: Financing - BNDES 62,837 866 63,703 — — Interest of 2.8% p.a. + TJLP(b) April 2011 Interest of 106% of Banco Credit Suisse S.A.(*) 78,100 — 78,100 — — CDI(a) August 2011 Interest of 108% of Banco Credit Suisse S.A.(*) 28,293 356 28,649 — — CDI(a) February 2009 Interest of 4.5% to 6% p.a. + Mach 2008- Safra S.A. - FINAME 1,457 42 1,499 629 125 TJLP(b) October 2009 Banco Bradesco S.A. - BNDES 2,745 228 2,973 3,553 — Interest of 6.5% p.a. + TJLP(b) April 2009 Interest of 4.5% to 5.5% p.a. + December 2008- Unibanco S.A. - BNDES 540 16 556 1,146 3,983 TJLP(b) August 2009 Banco Santander S.A. - May 2009- financial instrument — 973 973 — — Interest of 9% p.a. + IPCA(c) August 2010 173,972 2,481 176,453 5,328 4,108

(a) CDI - Interbank certificate of deposit (b) TJLP - Long-term interest rate (c) IPCA - Extended Consumer Price Index

F-59 Marisa Group Companies

Annual rate Index 2006 2005 2004 TJLP - Long-term interest rate 6.85 9.75 9.75 CDI - Interbank certificate of deposit 12.47 19.09 19.28 IPCA - Extended Consumer Price Index 3.14 — — (*) On the same date this fund was raised, the subsidiaries Marisa Lojas and Credi-21 entered into swap transactions to hedged the exposure to market, foreign exchange, and interest rate risks. As of December 31, 2006 the swap balance recorded under loans and financing in current assets, with a corresponding entry in financial expenses, was R$17,950.

Loans and financing in noncurrent assets as of December 31, 2006 mature as follows:

2008 46,200 2009 23,816 2010 18,631 2011 87,806 176,453

Covenants As of December 31, the subsidiaries have loans and financing with covenants under the loan agreements entered into with banks. Some of these covenants have been met and others have not. The covenants related to the financial indicators required in the loan agreements entered into with Banco Credit Suisse S.A. and Unibanco S.A. - BNDES for 2006 are as follows:

Banco Credit Suisse S.A. Indebtedness shall not exceed R$350,000 (not met).

Dividends and interest on capital shall not exceed 40% of net income (not met).

Disclose annual or quarterly financial reports.

As regards the covenants not met, the subsidiaries obtained from their creditors a waiver, until June 30, 2007, of their rights to immediate payment of the amounts due.

Unibanco S.A. - BNDES Transfer of funds (“loan agreements”) between subsidiaries and affiliates can not exceed R$30,000 (not met).

Total indebtedness shall not exceed 150% of EBITDA or 15% of shareholders’ equity (not met).

Financial expenses for the period shall not exceed 40% of EBITDA.

Dividends paid shall be limited to 15% of net income and interest on capital limited to 5% of shareholders’ equity, as long as the amount does not exceed half the amount of the profit reserve recognized (not met).

As mentioned in note 26, on April 30, 2007, the Company’s subsidiaries signed an addendum to the financing agreements entered into with Unibanco S.A., under which the creditors exclude from the agreements the covenants above.

F-60 Marisa Group Companies

Guarantees of loans and financing

The loans and financing are guaranteed by the following related parties:

Company Financial institution Type of guarantee Nix Administração e Participação Ltda. Banco Credit Suisse S.A. Promissory note 221,037 Banco Bradesco and Banco Safra BNDES financing Bank guarantees 115,000 Begoldi Comércio, Participação e Banco Citibank - Resolution Administração S.A. 2770 Promissory note 45,494 Nix Administração e Participação Ltda. Banco Santander Promissory note 40,059 Marisa Lojas Varejistas Ltda. Banco Safra S.A. Promissory note 35,328 Begoldi Comércio, Participação e Banco Itaú - Resolutions 2770 Administração S.A. and 3221 Promissory note 21,119 Begoldi Comércio, Participação e Administração S.A. Banco Bradesco S.A. Property(a) 11,750 Begoldi Comércio, Participação e Administração S.A. Unibanco S.A. Property(a) and lien 7,888 Nix Administração e Participação Ltda. Banco Alfa S.A. Promissory note 2,500 Marisa Lojas Varejistas Ltda. Banco Safra S.A. - FINAME Promissory note 1,385 Marisa Lojas Varejistas Ltda. Banco Credit Suisse S.A. Lien on receivables and other covenants(b) 6,078 507,638

(a) As of December 31, 2006, the properties pledged as collateral are recorded at net book value of R$4,746. (b) Private agreement for collateralization of receivables and other covenants, under which Marisa Lojas assigns as collateral, to Banco Credit Suisse S.A., 75% of all its receivables from billings of its stores related to sales carried out with two credit card companies, Redecard S.A. and Companhia Brasileira de Meios de Pagamento, which is effective until the repayment of the loan. Marisa Lojas shall keep in the account where the collateralized receivables are deposits an amount at the least three times higher than the amount required to pay an installment of the debt to Banco Credit Suisse S.A.

16. TAXES PAYABLE

2006 2005 2004 ICMS (state VAT) 32,386 19,686 15,610 IRPJ 14,616 22,591 7,748 CSLL 3,602 5,614 1,767 COFINS 14,638 9,382 7,502 PIS 3,177 2,037 1,643 Other 4,406 1,427 1,162 72,825 60,737 35,432

F-61 Marisa Group Companies

17. LEASING

The subsidiaries Marisa Lojas and Credi-21 have lease commitments for equipment, for periods ranging from 24 to 36 months and bearing and average interest rate equal to CDI plus 1.73% p.a., whereby assets are purchased at the end of the lease agreement for a symbolic residual value. As of December 31, 2006, the future lease commitment, which is considered as expenses as payments are made, totals approximately R$9,660 (R$5,864 in 2005 and R$2,456 in 2004).

As of December 31, 2006, 2005 and 2004 lease commitments are as follows:

Year 2006 2005 2004 2005 — — 1,428 2006 — 2,166 684 2007 4,712 2,446 344 2008 3,517 1,252 — 2009 1,431 — — Total 9,660 5,864 2,456

Had these transactions been recorded as purchase of property and equipment for payment in installments, as of December 31, 2006, property and equipment would be increased by R$10,809 (R$6,588 in 2005 and R$3,452 in 2004), liabilities would be increased by R$9,660 (R$5,864 in 2005 and R$2,456 in 2004), and shareholders’ equity as of that date would be increased by R$1,149 (R$724 in 2005 and R$996 in 2004).

18. RESERVE FOR CONTINGENCIES

The Company’s subsidiaries are parties to tax, civil and labor lawsuits and in administrative tax proceedings. Management, based on the opinion of its legal counsel, believes that the reserve for contingencies is sufficient to cover probable losses. The balances of the reserves for contingencies are as follows:

2004 2005 Additions Write-offs Charges 2006 Tax: COFINS(a) 32,037 36,12 — — 2,988 39,113 COFINS(b) 4,778 5,377 — — 427 5,804 IRPJ - Law 8200/91(c) — — 7,482 — — 7,482 FGTS (severance pay fund)(d) 1,546 2,285 1,504 — — 3,789 13th salary injunction(e) 700 700 1,086 — 1,873 3,659 State Poverty Alleviation Fund (FECP) - RJ(f) 949 1,884 1,459 1,265 — 2,078 Taxable income computation book (LALUR) — 1,671 1,671 1,671 — 1,671 CSLL(g) 316 1,208 840 — — 2,048 Other tax contingencies 3,402 3,829 2,229 — — 6,058 43,728 53,079 16,271 2,936 5,288 71,702 Labor(h) 9,329 14,17 10,787 10,913 — 14,053 Civil(i) 351 444 5,782 — — 6,226 Total contingencies 53,408 67,702 32,840 13,849 5,288 91,981 Escrow deposits (12,671) (17,279) (7,061) 8,990 (15,350) 40,737 50,423 76,631

F-62 Marisa Group Companies

(a) Law 9718, of November 27, 1998, increased the COFINS rate to 3% from 2% and allowed that the 1% difference to be offset, in 1999, against the tax payable in the same year. However, in 1999 the subsidiary Marisa Lojas filed a lawsuit and was granted an injunction suspending the payment of the tax (1% rate difference). (b) In 1999 the subsidiary Marisa Lojas filed a lawsuit and was granted an injunction suspending the expansion of the tax basis and challenging articles 3 and 8, respectively, of said Law, and authorizing the payment of COFINS based on Supplementary Law 70/91. As regards items (a) and (b), as of December 31, 2006, the court records were closed for judgment by the 3rd Region Regional Federal Court (TRF). Previous decisions of the Federal Supreme Court (STF) on the matter, based on article 195 of the Federal Constitution, before Constitutional Amendment 20/98, considered the expressions gross revenue and billings synonyms, making them equivalent to service or product and service sales. Therefore, paragraph 1 of article 3 of Law No. 9718/98 is unconstitutional because it extended the concept of gross revenue to all revenues earned by legal entities, regardless of their activity and the accounting classification adopted. Base on the opinion of its legal counsel, the Company classified the likelihood of an unfavorable outcome on this lawsuit as probable. (c) This lawsuit requests the court to declare that there is no legal or tax requirement to apply to the financial statements issued in 1991, for 1990, of subsidiary Marisa Lojas, the fiscal National Treasury Bond (BTN) variation, adjusted according to the tax adjustment index, and instead the fiscal BTN adjusted by the Consumer Price Index (IPC) should be applied on income and social contribution tax and tax on net income (ILL) falling due. The initial lawsuit was numbered No. 91.0653835-5 and unfolded into several lawsuits. The court records wait issuing of the court decision that rejected the special appeal filed. Previous court decisions considers this Law fully constitutional; accordingly, the likelihood of an unfavorable outcome is probable. (d) Subsidiary Marisa Lojas filed a lawsuit against the Federal Government, distributed on September 26, 2001 under No. 2001.61.00.024399-6, requesting the unconstitutionality of Supplementary Law No. 110/01, arguing it fails to comply with the precedence principle set forth by article 150, III, “b”, of the Federal Constitution. An appeal was filed against the court decision that partially granted the request; numbered No. 490790-9, which currently awaiting judgment by the STF. Marisa Lojas made escrow deposits until December 2006 based on its monthly payroll. Currently, the STF is judging the special appeal filed. There is a partially favorable decision that prevents the levy of the tax during the first three months. Among the related lawsuits we highlight the direct action of unconstitutionality (ADIN) No. 2568, being judged by the STF. The injunction granted to this direct action of unconstitutionality declares the constitutionality of Supplementary Law No. 110/01, except for the heading of article 14, related to the ninety-day grace period before which no the tax cannot be levied. Previous lower and appeal court decisions are uniform; accordingly, this position, which until now has been unfavorable to taxpayers, can be reversed. (e) Lawsuit requesting the court to declare that the subsidiary Marisa Lojas is not legally bond to pay social security contribution on Christmas bonuses and authorize the Company to offset the amount it considers unduly paid. Marisa Lojas made several escrow deposits and currently is regularly paying the 13th salary, however the deposit period is still under discussion. As of December 31, 2006, the Company waited the judgment of the lawsuit by a lower court. Previous court decisions, including by the STF, are unfavorable, even from lower courts; accordingly, the likelihood of an unfavorable outcome is probable. (f) Lawsuit filed against the Rio de Janeiro State Government to declare the unconstitutionality of the Poverty Alleviation Fund - Law No. 4,056/02. After the demand was dismissed by the Rio Janeiro Justice Court (TJRJ), an appeal was filed with the STF, which is awaiting judgment, after an appeal filed with the Superior Court of Justice was definitely dismissed. The subsidiary Marisa Lojas makes a monthly escrow deposit of the ICMS difference calculated in this State; accordingly, the likelihood of an unfavorable outcome is probable.

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(g) Lawsuit filed under No. 2004.61.00.019379-9 challenging the increase in the social contribution tax basis, when approved based on deemed income. This lawsuit challenges paragraph 62, which sets forth on the amounts calculated on the tax basis difference, increasing it from 12% to 32%. The subsidiaries TCM and Primos make a monthly escrow deposit of these amounts. Lawsuits filed with the 17th Federal Court, and there is no consensual understanding on this matter; accordingly, the likelihood of an unfavorable outcome is probable because of the arguments presented. (h) As of December 31, 2006, the Company’s subsidiaries are parties to 535 labor lawsuits filed by former employees demanding the payment of severance pay, allowances, overtime, or amounts payable due to joint liability. (i) As of December 31, 2006, the Company’s subsidiaries are parties to 1,412 civil lawsuits and administrative proceedings, filed with civil courts, the special civil court and the consumer protection agency PROCON by consumers, suppliers, and former employees, most of which claiming indemnities.

As of December 31, 2006, the Company and its subsidiaries are a parties to other lawsuits, for which the likelihood of loss, according to legal counsel’s evaluation, is considered possible, in the approximate amount of R$4,092, and for which the Company’s management understands that it is not necessary to recognize a provision for loss.

19. TAXES IN INSTALLMENTS Law 10,684, of May 30, 2003, provides for, but not limited to, the tax debt refinancing program (PAES) that allows the payment of tax debts to the Federal Revenue Service, the National Treasury Attorney General, and National Institute of Social Security (INSS) in installments. In July 2003, Marisa Lojas decided to include in this program some tax debts discussed in courts. In 2006, R$465 was repaid, resulting in a debit balance of R$3,098 (R$1,983 - principal, R$248 - fine and R$867 - interest) at the end of the period, of which R$475 (R$449 in 2005 and R$203 in 2004) was classified in current liabilities and R$2,623 (R$2,915 in 2005 and R$2,732 in 2004) in noncurrent liabilities, to be paid in monthly installments, adjusted based on TJLP, with final maturity in 2013.

Additionally, on September 1, 2006 Marisa Lojas requested the payment in installments of income tax deficiency notice, raised on alleged undue offset of 1997-1999 tax loss carryforwards, and the recognition of a tax credit because of alleged failure to add to net income for the these years used to calculated taxable income, gains earned abroad by a subsidiary and remitted to Brazil. This payment was divided into 59 monthly installments. In 2006, R$599 was repaid, resulting in a debit balance of R$11,503 (R$3,419 - principal, R$2,564 - fine and R$5,520 - interest) at the end of the period, of which R$2,320 was classified in current liabilities and R$9,183 in noncurrent liabilities, to be paid in monthly installments, adjusted based on TJLP, with final maturity in 2011.

The regular payment of taxes and other obligations is mandatory to maintain the payment terms and conditions of this program.

These payments in installments are recorded under the caption “Reserve for contingencies”.

F-64 Marisa Group Companies

Installments in noncurrent assets as of December 31, 2006 mature as follows:

2008 2,979 2009 2,979 2010 2,979 2011 2,146 2012 475 2013 248 11,806

Had this subsidiary recognized its financial liabilities at fair value, it would have recognized an additional expense before income and social contribution tax of R$1,984 as of As of December 31, 2006, as shown below:

Book Fair Financial liability value value Difference Taxes in installments 14,601 16,585 (1,984)

20. SHAREHOLDERS’ EQUITY Calculated based on the sum of the accounts included in the Companies’ shareholders’ equity mentioned in note 4, eliminating minority interest.

a) Capital As of December 31, 2006, the combined capital is by R$41,315 (R$207,595 in 2005 and in 2004), formed by the capital of the following Companies:

2006 2005 2004 Marisa Lojas Varejistas Ltda.(*) — 201,089 201,089 Due Mille Participações Ltda.(*) — 4,186 4,186 Fix Participações Ltda.(*) — 2,320 2,320 Begoldi Comércio, Participação e Administração S.A.(*) 41,285 — — Other shareholders resident in Brazil 30 — — 41,315 207,595 207,595

(*) On December 31, 2006, the Extraordinary Shareholders’ Meeting approved the capital increase of the Company of R$41,285, from R$30 to R$41,315, as a result of the assignment and transfer to the Company of the ownership interests held by Begoldi Comércio, Participação e Administração S.A.

F-65 Marisa Group Companies

The assignment and transfer of the ownership interests were made under a corporate restructuring, as follows:

Marisa Due Lojas Mille Fix Total Capital as of December 31, 2005 201,089 4,186 2,320 207,595 Capital contribution due to advance for future capital increase 9,429 — 30,000 39,429 Capital contribution from the assignment and transfer of receivables from Credi-21 owned by Begoldi Comércio, Participação e Administração S.A. — — 22,514 22,514 Capital decrease due to the assignment and transfer of other companies’ shares as of December 31, 2006(a) (95,285) — — (95,285) Capital decrease from the assignment and transfer of receivables from Credi-21 owned by Marisa Lojas to Begoldi Comércio, Participação e Administração S.A. (22,514) — — (22,514) Capital decrease due to the assignment and transfer of properties to Nix Administração e Participações Ltda. (19,342) — — (19,342) Capital decrease in cash, in favor of Begoldi Comércio, Participação e Administração S.A. — (961) (2,266) (3,227) Total changes in capital 73,377 3,225 52,568 129,170 Treasury shares — (2,660) — (2,660) Net income (loss) accumulated until December 31, 2006 (5,774) 7,753 (51,438) (49,459) Payment of dividends (33,412) (2,500) — (35,912) Other 4 142 — 146 Capital decrease by merger(b) (39,182) 2,735 (51,438) (87,885) 34,195 5,960 1,130 41,285

(a) Capital decrease due to the assignment and transfer of ownership interests in Mareasa Participações Ltda. at book value of R$49,161, Actio Participações Ltda. at book value of R$44,424 and Compar Participações Ltda. at book value of R$1,700 to Begoldi Comércio, Participação e Administração S.A. (b) Capital decrease due to the assignment and transfer of ownership interests in Marisa Lojas Varejistas Ltda., Due Mille Participações Ltda. and Fix Participações Ltda. and subsidiaries to the Company on December 31, 2006. The amount of the capital decrease is based on an appraisal report issued by independent experts.

F-66 Marisa Group Companies

b) The breakdown of the combined shareholders’ equity and accumulated net income (loss) combined with the related shareholders’ equity and accumulated net income (loss) of the Companies, as of December 31, 2006, 2005 and 2004 is as follows:

Shareholders’ equity 2006 2005 2004 Marisa Lojas Varejistas Ltda. — 242,199 202,552 Fix Participações Ltda. — (3,597) (6,626) Due Mille Participações Ltda. — 2,523 1,304 Marisa S.A. 35,087 — — Combined shareholders’ equity 35,087 241,125 197,230

Net income (loss) 2006 2005 2004 Marisa Lojas Varejistas Ltda. (42,634) 42,400 (26,017) Fix Participações Ltda. (15,521) (26,971) (14,240) Due Mille Participações Ltda. 6,899 3,577 266 Marisa S.A. (103) — — (51,359) 19,006 (39,991) Unrealized profits on inventories(*) (6,125) (5,182) — Combined net income (loss) (57,484) 13,824 (39,991)

(*) Refers to adjustments to unrealized profits on inventories (net of taxes) of Marisa Lojas arising from transactions with the Group’s wholesales companies (SPEs), which have been eliminated in the caption “Minority interest”, since the Company has no ownership interest in these companies.

21. OTHER OPERATING INCOME (EXPENSES)

For better understanding of the performance and the actual contribution of Cartão Marisa financial services to the Company’s results, we present the breakdown of other operating income, net.

2006 2005 2004 Result from financial services: Income from financial services 76,900 45,521 23,620 Expenses on financial services (16,941) (19,593) (3,856) Losses on receivables, net (72,665) (48,904) (27,009) (12,706) (22,976) (7,245) Other operating income (expenses): Allowances recognized (14,879) (14,294) (3,834) Tax credits 10,684 15,692 9,427 Recovered expenses 3,223 3,329 2,262 Other (250) 683 (13) (1,222) 5,410 7,842 (13,928) (17,566) 597

F-67 Marisa Group Companies

22. FINANCIAL INCOME (EXPENSES)

2006 2005 2004 Financial expenses: Loss on variable income investments (89,725) (20,751) (13,822) Loss on fixed-income investments (416) (110) (1,378) Interest (35,348) (12,427) (4,858) CPMF (tax on banking transactions) (7,683) (3,944) (2,368) Banking expenses (3,266) (1,848) (1,296) Monetary variation (19,161) (483) (387) Adjustment to present value (2,067) (1,237) — Other (3,974) (897) (575) (161,640) (41,697) (24,684) Financial income: Temporary cash investments 82,351 27,035 18,557 Monetary variation 5,210 586 425 Adjustment to present value 4,298 2,353 — Discounts obtained 1,310 1,304 450 Other 213 701 243 93,382 31,979 19,675

23. OTHER NONOPERATING INCOME (EXPENSES)

2006 2005 2004 Nonoperating income: Gains of investments 7,999 6,005 — Other 292 407 1,076 8,291 6,412 1,076 Nonoperating expenses: Losses on investments (2,727) (602) (9,049) Other (158) (478) (624) (2,885) (1,080) (9,673) 5,406 5,332 (8,597)

Gains (losses) on investments refer to percentage change in investments made in subsidiaries during the years.

24. FINANCIAL INSTRUMENTS The Company’s subsidiaries carry out transactions involving the financial instruments below. There were no material differences between the estimated fair values of financial instruments, assets and liabilities, of subsidiaries as of December 31, 2006, 2005 and 2004, recorded in balance sheet accounts, and their carrying amounts.

a) Credit risk The sales and credit policies of the subsidiaries are subject to the credit policies established by their Management and are intended to minimize possible problems with the default of customers. This goal is

F-68 Marisa Group Companies

attained by the subsidiaries’ Management through a careful selection of the customer portfolio, which considers their ability to pay (credit rating) and diversification of operations (risk dilution). The subsidiaries recognized an allowance for doubtful accounts, in the amount R$34,950 as of December 2006 (R$20,856 in 2005 and R$12,332 in 2004) to cover credit risks. b) Loans and financing in foreign currency There are amounts payable denominated in foreign currency, which are thus exposed to exchange risks. As of December 31, 2006, the subsidiaries did not have financial instruments to hedge liabilities denominated in foreign currency. The main balances denominated in foreign currency refer to loans and financing and are mentioned in note 15. The exchange gain or loss as of December 31, 2006 is recorded in current liabilities. c) Fair value of financial instruments The fair value of cash and cash equivalents (cash, banks, temporary cash investments and securities), accounts receivable and current liabilities approximates their carrying amounts, since the maturity of a significant portion of these balances occurs close to the balance sheet date. Loans and financing are monetarily adjusted based on inflation indices and variable interest due to market conditions and, therefore, the debit balance as of the balance sheet date approximates the fair value. d) Concentration of risk Financial instruments that potentially subject the Company to concentration of credit risk consist mainly of banks, temporary cash investments and trade accounts receivable, mainly related to transactions carried out with subsidiary Credi-21. The balance of accounts receivables is distributes among the credit card companies. In 2006, transactions with Credi-21 accounted for approximately 93% of total credit card sales transactions. The full balance of trade accounts receivable is denominated in Brazilian reais. e) Interest rate The Company’s subsidiaries are exposed to normal market risks arising from changes in interest rates on its long-term obligations. f) Future commitments As of December 31, 2006, the subsidiaries had lease agreements entered into with related companies and third parties. The lease amount of the properties of related parties is always the higher of: (i) the amount equivalent to 3.65% of gross monthly sales of the store; or (ii) a minimum monthly amount adjusted annually based on several indices of inflation and average monthly expenses of rentals paid to related companies, of R$1,198. These lease agreements are effective for five years and can be contractually and automatically renewed for up to two five-year periods. The lease amount of the properties of third parties is always the higher of: (i) the amount equivalent to 3% of gross monthly sales of the store; or (ii) a minimum monthly amount adjusted annually based on several indices of inflation and average monthly expenses of rentals paid to third parties, of R$2,279.

F-69 Marisa Group Companies

25. INSURANCE COVERAGE (UNAUDITED) The Company’s subsidiaries have an insurance policy that considers principally risk concentration and materiality, providing it with a level of insurance coverage considered sufficient according to the type of their activities and advice of the insurance brokers.

As of December 31, 2006, the insurance coverage is as follows:

Civil liability 1,000 Sundry risks - inventories and property and equipment 44,200 National and international transportation 2,500 Vehicles 728 48,428

26. SUBSEQUENT EVENTS Working capital On January 17, 2007, the subsidiary Marisa Lojas obtained financing through a loan agreement in the amount of R$25,000 with Banco J. Safra S.A., bearing monthly interest of 0.15% plus CDI, for a 61-day period, without grace period, and maturing on March 18, 2007.

The main purpose of this financing is to meet the additional working capital requirements of the Company and settle installments of short-term loans. This loan is guaranteed by affiliate Nix Administrações e Participações Ltda.

On maturity date, this loan was rescheduled with the same terms and conditions and maturity on September 3, 2007.

Foreign currency loans On February 2, 2007, the Company obtained foreign currency-denominated financing in accordance with National Monetary Council Resolution No. 2770 from Banco Itaú BBA S.A., in the amount of US$2,377,000 and maturity on May 2, 2007. This loan is subject to annual interest of 8.95% plus exchange variation and is guaranteed by affiliate Nix Administrações e Participações Ltda. The Company entered into a swap transaction with the same terms, conditions and amounts to hedge exchange variations.

On maturity date, this loan was rescheduled with annual interest of 2.8% plus CDI variation and maturity on September 3, 2007.

Bank credit notes On February 12, 2007, the subsidiary Credi-21 obtained financing through the issue of six bank credit notes in the amount of R$30,000 from Banco UBS Pactual S.A., bearing annual interest of 1.20% plus CDI variation, during a 24-month period, with a twelve-month grace period and maturity on February 12, 2009.

The main purpose of this financing is to meet the additional working capital requirements of the Company and settle installments of short-term loans. The loan is guaranteed by the individual shareholders and the parent company Begoldi Comércio, Participação e Administração S.A.

On February 12, 2007, the subsidiary Marisa Lojas obtained financing through the issue of ten bank credit notes in the amount of R$50,000 from Banco UBS Pactual S.A., bearing annual interest of 1.20% plus CDI variation, during a 24-month period, with a twelve-month grace period and maturity on February 12, 2009.

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Amendment to the Company’s Bylaws On March 20, 2007, the Minutes of the Extraordinary Shareholders’ Meeting were approved and contained the following main decisions: (a) approval of the amendment and revision of the Company’s bylaws; and (b) election of, already in conformity with the new bylaws, the following members of the Company’s Board of Directors, for an unified term of one year as from that date, to be extended until the Annual Shareholders’ Meeting to be held in 2008, and with possible reelection: Mr. Marcio Luiz Goldfarb, as Chairman; Mr. Décio Goldfarb, as Director; Ms. Denise Goldfarb Terpins, as Director; Mr. Celso Clemente Giacometti, as Director; and Mr. Cassio Roberto Vieira Romano, as Director. Celso Clemente Giacometti meets the description of “Independent Director” set forth by the Novo Mercado Regulations. Because of the elections of the Company’s Board of Directors, the overall amount of up to R$3,900 was approved as management compensation for the current year, and the Board of Directors will define the individual compensation to be paid to each Company director and officer, pursuant to the Company’s bylaws.

The main amendments and revision of the Company’s Bylaws were as follows: (a) the Company is authorized to increase capital up to the limit of 150,000,000 common shares, without par value; and (b) shareholders are entitled to receive, each year, a mandatory minimum dividend of 25% of net income: (i) plus the amounts arising from the reversal, in the year, of previously recognized reserves for contingencies; (ii) less the amounts allocated, in the year, to the legal reserve and reserve for contingencies; and (iii) whenever the amount of the mandatory dividend exceeds the realized portion of net income for the year, Management may propose, and the Shareholders’ Meeting may approve, the allocation of the exceeding amount to the recognition of the unrealized profits reserve (article 197 of Corporate Law).

Capital increase in investee In the Extraordinary Shareholders’ Meeting held on March 2, 2007, the Company’s capital was increased by R$3,320, thus from R$41,315 to R$44,635, with the issuance of 3,319,993 new registered common shares, without par value, subscribed and paid up as follows: (a) the shareholder Begoldi Comércio, Participação e Administração S.A. subscribed 1,000,000 shares in the amount of R$1,000 through an advance for future capital increase; and (b) other shareholders domiciled in Brazil subscribed 2,319,993 shares in the amount of R$2,320 through the assignment and transfer to the Company of Fix Participações Ltda’s shares.

Rectification of share subscription On March 26, 2007, the minutes dated December 31, 2006 were rectified to change the subscription amount of the shares of subsidiary Marisa Lojas Varejistas Ltda., from R$45,274 to R$34,195 because of the change in the its shareholders’ equity. The effects of this rectification are recognized in the financial statements as of December 31, 2006.

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Addenda to loans and financing In April and May 2007, the Company’s subsidiary rescheduled several loan and financing agreements, as shown below:

Agreement Rescheduled Principal Charges maturity date maturity date Banco Alfa 2,000 Interest of 106% of CDI April 2007 July 2007 Banco Safra - working capital 19,000 Interest of 2% p.a. + CDI April 2007 July 2007 Banco Santander - Resolutions 2770 and 3221 34,600 Interest of 118% of CDI April 2007 October 2007 Banco Santander - Resolutions 2770 and 3221 5,300 Interest of 118% of CDI April 2007 May 2007 Banco Unibanco S.A. - buyer financing 7,700 Interest of 1.5% p.a. + CDI April 2007 July 2007 Banco J. Safra - loan 25,000 Interest of 1.8% p.a. + CDI March 2007 May 2007

Settled loans On April 2007, the Company’s subsidiaries settled an aggregate amount of R$8,646 related to buyer financing and manufacturer financing (FINAME) agreements entered into with Banco Safra.

BNDES financing On May 2, 2007, Marisa Lojas obtained the release of R$15,425 from BNDES, which bears annual interest of 2.8% plus TJLP, with a twelve-month grace period and maturity on April 15, 2012.

Addendum to the financing agreement with Unibanco S.A. - BNDES On April 30, 2007, the Company’s subsidiaries signed an addendum to the financing agreements entered into with Unibanco S.A. - BNDES, under which the creditors exclude covenants from such agreements. • Transfer of funds (“loan agreement”) between subsidiaries and affiliates can not exceed R$30,000. • Total indebtedness shall not exceed 150% of EBITDA or 15% of shareholders’ equity. • Financial expenses for the period shall not exceed 40% of EBITDA. • Dividends paid shall be limited to 15% of net income and interest on capital limited to 5% of shareholders’ equity, as long as the amount does not exceed half the amount of the profit reserve recognized.

Stock option plan ON April 25, 2007, the Company’s Board of Directors established a stock option plan, through a Stock Option Agreement, and appointed the eligible employees in power positions and highly qualified contractors of the Company or its subsidiaries, to align the interests and goals on these individuals with strategies and results expected by the Company. The option may be partially or totally exercised during the period defined in the Stock Option Agreement while the plan remains effective. Under the plan, on April 25, 2007 the total number of common shares underlying the options that can be granted was 892,688 common shares of the authorized capital stock, and cannot exceed 2% of total outstanding common shares of the Company’s capital stock, at any time while the plan remains effective. Under the plan, all shares acquired with the exercise of vested options shall have the same rights and advantages granted to the common shares issued by the Company.

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The exercise price of the options shall be equal to the average market price of the Company’s common shares in the last five trading sessions of the São Paulo Stock Market (BOVESPA) prior to the date of the Stock Option Agreement, and the Board of Directors can, at its sole discretion, apply a discount on this price, as defined for each individual case. The exercise price established in the Stock Option Agreement will be monetarily adjusted based on the IPCA (Extended Consumer Price Index) from the period from the date of the Stock Option Agreement to the subscription date.

By the date of this report, no stock options had been granted or exercised; accordingly, no effects were produced on the statement of operations and the shareholders’ equity.

The exercise of all these options would generate a dilution in relation to the number of Company shares of approximately 2%.

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